Senate moves ANTI-mandate relief

by E.J. McMahon |  | NY Torch

new-york-state-senateThe Republican-controlled state Senate Civil Service and Pension Committee today approved a bill (S.3320) that would lock in tens of billions of dollars in unfunded healthcare liabilities for state and local government retirees.

It’s the second time in as many years that the Senate has advanced this measure, sponsored by state Sen. Andrew Lanza, R-Staten Island—whose constituents pay taxes to a city government with a $93 billion unfunded liability for retiree health costs.

It’s also the second time in a month that the Civil Service and Pension Committee has reported out a bill designed to prevent government employers from attempting to restructure unaffordable healthcare liabilities without first bargaining with unions (which, of course, strenuously resist changes).  In early May, a similar bill limited to retired police and firefighters, sponsored by Sen. James Sanders, Jr., D-Queens, was reported to the floor; it is now on third reading (i.e., one step from a vote) on the floor calendar. Both bills are opposed by the state Association of Counties and the Conference of Mayors.

This year there’s also an Assembly version of the Lanza measure (A.3539), sponsored by Assemblyman David Weprin, D-Queens. That bill is still pending in the Assembly Governmental Employees Committee. But with two weeks to go in the session, once the Lanza bill (inevitably) reaches third reading on the Senate calendar, it will be positioned to pass on virtually no notice, and the Assembly could quickly follow suit.

I explained the problem with the Lanza bill in this op-ed a year ago in the New York Post.  Money grafs:

Retiree health insurance (also known as other post-employment benefits, or OPEB) amounts to a $250 billion unfunded liability for the state, its public authorities and localities.

New York City’s share alone comes to $93 billion, according to its most recent comprehensive financial report.

And the cost for this isn’t covered out of multi-employer pension funds but out of current budgets. Beyond this year’s premiums, future New York taxpayers are on the hook for the rest — a quarter of a trillion dollars’ worth of benefits, due to flow for decades to come.

State lawmakers should be urgently looking for ways to reduce this burden at every level of government.

Instead, with less than a week to go in the session, a bill poised for a vote on the Senate’s floor calendar would virtually guarantee current levels of retiree health coverage for everyone on a public payroll in New York state.

Sponsored by Sen. Andrew Lanza (R-SI), the measure would bar any reduction in health benefits for retirees — including, by implication, active employees who haven’t retired yet.

Lanza’s proposal would build on the bad precedent created by then-Gov. David Paterson’s December 2009 Tier 5 pension bill, which pre-emptively locked at least $38 billion of long-term retiree-health-care liabilities into school-district collective-bargaining agreements.

Public-sector unions representing non-school employees have been seeking the same sort of “protection” for years, but earlier versions of the Lanza bill were vetoed by Govs. George Pataki, Eliot Spitzer and Paterson.

Tracking the committee

In the video feed of this morning’s committee meeting, the chair, Sen. Martin Golden, R-Brooklyn, can be heard indicating there had been “two AWRs,” although he didn’t say which committee members had cast them. The acronym stands for “aye without recommendation” and is best translated as “ambivalent, but unwilling to take a firm position against.”  There appeared to be no negative votes.

Needless to say, it’s hard to square this with the Senate majority’s (commendable) support for making the state’s local property tax cap permanent. Measures like this one—designed, at the behest of labor unions, to make it extremely difficult for counties and municipalities to restructure retiree health costs along more affordable lines—are completely inconsistent with any standard of fiscal responsibility, much less fiscal conservatism. This in-depth Empire Center report on the retiree health care issue explains the issue in more detail.

More where this came from

The two “anti-diminution” measures are among dozens of proposed pension or benefit sweetener bills pending in the Legislature in the final weeks of session. The most expensive on the list, S.5656, would raise tax-funded employer contributions by $421 million over the next five years to begin financing increased disability retirement benefits for New York City police and firefighters, over the (fumbling, belated, ineffective) opposition of Mayor Bill de Blasio.  The Senate last week passed another version of that bill (S.5596), which will raise tax-funded employer contributions by $65 $407 million over the next five years.

Here is Empire Center’s quick-and-dirty spreadsheet/cheat-sheet of pending pension sweetener bills, excluding those affecting only individuals.

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