There is some good news coming out of the state comptroller's office as we learn there will be a decrease in the average employer contribution rates to pension funds. Capital Tonight's Nick Reisman has more on what it all means for taxpayers.
ALBANY, N.Y. -- As local governments across the state face tightening budgets and a cap on property tax increases, taxpayers will see some modest relief next year on the cost of pensions. Comptroller Tom DiNapoli announced slight declines in the average employer contribution rates for police, fire and local employee retirement systems in the 2014-15 fiscal year.
"We are seeing a decrease in the contribution rate. It's a modest one, but we're going to work hard to keep that trend moving in that direction and I think that will be welcomed by our local officials," said New York State Comptroller Tom DiNapoli.
The average contribution from a local government to the Employee Retirement System will decrease by 0.8 percent of payroll costs while for the Police and Fire Retirement System, the average contribution will decrease from 1.3 percent of the payroll. Nevertheless, local governments are still paying more than 20 to 30 percent on average for the cost of pensions, an explosion of growth over the last 10 years at a rate in which many villages, towns, cities and counties cannot keep pace.
"It's still a huge number, but we've peaked and that's a good thing for counties," said Mark LaVigna, Association of Counties Spokesperson.
Local governments still face increasing demands on the cost of health care as well as other built-in mandated spending required by Albany while state aid has remained flat for the last several years.
"To finally have a pension figure that's a little bit lower rather than going up 20, 30, 40 percent a year, which has been will be beneficial. But again, a lot more needs to be done for local governments to be sustainable," said Peter Baynes, conference of Mayors Executive Director.
The decline in the average contribution rate for the first time since 2010 was made possible in part by a cost smoothing mechanism that was put in place. But whether the declines in contribution rate can continue is not a guarantee.
DiNapoli said, "If the markets stay reasonably stable, my assumption is certainly, for the short run, we're going to see a downward trend, but no one has a crystal ball as to what the returns are going to be."