Buried in one of the budget bills introduced by the state Senate last week was a provision that would add billions of dollars to New York City’s already sizable long-term pension liabilities.

The provision in question, among Senate amendments to the governor’s proposed Article 7 revenue bill, would increase disability retirement benefits for city police officers hired since 2009—and, by extension, also for city firefighters and corrections officers, even though their unions already have agreed to less costly benefit improvements.

By making the change part of their one-house state budget package—even though police disability pensions are essentially irrelevant to the budget—Senate Republicans are continuing to carry water for the city Patrolmen’s Benevolent Association (PBA), which has been fighting with Mayor Bill de Blasio over the disability pension provision for more than a year now.  Last year, the Senate passed the union’s preferred measure, and Senate leaders joined Governor Andrew Cuomo at a loud PBA rally in Albany to press for higher benefits. The bill died in the Assembly, however.

Since then, de Blasio has negotiated compromise deals with unions representing the Uniformed Firefighters Association and the Corrections Officers Benevolent Association, and hopes to do the same with the PBA.  The Senate’s inclusion of the PBA’s preferred language in its one-house budget is another attempt to end-run the mayor and the City Council, which hasn’t sent Albany a home-rule message requesting the change. Even worse, it would effectively supersede the proposed legislation implementing de Blasio’s union deals.

Background

As reviewed here, the dispute between de Blasio and the PBA boils down to a crucial difference between disability benefits available to officers hired since 2009, when then-Governor David Paterson vetoed a previously routine extension of the long-established Tier 2 pension plan for police and firefighters statewide. Injured Tier 2 officers are entitled to tax-free, accidental disability pensions equivalent to 75 percent of their final salaries. Injured Tier 3 members—including all officers hired in New York City since 2009—are now eligible for much less generous disability pensions equivalent to 50 percent of a smaller base salary, which must then be offset by half the value of any Social Security disability benefit for which they qualify.

Under de Blasio’s compromise with the firefighters’ and corrections officers’  unions, Tier 3 employees unable to perform normal duties after an injury can qualify for 75 percent disability pensions —in exchange for paying an added 3 percent per year of their own salaries to help offset the cost.* The Tier 3 disability pensions also will be based on lower five-year average salaries, excluding some other extra pay, among other modifications to the Tier 2 plan.

The city has estimated that the PBA-backed disability plan would add $400 million through the city’s 2019 fiscal year, with a 30-year impact totaling $6 billion, assuming it was applied to all four uniformed services (police, fire, corrections and sanitation). De Blasio’s compromise plan had a four-year fiscal price tag of between $200 and $250 million. (The Senate language also extends the more generous 75 percent disability benefit to police officers across the state, who are members of the New York State Police & Fire Retirement System administered out of Albany. However, this change would affect only a small handful of cops hired during a brief period in 2009, with potential impacts too small to register in statewide pension calculations.)

With less than two weeks to go before the April 1 start of the next state fiscal year, Assembly Democrats show no sign of abandoning the mayor. Nonetheless, the city has to be worried by the prospect of having an expensive pension disability issue thrown into the notoriously opaque and often unpredictable state budget-negotiation mix.

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* As noted in this pay-walled Dec. 28 article at the indispensable labor weekly, The Chief-Leader:

Those post-2009 (Fire Department) hires who were on the job at the time the deal was ratified have the option of not becoming eligible for the upgraded disability benefit if they don’t want to make the additional salary contribution. For those hired later, including a class of 300 probationary Firefighters that entered the Fire Academy Dec. 28, the higher contribution and the accompanying improved benefit would be automatic.