Unions Kvetch Over Gov. Cuomo's Proposals To Change NYS Pension System

Once again, the state unions in New York are up in arms over Gov. Andrew Cuomo's proposals to revise the state pension system, including increasing the retirement age, increasing the percentage that workers must contribute to their future pensions and medical benefits, and eliminate the way that overtime is calculated as part of pension benefits:

The changes would affect newly hired workers in a pension system that covers 175,000 state employees and hundreds of thousands of employees of local government and teachers, as well as 300,000 New York City employees.

Labor officials immediately expressed strong opposition.

“Congratulations to Governor Cuomo for another grandstand play for the attention of his millionaire friends at the expense of the real working people of New York,” Danny Donohue, president of the largest union of state workers, the Civil Service Employees Association, said in a statement.

“Governor Cuomo’s proposal can only be viewed as an attack on working people to score some cheap political points.”

The president of the New York State Public Employees Federation, Kenneth Brynien, attacked the proposal as “draconian pension cuts that would inflict permanent damage on middle-class workers such as nurses, parole officers, bridge inspectors and cancer researchers for what is a transient problem.”

“This is about politics and placating big-business special interests, plain and simple,” Mr. Brynien added.

Pensions for new workers would still be enviable by the standards of the private sector, and Mr. Cuomo is not going as far as he has talked about in the past, when he raised the idea of shifting from a traditional pension to a defined contribution plan, similar to the 401(k)’s that have proliferated in the private sector.

But Mr. Cuomo’s proposal would still cause significant changes to worker retirement plans.

New York taxpayers face one of the highest tax burdens in the nation, and it isn't just the rich who are paying for the state's massive annual budget.

63.2% of the state's tax collections come from the personal income tax in 2008. That amounts to $36.5 billion dollars (Table 1). Only 5.5% of taxpayers file returns with an AGI of $200,000 or more, but that comprises of 54% of the total tax liability (meaning that 5.5% of filers are paying 54% of the $36.5 billion in income tax collections- $19.71 billion). That leaves $16.79 billion to be picked up by all other income tax payers. That's 94.5% of taxpayers.

The pension problem in New York isn't going to be solved by increasing the taxes on the rich - and the downturn showed that when Wall Street was hammered hard, the receipts from the richest percentage dropped the furthest and increased the burden on other taxpayers. The problem must be solved by reworking the pension system to make it more sustainable and to eliminate profitable paydays resulting from banking overtime in the final year of w36ork to max out pensions that would be significantly lower otherwise. It also makes sense to bring the retirement age in line with the private sector considering that most people work past 65 - and most people can expect to live into their 80s.

The pension problem hits all taxpayers, including the 94.5% who aren't rich. Fixing the pension problem would help all taxpayers, especially the 80.7% who make less than $100,000 AGI.

Unions are doing what the unions always do - refuse to recognize the fiscal realities and instead hope to protect their already overexpansive benefits at the cost to all taxpayers.