Feb 25th - 1:25 pm
The Citizens Budget Commission, a NYC-based budget watchdog organization, has added its voice to the list of those calling for rejection of Gov. Andrew Cuomo’s controversial pension smoothing proposal, warning it has the potential to “endanger the future financial viability of the pension plans.”
In a letter sent today to state Comptroller Tom DiNapoli and R. Michael Kraus, president of the NYS Teachers Retirement System Board, CBC President Carol Kellermann noted the existence of the short-term pension “amortization” plan adopted in 2010, which already provides cash-strapped local governments with some breathing room.
“Although the CBC opposed this legislation, it was approved and has been used by 137 local governments and the State to lower short-run pension costs,” Kellermann wrote. “Additional underfunding options are not advisable.”
“…The full funding of New York’s pension systems is a nationally-recognized strength,” she continued. “The Pew Center on the States ranked New York 5th among states for its healthy funding ratio, with assets covering 94percent of liabilities in 2010. Proposals to permit lower contribution rates, no matter how well intentioned, can lead New York to slide down the rankings to join states facing crippling unfunded pension liabilities such as Illinois and Rhode Island.”
“Briefly put, the Governor’s proposal endangers the pension funds by promising a stable rate of contributions over a 25-year period, but the State is unlikely to be able to keep that promise.”
In short, Kellermann concluded, the governor’s proposal won’t provide “meaningful, long-term relief for municipalities in fiscal distress, and endangers the viability of the pension funds,” which is pretty much the argument others – including Syracuse Mayor Stephanie Miner – have been making for several weeks now.
The Cuomo administration’s basic response to these critics has been: Your numbers are wrong, and you don’t understand our proposal.
DiNapoli has expressed concern over the governor’s plan, but has yet to formally reject it out of hand.
Feb 20th - 2:45 pm
Comptroller Tom DiNapoli just announced that the state pension fund’s rate of return in the 3rd quarter of the budget year was up 1.74%. That brings the total value of the fund to $152.9 billion dollars.
“The New York State Common Retirement Fund has seen steady growth in the second half of 2012 and is on pace for a positive return as we approach the end of the fiscal year on March 31,” DiNapoli said. “Independent reviews of the Fund reveal it is well-run and has a long-term, diversified investment strategy designed to produce positive returns in various market conditions.”
The governor’s recent pension smoothing plan has made the strength of the pension fund a hot topic of late. As Liz blogged about yesterday, Republican Gates Town Supervisor Mark Assini suggested that smoothing could lead to underfunding of the pension plan if the fund is mismanaged or the stock market takes another dive.
Assini is a guest on Capital Tonight this evening at 8pm.
Feb 19th - 4:33 pm
Mark Assini, supervisor of the Monroe County town of Gates and a financial analyst, has crunched the numbers of Gov. Andrew Cuomo’s pension smoothing proposal and come to the conclusion that, as he put it during a telephone interview this afternoon: “Stephanie is right; she is absolutely right to question this.”
The “Stephanie” in question is, of course, the infamous mayor of Syracuse – Stephanie Miner – who has been publicly clashing (she prefers “disagreeing”) with the governor’s plan to let cash-strapped municipalities like hers borrow against future Tier VI savings to help provide themselves some fiscal stability in the short term.
Assini, who is also president of the Monroe County Supervisors Association, ran the numbers of Cuomo’s plan using figures he gleaned from the governor’s own executive budget and state Budget Director Bob Megna.
The results for the City of Syracuse appear below, and as even a lay person like myself can see, they are not pretty.
“The first five years are golden, very favorable, very enticing,” Assini told me.
“After that, it gets a little ugly…it does smooth your pension rate for 25 years, assuming it all goes well. The problem is the normal contribution rate is going to drop dramatically, according to the governor, and after four or five years, if you can hold on, you’ll be paying less anyway.”
“…Even if the governor says this is a great program, there is a cost. Municipalities should go in with their eyes wide open.”
Assini noted that his figures only include the data of regular state employees, (because that’s the information provided by the governor to date), and not fire, police or teachers, who make up the bulk of most localities’ pension costs.
Conservatively speaking, he said, the cost to governments that opt for pension smoothing – the numbers that appear in the highlighted column in the spreadsheet below – could very well more than double once law enforcement and teachers’ pension costs are factored in.
There’s also an added wrinkle, which is that Cuomo’s plan assumes the pension fund will maintain a rate of return of 7.5% – a very optimistic assumption.
Assini sent me a list of key issues he thinks need to be debated about the governor’s plan, including:
1) The cost can be staggering to “borrow” over 25 years.
2) Those left in the Normal Pension Rate Option may end up subsidizing the big cities and counties that join the “stable rate” proposal.
3) This may underfund the pension…look at the revenue stream for the first (4/5 years). Remember this is like a big annuity!
4) With the bumps in year 5 and 10 this could get very expensive – especially if the pension under-performs causing the terms to stretch out 35 years or more.
5) Tier VI may change in 5 or 10 years. The Legislature has a history of making those changes to gain political favor.
UPDATE: First off, H/T to EJ McMahon, who wrote about Assini and his spreadsheets on Feb. 6. (For the record, Assini is a Republican).
Also, I received the following statement from Budget Division spokesman Morris Peters: “These numbers are not correct and are based on faulty assumptions and a misunderstanding of the proposal.”
Feb 8th - 1:43 pm
…That was lead of David Rubin’s column in today’s Syracuse Post-Standard, in which he sided with the city’s mayor, Stephanie Miner, in her ongoing verbal battle with Gov. Andrew Cuomo over the governor’s controversial pension smoothing proposal.
Tell us how you really feel, Mr. Rubin.
It’s a bit of a stretch to compare Cuomo’s borrow now, pay later pension plan to then-President Ford’s 1975 denial of federal funds to nearly bankrupt New York City. (And for the record, Ford never actually uttered the words “drop dead” – that was a moment of creative license by the Daily News).
It’s also not at all unusual for a local newspaper columist to support his mayor when she tangles with a much bigger fish, especially when almost no one else has been willing to take on the popular and powerful governor.
But Rubin’s point – basically that Cuomo’s “this or a control board” response to Miner’s public questioning of his plan was overkill – is well taken. And Rubin also doesn’t stop at this particular incident in calling out the governor for being what he calls a “kick the can down the road” politician.
“What the governor offered provides a clue to his management style,” Rubin wrote. “The Mayor’s response suggests he has met a foe he cannot bully.”
“…While he is relentless in trumpeting his successes, his record is replete with can-kicking of this sort. Where is the independent redistricting plan he promised? Where is the comprehensive ethics legislation? Where is a decision, any decision, on hydrofracking? Most important, where is the real mandate relief from Albany’s sweetheart contracts with public employees?”
“…What lessons should we learn from this sad story? Cuomo should focus on the job he has, and not the job he wants. He should realize that if he runs for president as the governor of a state whose cities are falling apart, he loses. Finally, he should recognize who his friends are – they are the independent ones with ideas, not the ones who bow and scrape.”
After Miner went public with her criticism of the pension smoothing plan, a whole host of people have felt sufficiently comfortable (safe?) to express similiar concerns – especially since the mayor his Cuomo’s hand-picked state Democratic Party co-chair, and no retribution has (yet) been exacted on her for speaking her mind.
We’ll see how long this lasts.
Jan 30th - 1:24 pm
ICYMI: For the moment, Assembly Speaker Sheldon Silver is declining to choose sides in the fight over pension smoothing, which has divided his former Democratic conference member, state Comptroller Tom DiNapoli, and Gov. Andrew Cuomo.
But he’s also making clear that he believes DiNapoli – not the governor – gets the final word on this subject as the sole trustee of the state pension fund.
“The comptroller has indicated that he is studying the proposal and analyzing it,” Silver told me during a CapTon interview yesterday. “I’d like to wait and see what his analysis shows.”
“I am very sympathetic to smoothing out and reducing the contributions of municipal governments to the pension system if they are actuarially sound, if they make sense. So, this is the governor’s attempt to do that. To alleviate the pain. To alleviate the property tax burden, in effect, on local governments. And, you know, he has come forth with a good faith effort.”
“If in fact the comptroller, who is the fiduciary of the pension system, can see a way clear to do something on those costs – I know that is his intent is to reduce those contributions – and if he can come up with something good, I can support it. But I recognize in the end that the comptroller is the fiduciary and has to make sound investments. I don’t want people who are paying into the system to come up 20, 30 years from now be told: Sorry we don’t have the money to give you the pension you are entitled to.”
Comptroller Tom DiNapoli, as you’ll recall, said (in a statement to the New York Times) that he had “serious concerns” about Cuomo’s budget proposal to allow cash-strapped local governments to borrow against future projected Tier 6 savings to provide more predictability in short-term pension payments.
The comptroller, who has already established a pension amortization program in which a growing number of municipalities are participating, did not reject Cuomo’s proposal out of hand, and yesterday he seemed to be backtracking a bit after Cuomo took a shot at him on the radio.
However, others who have publicly expressed opposition to the plan – most notably Syracuse Mayor Stephanie Miner – are standing firm. (Miner, who is also Cuomo’s hand-picked state Democratic Party co-chair, is going out of her way to stress that the disagreement is not a signal of personal animosity between herself and the governor).
Silver said much the same thing during an interview with public radio’s Karen DeWitt, adding: “If (DiNapoli) said no, I think the courts have ruled that he’s the final arbiter on that issue.”
Aug 23rd - 2:24 pm
After announcing back in March that it was halting all political contributions and endorsements until further notice in retaliation for passage of Tier 6, the state’s largest public employees union, CSEA, today released a limited number of legislative endorsements of candidates who “stand with working people.”
“Many lawmakers who have long enjoyed CSEA support will not have it this year because they abandoned the working people of this state,” said CSEA President Danny Donohue. “CSEA is holding lawmakers accountable for their actions. The CSEA endorsement has to be earned or else it has no meaning.”
“…CSEA members will aggressively campaign for our endorsed candidates,” Donohue said. “Just as important, beyond this election we will work to mobilize members to be even more involved in the legislative process – regularly communicating with elected officials and challenging them when they don’t do what’s right for working people.”
“Limited” translates into 49 Assembly candidates – a mix of incumbents and challengers that’s heavy on Democrats, but does include a few token Republicans (Mark Johns, Claudia Tenney) – and 16 Senate candidates, all of whom are Democrats.
Oddly, CSEA is backing just two of the four IDC members – Sen. Diane Savino and Jeff Klein, but not David Carlucci or Dave Valesky (who doesn’t have a challenger anyway). The IDC members were the only senators to vote “no” on Tier 6, while the Democrats all walked out of the chamber to avoid casting a vote one way or another.
Aside from backing zero Senate Republicans, CSEA has thrown its support to Democratic candidates in two races for open seats – Ricardo Montano, who is running against GOP Assemblyman Phil Boyle for the seat being vacated by retiring Sen. Owen Johnson; and Ted O’Brien, who’s facing off against Assemblyman Sean Hanna for retiring Sen. Jim Alesi’s seat.
The union issued no endorsement in the race for retiring Sen. Suzi Oppenheimer’s seat, where Democratic Assemblyman George Latimer is dueling Republican Bob Cohen. Latimer was one of eight Assembly members who were not present for the Tier 6 vote.
In the 15th Senatorial District, CSEA sided with Democratic Sen. Joe Addabbo, who is likely to face a tough challenge from New York City Councilman Eric Ulrich, assuming he defeats attorney Juan Reyes in the Sept. 13 GOP primary. In the 40th Senatorial District, the union is supporting Democratic newcomer Justin Wagner against GOP Sen. Greg Ball.
In the 60th Senatorial District, where GOP Sen. Mark Grisanti is fighting for his political life, CSEA went with Hamburg Democrat Michael Amodeo, who is facing off against former Erie County Legislator Chuck Swanick (who has the Conservative Party’s nod) in the September primary.
CSEA’s congressional endorsements are straight down the Democratic line. The union also is backing Sen. Kirsten Gillibrand in her first question for a full six-year term.
Aug 22nd - 1:07 pm
ICYMI: AFL-CIO President Mario Cilento joined me on CapTon last night to review the details of his organization’s endorsement list, which was the result of a two-day convention in Manhattan this week.
The congressional picks brought no surprises – Democrats right down the line. But the legislative selections brought a few eyebrow-raisers, including a host of “no endorsements” for freshmen Assembly Democrats and Senate Republicans who had the temerity to vote – along with many more seasoned members of their majority conferences – “yes” on creating a sixth tier in the state pension fund.
I asked Cilento if this move was intended as retaliation, or to try to scare the newbies into voting more in line with labor interests in the future. He explained:
“There was really no track record of saying: We’ve worked with working men and women, we have a 90 or 95 percent voting record and have that long relationship.”
“If someone came right out of the box and voted against what we felt were the real needs and concerns of working men and women last session, then that didn’t bode well, we thought, for a future relationships. For the most part, it came from candidates who were just coming into office without a long track record.”
“…I never liked the word retaliation. I think that’s a little harsh. But I think for us, it’s you have to show us something. You have to prove it. We have to prove ourselves every day when we go to work. We expect political leaders in the sate to prove themselves to us, and to in fact earn our endorsement.”
The AFL-CIO actually took a pass on a number of Senate races, but did back ten Republican incumbents: Ken LaValle, Kemp Hannon, Charles Fuschillo, Majority Leader Dean Skelos, Andy Lanza, Jim Seward, Deputy Majority Leader Tom Libous, Joe Robach, George Maziarz and Mike Nozzolio. The federation backed none of the GOP candidates challenging Republicans or running for contested open seats.
Apr 18th - 1:07 pm
Last night on the show featured my story on the fiscal troubles faced by local governments across New York state, with both Yonkers and Syracuse turning to former Lt. Gov. Richard Ravitch for help.
Ravitch, an architect of previous solutions to public financing emergencies, was upbeat in his assessment of whether municipalities can pull through this time around.
In an interview, Ravitch said a fix on the scale of the bargain reached to pull New York City out of its financial quagmire in the 70s is needed.
“Everybody did with less, paid more taxes, deferred the repayment of debt, society came together,” Ravitch said.
Looking back on those years is a popular thing to do these days.
Indeed, when Gov. Andrew Cuomo took office, he distributed copies of “The Man Who Saved New York” — a biography of Gov. Hugh Carey who helped carry out the rescue of New York City’s finances at the time.
Both Yonkers and Syracuse face large budget deficits, while the public debt of the city of Utica and Rockland County have been downgraded. Suffolk County has recently declared a fiscal emergency after County Executive Steve Bellone took over.
As documented recently in The New York Times and Wall Street Journal, the cash crunch is largely due to the growth of pensions, reliance on one-shot budgetary gimmicks and advances in state aid to cover costs.
“The question that I think we all have to face is how we’re going to pay for the benefits that we promised public employees, how we’re going to pay for the kind of health care system that we’ve created. Those are the two big question and we have to figure those out,” Ravitch said.
The Legislature and Cuomo signed off a new, less generous pension tier that saves nearly $80 billion over 30 years and, in the short term, say they’re focusing on required state spending.
A h/t is due to Grace Rauh at NY1 for gathering the sound.
Mar 19th - 11:18 am
Furious over the passage of Tier VI, CSEA, the state’s largest public employees union, has made an unprecedented decision to halt all political contributions and endorsements for the foreseeable future.
The union plans to use this pause to “re-evaluate our political relationships and make judgments about the criteria we use in determining who has earned and deservesour support,” according to a statement issused by CSEA President Danny Donohue, who added: “It is also important to consider how our support is valued.”
Donohue made it clear this decision is a “direct result” of the deal struck last week by Gov. Andrew Cuomo and legislative leaders, in which organized labor believes the governor “traded” his approval on the LATFOR redistricting plans for lawmakers’ support of pension reform.
“CSEA will also use this time to consult with our brother and sister unions and other allied community organizations about how we can collectively address the disrespect and disenfranchisemen tof working people by our state’s elected officials,” Donohue continued.
“New Yorkers should understand that lawmakers’ actions did not result from meaningful debateand good judgment – it resulted from political expediency – and it will have harmful consequences to people and communities now and for a long time to come.CSEA will seek better ways to hold elected officials accountable and ensure that the voices of working people will be heard and addressed in New York state.”
It has been clear for some time that labor and Cuomo has been at odds. Even during the 2010 campaign, some unions – including CSEA – withheld support from Cuomo, thanks all his talk of public employee pay freezes, union givebacks and government spending reductions.
Donohue even went so far as to say back in August 2011 (right after a difficult contract negotiation process) that CSEA would be willing to consider a challenger to Cuomo in the future, noting that the union had bucked the traditional Democrat-labor alliance and backed Republican Gov. George Pataki in the past.
The conventional wisdom is that Cuomo will have to tack left in the coming years if he indeed wants to run for president in 2016 – although not everyone agrees with that theory, reasoning that Cuomo’s approach with the state worker unions signals a new reality for Democratic presidential candidates, particularly those currently serving as governors and tackling big financial problems in their respective states.
In the short term, CSEA’s decision has a greater impact on the Legislature, since this is an election year for lawmakers and not the governor. (He doesn’t have to run again until 2014).
It’s particularly problematic for the Senate Republicans, who have enjoyed some labor support in the past and will need all the help they can get as they battle in a presidential year to retain control of the Senate. The Democrats, as you’ll recall, didn’t cast any votes for Tier VI – with the exception of the four-member IDC, which voted no in a bloc – because they walked out of the chamber to protest the redistricting bill.
Keep in mind, however, this isn’t the first time a union has undertaken some saber-rattling. If I remember correctly, the AFL-CIO threatened to withhold legislative endorsements back in 2008 due to anger over the property tax cap, but later relented.
UPDATE: A reader takes issue with my suggestion that this might impact legislative races, sending a link to CSEA’s contribution history and writing:
“CSEA is not a major player in the statewide game. They contribute mainly on the local level, (although) in 10/2010 and 11/2011 they did give DACC’s 2 big checks: $93,000 and $50,000. I’ve never seen them put troops in a race. Donohue is a lot of hot air and sold out all the other unions when he gave in to 4 “0″s and set the awful precedent. The politicians won’t miss their participation.”
Mar 15th - 8:13 am
CSEA President Danny Donohue reacted, predictable, with a pox-on-all-your-houses statement following the Assembly’s early-morning passage of the Tier VI pension reform bill, but directed his harshest criticism at Gov. Andrew Cuomo
“Tier 6 shoved down the throat of state legislators fixated on their own self-preservation, will be devastating to 99 percent of New Yorkers,” Donohue said.
“This deal is about politicians standing with the 1 percent – the wealthiest New Yorkers – to give them a better break while telling nurses, bus drivers, teachers, secretaries, and laborers to put up and shut up.”
The release noted that there will be no immediate savings from the creation of this new tier, which the Cuomo administration estimates will result in $80 billion saved over the next three decades.
Donohue criticized Cuomo’s “scorched earth pursuit” of his political ambition, and said he has given new meaning to the term “bully pulpit.”
“No good will come from this.”
The real question: How much revenge will the unions exact on the Legislature in this key election year – particularly in the Senate, where Democrats and Republicans are gearing up for a re-match in the battle for control of the majority.
Within hours, PEF members are expected to descend on the Capitol for a noon rally against Tier VI.
Given the dead-of-night/early-morning developments – Happy Sunshine Week, everyone! – it’s a safe bet this is going to be a pretty rowdy get-together.