State Comptroller Thomas DiNapoli has marked the beginning of Labor Day weekend by announcing the next wave of increases in taxpayer-funded pension costs for local governments throughout the state (except New York City, which has separate systems).

Employer contribution rates will rise by 3.1 percentage points of salary for members of the state Police and Fire Retirement System (PFRS) and by 2.0 percentage points of salary for members of the Employee Retirement System (ERS) during 2013-14 fiscal rates, DiNapoli announced.   This brings the total contribution rates to 28.9 percent for PFRS and 20.9 percent for ERS employees.

Since 2010, the PFRS contribution rate has roughly doubled, and the ERS rate has nearly tripled.  Another round of pension contribution increases — or “upward pressure,” DiNapoli described it — can be expected next year, as the pension fund continues to dig its way out of its 2008-09 losses.

As for the impact on property taxes, DiNapoli’s release explained:

The property tax cap generally limits the amount a government entity can increase its annual tax levy to two percent or the rate of inflation, whichever is less. The cost of pensions above a change in the average contribution rate by more than two percentage points is excluded from the tax cap.

Since the ERS rate increase will be 2 percentage points higher than the previous year, no portion of an employer’s ERS contribution will be excludable from the tax cap. Since the PFRS rate increase is 3.1 percentage points higher than the previous year, the portion of the PFRS contribution equal to 1.1 percent of salaries will be excludable from the tax cap.

Watch this space for more follow-up analysis of the pension trend early next week.

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

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