New York taxpayers who already are hit by rising pension costs for retired public workers are about to get socked again.
New York State Comptroller Thomas DiNapoli said Friday that public pension contributions from the state, local governments and schools will rise another 2 percentage points. That means employers will have to contribute an amount equal to almost 21 percent of salaries to the pension fund instead of less than 19 percent. That difference adds up fast.
Driving the cost is the continued recovery from the pension fund's huge losses on Wall Street during the collapse in 2008 and 2009. The pension system is funded by employer and employee payments that are then invested. But the pension fund is rebounding slowly with the economy.
The state public pension "has experienced solid gains the last three years and continues to rebuild from the substantial financial market loss of 2008-2009," DiNapoli said.
The New York Conference of Mayors said the increase announced Friday means pension costs in dollars to governments and schools have nearly tripled since 2010.
DiNapoli said the rate increase is lower this year than a year ago, but increases will be needed through the 2014-2015 fiscal year to meet the legal obligation to project the fund used by millions of retirees. This phased-in absorption of the Wall Street losses was chosen over paying shorter term but higher spikes in government payments.
"It isn't easy in these difficult economic times, but fulfilling our obligations has meant that New York has not had to play catch up like other states," DiNapoli said.
"When combined with other mounting fiscal pressures on local governments, these devastating increases in pension costs will undoubtedly lead to further increases in property taxes and cutbacks in essential municipal services," said Peter Baynes, executive director of the New York Conference of Mayors and Municipal Officials.
In 2011, DiNapoli sought to provide more information earlier to help local governments and schools budget for the major cost driver. He is providing projections of costs six weeks earlier now.
NYCOM also is pushing for more help that would allow governments to pay a predictable annual amount long term, regardless of whether Wall Street performed well or poorly.