Author: Larry Littlefield

As I wrote previously, there is a dispute among Generation Greed as to how to diminish the quality of life and standard of living of younger generations, and the future of the state, to pay for rich and long retirements they have promised themselves. Some want cut the pay and benefits of new workers relative to those who came before, while presumably allowing all public employees, including those with sweeter deals, to do a less good job in exchange. Others want to defer the cost of all those special pension deals and favors to the future, forcing future taxpayers to pay for them, preferably at a time when Generation Greed is drawing retirement income, which is exempt from state and local income taxes in New York. Simply not paying the cost of the pensions until later is the choice advanced by Comptroller DiNapoli, and it was evidently passed by the New York State Assembly without any public debate about its fairness some time ago. But yesterday there was a surprise.

From today’s New York Times: “According to the analysis, pension contribution rates for civilian employees in local governments will soar to 30.3 percent by 2015, from 7.4 percent of payroll this year. Contributions to police and fire department retirement plans are expected to increase to 41.1 percent in 2015 from 15.1 percent this year…If there is any silver lining, the trends appear to have somewhat curbed Albany’s appetite for extending pension enhancements to public employees to placate labor unions, which wield enormous clout and lobbying dollars in the capital. ‘I’m alarmed,’ said Assemblyman Peter J. Abbate Jr., a Brooklyn Democrat and the chairman of the Assembly’s Labor Committee, who is one of the capital’s more reliable union allies. ‘Bluntly,’ he said, ‘I’ve spoken to a lot of the union leaders and their lobbyists and said I don’t want to see bills that will cost the counties and the state millions of dollars.’”

Public services are doomed. This discussion doesn’t even include other retiree benefits such as health insurance, or all the debts people like Abbate have foisted on the next generation, future revenues that have been encumbered, costs that have deferred, infrastructure that has not been maintained. This is exactly the combination that produced the 1970s disaster for NYC, but now it will be the 1970s in the whole state. Alarmed? He and his backers, fellow members of Generation Greed, should be celebrating if their goal is to destroy the state. And I don’t want to hear about the “shared sacrifice” of slashing the pay and benefits of future public employees to pay for this, in exchange for having all workers – including those current – do a less good job. I’m not fooled by this. “Bluntly,” in taking and taking and not caring about the resulting harm to others, you any those like have done and are evil. PUT BANKRUPTCY ON THE TABLE.

Back when the Brennan Center was releasing reports showing how undemocratic and phony the New York State legislature is, I recall reading comments from Sheldon Silver and Joe Bruno, its leaders, in the newspaper. They didn’t come right out and say it, but reading between the lines they pretty much implied that if New Yorkers knew what those who grab and perpetually hold sinecures through our non-elections were like, they would be glad there were only three men in the room when anything important was at stake.

I bring this up without comment, other than to point out that decisions to sell out New York’s future (now the present) to free up money to hand out to interest groups in the present (now the past) were generally bi-partisan and had the support of both leaders, and many member of their generations. Is that really worse than what has been going on recently? In any event, credit to Gatemouth, whose history of the last time the Democrats were sort of in charge in the 1960s meant that no one who read it is surprised. I’m never surprised by something bad for ordinary people, particularly those in younger generations, coming out of Albany.

The U.S. Census Bureau has released 2007 data on the financial status of state and local government pension plans in the U.S. The data is at the state level, and is at present separate from data from the rest of the finance phase of the 2007 Census of Governments, so only limited conclusions may be drawn from it, but I’ve calculated some ratios to see how New York compares. What the data shows is that New York State’s pension plans, and in particular New York City’s pension plans, tend to be on the extreme end compared with other states by a variety of measures. There are more retirees relative to the number of workers in New York. Public employees contribute less to their own pensions here. For New York City, payments to pensioners and others are draining existing assets at an above-average rate. And, perhaps in an attempt to get out of the hole, New York’s plans were among the most highly invested in risky stocks in fiscal 2007.

On June 29th 2007, the last trading day of that fiscal year, the S&P 500 was at 1,505.70, while as I write this it is at about 925, a loss of 38.6%. Based on the assumption that the pension funds earn 8 percent per year, it should be at 1,756 by now starting at June 2007. Then again, starting at June 2000, when that assumption was made by state law, it should be at 2,960, or triple its actual level. It’s based on assumptions like those that all those pension enhancements over the past decade were described as “free.”