Governor keeps pension proposal in his budget
Despite some controversy, Governor Cuomo is keeping his pension smoothing proposal in the budget. The plan lets municipalities and school districts lower their pension costs in the short term by essentially borrowing against future Tier Six savings. And although several local elected officials have said they would take advantage of the option, as Capital Tonight's Nick Reisman explains, budget watchdogs say it's a bad investment.
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ALBANY, N.Y. -- In face of high-profile criticism of his pension smoothing proposal for local governments, Governor Andrew Cuomo is doubling down the plan. Cuomo's 30 day amendments to his $142.6 billion budget would expand pension smoothing to three hospitals in Erie, Westchester and Nassau counties and the BOCES program.
“The pension smoothing idea is a financially intelligent way to get them short term assistance,” Cuomo said.
The plan allows local governments to lock in stable pension rates under the Tier Six program now at the expense of future savings. It's opposed by Syracuse Mayor Stephanie Miner, Cuomo's own state Democratic co-chair, who says the state needs to get serious on local government finances. But expanding the pension smoothing proposal has budget hawks concerned.
“It simply expands the risk to more parties. These hospitals in particular may not even exist for the whole 25 year period. At lot of things can change their so they're basically stealing supposed savings from a future that may not exist. It's just more of a bad thing,” said EJ McMahon, Empire Center for New York State Policy.
Cuomo defends his track record on helping local governments, noting that he had pushed successfully for the new, cheaper pension level as well as a cap on Medicaid growth.
“We have provided more mandate relief than any state administration has in modern political history in this period of time and fundamental fact is localities have to deal with their finances,” Cuomo said.
For now, it seems unlikely the proposal will be taken out of the budget as lawmakers have sounded supportive of the move.
“This is an important tool that the governor put forth that can be used or rejected by a locality,” said Independent Democratic Conference Leader Jeff Klein.
But more attention will soon be placed on Comptroller Tom DiNapoli, who could reject the pension smoothing idea. DiNapoli says he is studying the proposal, but this week told reporters he would be weighing in on the debate very soon.