Report: New York State Legislators Adding to State Pension Woes

July 15, 2005 ( - A new report from the Empire Center for New York State Policy blames the state's legislature for adding to the $4 billion in costs already imposed on taxpayers by the government's pension plan, the New York Times reported.

According to the  report , the state’s legislature has passed at least 46 bills expanding benefits for groups of government employees, including a disability benefit for any NY City employee who ever claims a lung ailment resulting from cleanup of the World Trade Center site.   The city said that bill alone will increase pension costs by $50 million.

In a  FiscalWatch memo by E.J. McMahon, director of the Empire Center, he said there are still around 500 pension-related measures up for legislative approval that will cost taxpayers another $5 billion.  

In his memo, he said the state’s pension problems began in 2000 when legislature passed the largest pension increase in almost 30 years, contributing to a 44% increase in benefit payments.   Up to that point the market had helped the pension fund grow to the point where the state was able to practically suspend its employer contributions to the fund.   After passing the changes in 2000, though, the market sharply declined and costs to taxpayers for the pension fund rose around $3 billion from 2000 to 2004.

A proposed solution was passed into law that allowed most local governments to push their pension costs into the following fiscal year, to save $980 million, and to borrow to pay off costs that rose above a certain percentage, according to a New York Times report.   But, McMahon issued a  civil report in November of 2003 calling for changes to the pension plan to resemble the structure of a 401(k) plan with employees making contributions that employers match, to help relieve taxpayers burdens (See  Empire State Watchdog Group Calls for Benefit Cutbacks ).

In his most recent report he reiterated that costs could be much more predictable and reduced by taking this defined contribution approach to state pensions.   He asked the state to stop adding to the problem by saying, ” Rather than routinely reintroducing the public employee unions’ full wish list of pension benefit enhancements, it would be more appropriate for the Legislature to declare a moratorium on consideration of any new retirement benefit increases.”