Cuomo zigs and zags on retiree health obligations

by E.J. McMahon |  | NY Torch

To the consternation of the New York’s largest state employee union, Gov. Cuomo has cleared the way for an increase in the share of health insurance premiums paid by retired state workers.

Under their new contract, active members of the Civil Service Employees Association (CSEA) will see their share of premiums rise, from 10 percent to a minimum of 12 percent for individual coverage and from 25 percent to a minimum 27 percent for additional family members’ coverage. The premium increase is on a sliding scale based on income, with workers in the highest grades paying six percentage points more, or up to 16 percent for individual coverage and up to 31 percent for individual coverage.

Effective Oct. 1, the Division of the Budget confirms, the state will apply the minimum two percentage point increase to premiums paid by all retired state employees.  On a union web page, CSEA objects that the governor is doing this “unilaterally,” but the Cuomo administration apparently has authority to raise retiree premiums under Section 167.8 of the Civil Service Law, which reads as follows:

Notwithstanding any inconsistent provision of law, where and to the extent that an agreement between the state and an employee organization entered into pursuant to article fourteen of this chapter so provides, the state cost of premium or subscription charges for eligible employees covered by such agreement may be modified pursuant to the terms of such agreement. The president [of the Civil Service Commission], with the approval of the director of the budget, may extend the modified state cost of premium or subscription charges for employees or retirees not subject to an agreement referenced above and shall promulgate the necessary rules or regulations to implement this provision. [emphasis added]

Picking up its class-warfare cudgels, CSEA’s web-page also complains: “This increase is happening at the same time Governor Cuomo is giving New York’s MILLIONAIRES a massive tax cut”  — which is not true. A temporary three-year state tax increase hitting incomes as low as $200,000 will expire on Dec. 31, at which point the top marginal rate will revert to the permanent-law level in effect since 1997.  Cuomo did not propose extending the expiration date on this tax hike.

Members of the second-largest state union, the Public Employees Federation, are now voting on whether to ratify a contract almost identical to CSEA’s, which votes due to be counted tomorrow.

Meanwhile, the governor on Friday vetoed a bill under which the state would assume the retiree health obligations of the bankrupt New york City Off-Track Betting Corp.  Unfortunately, the governor didn’t definitely shut the door on what could be a very costly precedent, given the number of other regional OTBs (and, for that matter, entire municipalities) with financial troubles and retiree health legacy costs.  Instead, the governor noted that the Legislature had failed to make any appropriation for the health care takeover. The “fiscal impact” section of the bill sponsor’s memo for the bill said “none available.” In fact, when OTB imploded last December, it was reported that the city had estimated OTB’s retirement health costs would come to “$6 million a year and tens of millions during the next several decades.”

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- E.J. McMahon is the Research Director at the Empire Center for Public Policy.