Pension reform a major budget issue, one month before deadline

PHOTO: Karen DeWitt, NY Public Radio

With one month to go before the state budget is due,  pension reform remains a focus of discussion between Governor Cuomo and the legislature.

Governor Cuomo pulled back a bit from his plan to offer, for the first time,  a 401k style option for newly hired public workers, saying he’s “flexible”  on  it, but the governor does say he’s not bending on the need for a new pension tier with lowered benefits that produces “maximum amount of savings”.

Cuomo’s plan is opposed by state worker unions, who says it will erode retirement security for future employees. But it is supported by numerous local government leaders.  Many mayors and county executives say they will be squeezed to near bankruptcy by future pension obligations. The state’s constitution does not permit lowering benefits for current workers or retirees.

White Plains Mayor Tom Roach says his Westchester County City id facing increasing costs for health care, and a newly imposed 2% property tax cap has meant little  money left over for anything else. He says one of the only alternatives is to use a program enacted in 2010 that permits municipalities to borrow against the current state pension fund, in order to meet their current pension pay roll. But Mayor Roach says he thinks it sets a very bad precedent.

“The road to hell is paved in amortizing pensions,” Roach  said.

Senate Republicans have been supportive of Cuomo’s plans to bring down future public pensions costs, including a 401k option for new employees, but Assembly Democrats have not agreed.

Assembly Majority Leader Ron Canestrari says he thinks offering a 401k option would be a poor idea.

“I don’t personally like the 401k contribution aspect,” says Canestrari , who says the state pension fund is currently “sound”.

“I do not want to take any steps that would jeopardize that for future people,” the Assembly Majority Leader said.

Canestrari represents the Capital Region in the Assembly, where many state workers live.

Assembly Speaker Sheldon Silver has said he’s supportive of some pension reforms, including cutting down on abuse of overtime that leads to inflated pension payments, but has not yet publicly said yes to a new benefit tier.

Canestrari says he expects that Democrats will eventually agree to one, because, he says, no one wants to prevent he budget from being passed on time this year.

“The governor’s determined to make some changes,” he said. “And certainly we cannot turn a deaf ear.”

Canestrari points out that lawmakers just approved a new pension tier with lowered state benefits less than two years ago, and it might be better to measure the effects of that change, first.

The state budget is due April 1.