Cuomo’s challenge

By ED COX

Last Updated: 4:24 AM, December 30, 2011

Posted: 10:48 PM, December 29, 2011

Gov. Cuomo recently said public-pension reform would be his top goal for 2012 — and then backtracked. But ignoring this crisis for another year simply isn’t an option; it won’t go away.

Cuomo should use the bully pulpit of his State of the State Address and his upcoming executive budget to help force a solution to New York’s public-employee-pension dilemma.

“I don’t think the unions are ever going to agree to pension reform,” Cuomo said in a year-end interview — adding: “It depends on whether or not the Legislature is going to do it.”

Yet the governor has the constitutional power to drive pension reform in the budget process (see Article VII of the 1929 amendments to the state Constitution) — and he knows it.

The question is: Does Cuomo have the will?

How bad is the problem? Consider: Ill-advised pension enhancements coupled with poor investment returns have raised public-employee pension costs by 50 percent — 50 percent! — in the last three years alone.

By 2014, county pensions in the aggregate will consume 25 percent of property-tax levies, up from 9 percent. That means other core local spending — senior-citizen services, infrastructure repairs, community college support — must be cut if we do nothing.

This pension squeeze isn’t unique to New York. But other states have already enacted reforms to deal with it.

New Jersey Gov. Chris Christie plugged a $52 billion hole in the state’s pension fund by requiring 750,000 public-sector workers to contribute more to their pension funds, saving $132 billion over 30 years.

Christie also raised the retirement age to 65 and increased eligibility requirements for early retirement, establishing a 3 percent-per-year penalty for early retirement.

Massachusetts also passed major pension-reform measures, including raising the retirement age for most officials and preventing elected and appointed officials from receiving pension benefits while holding office.

Will New York act soon as well?

There are solid ideas for reform on the table in this state.

In its comprehensive Mandate Relief report (available at nygop.org), the New York State Association of Counties called for reform of the state-pension system to mirror what is available in the private sector. The report suggests an amendment to the state Constitution to restore benefits to pre-2000 levels and the creation of a sixth pension tier that replaces defined benefits with defined contributions and a floor on employee contributions of at least 7.5 percent.

NYSAC also suggests other common-sense solutions, such as basing pensions on salaries without overtime, permitting employees to make contributions above the requirement and raising the minimum retirement age for new employees to mirror Social Security eligibility.

The governor’s proposed Tier VI pension level for new state employees would have been a step in this direction. The plan could have saved $120 billion over 30 years by raising the retirement age from 62 to 65 for new state workers and from 57 to 65 for new teachers, as well as requiring all new state employees to contribute 6 percent to their pension, up from the current 3 percent.

But Cuomo’s pension-reform plan wasn’t taken seriously in 2011, because it was tepidly introduced with just six days left in the legislative session — while Albany was fixated on the governor’s same-sex marriage legislation.

The timing of his 2011 roll-out and his year-end comments make one wonder whether Cuomo is truly serious about public-pension reform.

Now we’re at the cusp of a brand new year. The governor can send a clear message in his State of the State Address and through his executive budget that he means what he says. He can declare unequivocally that public-pension reform is a key and immediate priority.

Acting now is something he absolutely must do — if he has the long-term interests of the state in mind.

Ed Cox is chairman of the New York Republican State Committee.