The first in a series of messages from NYS Assembly Candidate and Suffolk County Legislator Daniel P. Losquadro about the path to Reforming New York State Government.
Many states, New York included, now concede that they have promised their workers pensions they cannot afford and are cutting benefits to soothe angry taxpayers and attempt to close gaping budget shortfalls.
And here in New York, just when we thought we had heard the worst, came the news from the State Comptroller a short time ago that he is lowering the assumed rate of return for the state pension system. This bad news came just after the state announced and adopted a plan to borrow from the state pension fund to make constitutionally required payments to the same fund — with interest.
And just this year, - despite months of wrangling about how to close a black hole of a budget deficit -- there were, according to The New York Times, 50 bills before New York’s legislature that would add to pension benefits.
You can’t make this stuff up.
There is one sad truth in all of this: we all end up paying more. Local governments will have pay dearly to make up the shortfalls suffered by the pension system and that means, you guessed it, higher taxes.
Thank you, Albany.
How do we move forward without depriving retirees and existing employees of benefits they have already earned?
New York must immediately fix its pension laws to enable public employers to implement lower-cost benefits for new employees. We must also immediately eliminate the loopholes that inflate employee’s wages used to determine benefits.
I know you’ve read and heard about New York State enacting pension reform in the past. Late last year’s headlines proclaimed “landmark reforms” that will “save billions.” The problem? These new “reforms only created yet another non-sustainable ‘tier’ in our already crippled system. Worse yet, the state will now be taxing the contribution of those very employees whose system they purported to reform.”
As a Suffolk County Legislator, I represent thousands of single parents and families who work two jobs -- assuming they still have jobs -- to earn barely enough to save for retirement, if at all.
Those same parents and families would happily agree that a hardworking police officer deserves every dime of his or her pension for risking life and limb; or a teacher, or state or county worker for that matter who has put in their time, worked hard and wishes to retire. But, the relevant question isn't whether anyone deserves that benefit, but whether we can afford it.
We can start to fix this problem now by making smart reforms and implementing retirement benefit packages similar to those used by the private sector for more than two decades. We should also be tapping the private sector expertise to help develop a new program and new rules – rules that are fair to workers and to taxpayers.
In New York we must:
- create a pension plan for new public employees similar to a 401K plan
- eliminate the use of overtime and vacation time for calculating a public employees’ pensions
- eliminate waivers that allow retired public pensioners to sidestep the state law that caps any additional state salary at $30,000 when one is already receiving a state pension.
How are other states battling the crisis?
A bold solution was introduced in Utah by Republican State Senator Dan Lijenquist and signed into law in March of this year.
The Utah reform changes the pension system for public employees to a fixed defined state contribution. A fixed contribution means the state no longer has to raise or lower contributions to the fund in response to market fluctuations. The state contribution is fixed each year at 10% of the employees’ salary whether fund investments are doing well or poorly. If the investments take a dive and earn too little to sustain the guaranteed benefits, the state is not obligated to pay more that the fixed 10% and the employee would have to make up the difference out of his or her salary. If the investments do well, the state still invests the 10% annually and if there is anything over and above the amount needed to meet guaranteed benefits, the worker gets to invest the difference in a personal 401(k) according to parameters set by the state retirement system. Workers are not permitted to borrow from or against the 401(k). Workers can also opt out of the system and have the state forward its contribution to the employees 401(k).
While this might not be the solution to New York’s problem, an innovative plan like this is worth considering and demonstrates that with cooperation and independent thinking reforms can be achieved.
Share your thoughts: danforassembly@danlosquadro.com
NY Post Article
ALBANY – Even while telling New Yorkers to pony up $1.3 billion more next year to cover soaring pension costs, Comptroller Thomas DiNapoli is advertising on his official Website how government workers can game the system.
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