New York state and more than 100 local governments face at least $600 million in extra pension costs after thousands of workers grabbed one-time incentives meant to shave former Gov. David Paterson’s last budget.
About 12,000 public employees seeking to retire early fueled a pension-application record in 2010, according to a report from state Comptroller Thomas DiNapoli. The state processed 30,772 requests for retirement benefits that year, about 50% more than average, according to the report.
Lawmakers passed the plan in May 2010, as Mr. Paterson, a Democrat, estimated fiscal 2010 and 2011 budget savings of $320 million. Combined, the extra cost to state and local governments that offered the inducements will be almost $650 million, and more if municipalities spread out their payments to the New York State Common Retirement Fund, according to officials in Albany. About $50 million of the added expense will be in interest.
“Generally, any savings in the short-term are offset, or more than offset, by added pension costs” from incentive programs over the long term, said E.J. McMahon, a senior fellow at the Manhattan Institute for Policy Research. The nonprofit research organization focuses on “ideas that foster economic choice and individual responsibility,” according to its website.
The state will pay $385.5 million to the pension fund, including interest, since it opted to spread out its payments over five years, said a spokesman for the Budget Division. Local governments face at least $264.4 million in extra payments, said a spokesman for Mr. DiNapoli….