New York State, its local governments and its public authorities have promised their employees well over $200 billion in future retiree health benefits that no money is set aside to pay for, as we documented in our “Iceberg Ahead” report in late 2010. This unfunded liability translates into an enormous and growing debt that current and past generations of taxpayers have pushed onto future generations.
The agreed-upon Tier 6 bill restores much of the benefit reduction originally proposed by Governor Cuomo–especially for career employees.
Opponents of the proposed Tier 6 pension reform like to point out that the average annual benefit paid by the state pension system in 2011 was $19,151 — “not a big amount for someone whose [sic] gave a lifetime of service,” as the Public Employees Federation (PEF) puts it in a letter and blast fax to state legislators.
The inevitable is now official: Assembly Speaker Sheldon Silver today said Governor Cuomo should “work out” his proposed Tier 6 pension reform with public-sector labor unions. As the governor himself pointed out just last week, the Legislature effectively prefers to give unions a “veto” over any change–which, if it sticks, means there will no meaningful change at all.
The proposed Tier 6 pension for a general employee of state and local government who retires at age 65 after 30 years of service would be 50 percent of final average salary. The Tier 5 pension at the same age and for the same career duration is 60 percent of final average salary. In other words, measured on this basis, the Tier 6 benefit will be 17 percent less than the Tier 5 benefit.
It sounds like Governor Cuomo may be wavering on the optional defined-contribution (DC) retirement plan that was the single most innovative aspect of his Tier 6 pension reform proposal.
Traditional public employee pension programs in New York State have become unaffordable for taxpayers—while denying workers the ability to choose more flexible approaches to retirement planning.
In the wake of the nation’s worst economic downturn since the 1930s, New York State’s counties, municipalities and school districts face intense budgetary pressure. To bring spending into line with tightly constrained revenues, especially under a newly imposed property tax cap, local governments need more than ever to control rising employee salary and benefit costs.
New York State has a new law capping annual increases in local government and school district property taxes. Effective in local fiscal years starting on or after Jan. 1, 2012, the law limits the annual growth of property taxes levied by local governments and school districts to 2 percent or the rate of inflation, whichever is less.
Governor Cuomo may seek to extend higher state income tax rates in top brackets under the guise of a tax reform or restructuring that might also involve a tax break for middle class, according to a report in today’s Wall Street Journal.
Governor Andrew Cuomo is making a big deal out of the failure of a congressional “super committee” to produce a deal on reducing the federal budget deficit. This is supposed to trigger $1.2 trillion in across-the-board federal budget cuts over a 10-year period beginning in 2013—which, Cuomo said yesterday, could translate into $5 billion in lost federal funding for New York.
Directional drilling and hydraulic fracturing have unlocked vast new reserves of natural gas in the United States. Development of these resources is now well under way in Pennsylvania and West Virginia. Unlike their neighbors to the south, however, New York residents are not directly benefiting from natural gas development as the result of a government-imposed moratorium, itself a response to environmental concerns surrounding hydraulic fracturing.