Spiraling costs of employee benefits–as well as 4 percent pay raises–are squeezing the budgets of both New York State and New York City.

According to the state Division of Budget (DOB), employee benefits (pensions, health insurance, federal payroll taxes, unemployment insurance, etc.) now average 48.43 percent of salary (up from 43.90 percent during the past fiscal year).

That’s projected to jump to 54.47 percent next year and to a whopping 61.82 percent in 2012-13, or nearly $620 for every $1,000 of salary (here).

In New York City, Mayor Michael Bloomberg, “in attempt to pressure municipal unions to accept lower pensions for new hires,” has included no raises for city employees in his 2011 budget, the New York Post reports (here).

Bloomberg pointed out that fringe-benefit costs now average 75 percent of salaries–100 percent for the uniformed forces and 50 percent for civilian workers–and are running away from the cost of running the rest of the government.

Meanwhile, the city is earmarking an extra $600 million for pension costs pending the outcome of an analysis on projected life spans of city retirees. The analysis likely will lower the projected 8 percent rate of return for the city’s pension plans.

Mayor Bloomberg has already allocated $7.4 billion to fund the city’s five pension systems next year, up a worrisome 13 percent from the $6.6 billion being spent this year. When Bloomberg took office in 2002, taxpayers contributed just $1.3 billion toward the pensions of city workers.

Originally Published: NY Public Payroll Watch

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