Governor Kathy Hochul gave a speech before a union rally last week, indicating that she is fully behind the efforts of unions to demolish the important fiscal reforms that were put into effect in 2011 to control the government pension time bomb.
It is obvious that the governor is pandering to the unions, seeking their support in an election year. But her caving to their demands will cost New York taxpayers billions of dollars over future years. This will have an extremely negative impact on the amount of property taxes that we pay throughout the state.
In 2011, the state was in the throes of a horrendous recession caused by the collapse of the real estate market. It came to light that pension obligations were imposing enormous fiscal stress on the state.
Something had to be done to put a limit on these runaway perks and benefits. Employees who had base salaries of $150,000 were racking up an extra $100,000 in overtime, which would be factored into their pension calculations. Thus, the base of their pensions was not their $150,000 salaries, but rather, the higher 250,000 salaries, which provided many retiring employees with six-figure pensions.
So the legislature, under the leadership of then-Governor David Paterson, created a new Tier 6, which imposed a different standard for employees hired in 2012 and beyond. It requires them to work longer to have their pensions vested and to contribute a reasonable amount to their pensions as they were working. It also capped the amount of overtime that could be factored into the pension to 15% above the base salary.
These were important reforms that, while not addressing the enormous benefits still going out to those hired before 2012, at least would give us some light at the end of the tunnel for the new hires.
But just last year, the governor and the weak legislature, both Democrats and Republicans alike, diluted Tier 6 by allowing their retiring employees to base their pensions on the last three years of service, rather than the last five, which would have a lower overall average salary.
But now Hochul and the legislature are pandering to the unions in seeking an undoing of the whole enchilada. That would mean less pension contributions from the employees and an earlier retirement than mandated on Tier 6.
These changes will force local governments to dramatically raise property taxes to fund these increases in the pension system.
Hochul and the legislature is hoping that the average voter isn’t paying attention to this sleight-of-hand. They know opposing the unions will automatically lead to union money spent against them in the next election.
So they signed on with the unions over the taxpayers. There’s only one way to counter the clout of the union and that is for average taxpayers to call their representatives and tell them how you feel about undoing these taxpayer-initiated reforms of 2011.