Landmark bill will save city $22 billion in public employee pension costs

By ERIK KRISS, Bureau Chief

Last Updated: 8:43 AM, March 15, 2012 

ALBANY — State lawmakers passed a landmark bill this morning to cut pension benefits for future public employees — saving the city about $22 billion over 30 years. The state and other localities would save around $60 billion. "This bold and transformational pension reform plan is a historic win for New York taxpayers and municipalities," Gov. Cuomo said. "Without this critical reform, New Yorkers would have seen significant tax increases, as well as layoffs to teachers, firefighters and police."

The "pension Tier VI" bill, praised by Mayor Bloomberg, received final passage from the Assembly 93-45 around 7 a.m.- after a struggle to round up enough votes from reluctant majority Democrats. It passed the state Senate earlier this morning.   Gov. Cuomo, on the brink of another major victory, makes his case for pension reform yesterday

Gov. Cuomo’s original pension proposal would have saved $113 billion over the next three decades.

But he agreed to concessions demanded by lawmakers who are all up for re-election this year and rely on donations and political ­organizing from unions that strongly opposed the Cuomo plan.

Organized labor fought hardest against a Cuomo proposal to give future government workers the option of a 401(k)-style retirement plan as an alternative to a traditional pension.

But the final deal included the 401(k) option for ­future non-union high-earners with salaries of $75,000 or more.

Cuomo also agreed to raise the future retirement age from 62 to 63, not 65 as he had proposed.

And he agreed to keep pensions fully vesting at 10 years rather than the 12 years he had wanted.

While his original plan required pension contributions of 4 to 6 percent of salary, the deal keeps the lowest earners at 3 percent. Those earning $45,000 will contribute 3.5 percent, with incremental increases up to six-figure earners, who will kick in 6 percent.

The deal spared city cops and firefighters from some of Cuomo’s proposed cuts, and reduces benefits for ­future city sanitation workers and correction officers.

It requires the state, rather than the city or other localities, to fund any pension enhancers.

It further limits overtime and lengthens from three years to five years average final salaries for pension calculations, while prohibiting any pay over the governor's $179,000 annually from being used to figure retirement benefits.

Capitol insiders said Cuomo leveraged today’s court deadline on redistricting — lawmakers’ ultimate self-preservation tool — to get the deals; he agreed to support the redistricting plan, which he had repeatedly threatened to veto.

Bloomberg credited Cuomo and The Post, among others, for what he called “a very good deal for the taxpayers” that should help contain city tax increases to meet skyrocketing pension costs.

“Typically any (pension) changes have been made swapping one taxpayer expense for another,” Bloomberg told The Post. “The governor didn’t buy any reforms” in this case.

Cuomo said pension costs to local governments have soared by 650 percent since 2002, from $1.4 billion then to $12.2 billion this year.

The president of the state's biggest public employee union had harsh words for the dealmakers.

"Tier 6 shoved down the throat of state legislators fixated on their own self-preservation will be devastating to 99 percent of New Yorkers,” said Civil Service Employees Association President Danny Donohue.

Some lawmakers, including Assembly members Phil Goldfeder (D-Queens) and Amy Paulin (D-Westchester) voted for the bill reluctantly, saying the concessions won by Speaker Sheldon Silver (D-Manhattan) prevented it from being worse for "working" New Yorkers.

Early today, lawmakers also passed:

• A bill making the state teacher evaluation system announced last month official in law.

• A proposed constitutional amendment authorizing up to seven non-Indian casinos at locations to be determined by the Legislature, likely in 2013. Lawmakers would have to pass the amendment again next year before it goes to voters in November 2013. Cuomo and Silver oppose casinos in Manhattan.

• A crime-fighting DNA bill that requires samples from criminals convicted of felonies and the most serious misdemeanors. It would not apply to first-time pot-possession offenders. Cuomo and Senate Republicans agreed to Assembly Democrats’ demands to grant defense lawyers more access to DNA samples.

• A Senate- and Assembly-drawn legislative redistricting plan and reforms to make the process more independent in future reapportionments, starting in 2022. The plan limits lawmakers’ ability to change independently-drawn future redistricting plans to 2 percent.

Democratic black and Hispanic lawmakers threatened to sue over the redistricting plan - and minority party Democrats stormed out of the Senate chamber after charging majority Republicans with cutting off debate over the contentious redistricting bill.