Mon February 25, 2013
Budget Watchdog Group Urges Rejection of Cuomo's Pension Bail Out Plan
A leading budget watchdog group is urging rejection of a key component of Governor Cuomo’s budget plan. It would allow cities and schools to put off some payments to their pension funds.
The Governor’s proposal, known as the pension stabilization plan, would allow schools and municipalities to “smooth” out their pension payments over a 25 year period, by paying less now, but more later.
The Citizens Budget Commission has written a letter to Comptroller Tom DiNapoli urging him to reject the idea, saying it would “endanger the future financial viability of the pension plan”. The Commission’s Betsy Lynam calls it a “gimmick” .
“It’s not real relief,” Lynam said. “It could have higher costs for them later.”
Comptroller DiNapoli has said he has some “concerns” with Cuomo’s proposal, but has not yet issued a final judgment.
The Comptroller since 2010 has given local governments the option of a ten year borrowing plan to meet pension payments, paid back with interest. Citizen’s Budget Commission says while they initially opposed that plan, they think it’s still better than what Cuomo is offering.
Lynam says Cuomo and state lawmakers should instead get together with all the stakeholders, and find some solutions to the larger problem of financially struggling cities.
Syracuse Mayor Stephanie Miner, who is also the governor’s chosen State Democratic Party Co-Chair, has also criticized the pension stabilization option and, in an Op Ed piece for the New York Times, accused the governor of avoiding the reality of imminent “financial collapse” of major upstate cities.
Mayor Miner testified in Albany at a legislative hearing on the governor’s budget earlier this winter, saying she still had “more questions than answers”.
If the State Comptroller ultimately also rejects Cuomo’s budget plan, it would have face even more obstacles in the legislature. Assembly Speaker Sheldon Silver said, in an interview this month with public radio and television, that he won’t back the pension option if the Comptroller decides it’s not a good plan .
“If he said no, I think the courts have ruled that he’s the final arbiter on that issue,” Silver said at the time.
A spokesman for Governor Cuomo’s budget office, Morris Peters, says the pension stabilization plan won’t jeopardize the financial health of the state’s pension fund.
“The proposal was carefully designed to be fiscally neutral to the funds, and we included multiple protections to guarantee that it is,” Peters said in a statement.