“It’s much too high an assumption for us, I think it should be lowered,” Bloomberg said at a news briefing, according to Bloomberg News. “That’s going to require the city to put in more money. It’s very difficult to see where we could get the money to do that.”
Bloomberg said the real problem is the pension system itself, which provides defined benefits that can’t be reduced under guarantees the Legislature has placed in the state constitution. While it permits new, less-expensive benefit tiers for future employees, savings wouldn’t be realized for 10 or 15 years.
“We’ve been trying to get the governor and the Legislature to vote a fifth tier,” Bloomberg said, according to the news report. “They won’t do it unless the unions ask them to.” He contended that without a change the municipal workforce will shrink, because the city won’t be able to afford a payroll of the current size and cover retirement benefits at the same level as today.
The city’s five pensions hold almost $104 billion.
The news report said the city, which must balance its budget or face a state takeover of operations, has to close a $3.3 billion budget gap projected for fiscal year 2012, which starts July 1. The deficit is forecast to grow to $4.8 billion in 2014, while officials expect pension costs to increase to $8 billion that year from $7.6 billion now.Last month, the state pension fund cut assumed returns to 7.5% from 8% (see New York CRF Lowers Return Rate Assumption).