Cuomo's Costliest Problem: Pensions

"The task before him is gargantuan"

Andrew Cuomo,  New York’s 56th governor, has taken decisive steps toward confronting the huge financial problems facing the state of New York.

He is about to impose a wage freeze on state employees.  And, on just his third day in office, he cut his own salary and those of his senior staff by 5%.

Carol Kellermann of the Citizens Budget Commission told me: “His words and his actions are symbolic but meaningful. Certainly reducing the budget by a million or so dollars is a step in the right direction, although obviously, with a 10 billion dollar deficit, more painful steps will be necessary.”

Kellermann added that she was “very encouraged” by the Governor’s plan to cut salaries “but the task before him is gargantuan. He needs to get state employees and their union leaders to sacrifice for the sake of us all.”    

I spoke to Dick Dadey of the reform group, Citizens Union. “I think the governor is  starting out on the right note," he said.  "He’s not only talking the talk but, by asking his senior staff to take a pay cut, he’s walking the walk---taking all the right steps to begin reining in costs. “
Another reformer, Blair Horner of the state’s Public Interest Research Group, said of the new governor’s actions: “These were political moves and good ones. But what’s really going to matter is how this translates into public policy on many issues.”

Some further light may be shed on that in Cuomo’s state of the state address on Wednesday.

What is certainly clear is that the new governor has hit the ground running. And he seems ready to take on problems that go back many years.             

And these three civic leaders warn that it’s only the beginning.

Looming over the taxpayers and the new administration is the staggering cost of pension benefits. That cost is soaring, even as the economy falters.

The tax-funded contributions to the teachers retirement system, Long Island Assemblyman Michael Fitzpatrick estimated in and op-ed in today's the Daily News,  will more than quadruple over the next five years and contributions to the state retirement system will double. Pension costs for New York City, after rising tenfold over the past decade, will increase by about 20 percent over the next three years.  

It’s an untenable situation and Cuomo and his advisers know it. The increase in pension costs over recent years is a direct result of the long political partnership between labor leaders and the leaders of the Legislature. That partnership---critics would call it collusion---is costing taxpayers many billions.

If the state can’t afford this fantastic pension bill, how can it be handled? Certainly, it’s not easy to get away from a contractual obligation but it’s been suggested that state workers make some contribution to their own pensions to make the burden easier for the government. According to the Census Bureau, the benefits in the government systems are more than twice as high as similar benefits in the private sector.

Andrew Cuomo has hit the ground running. But the battle is just beginning.

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