It began with a simple plea for equity, for the same deal that other unions had. It ended with thousands more former New York City employees getting expensive Christmas presents: bonus checks in each year of retirement that would eventually reach $12,000, all paid for by taxpayers. 

The road to a new pension benefit that will eventually cost New York City an estimated $100 million a year began in 1995, when the city’s correction officers decided that on top of their regular pensions, they deserved the “Christmas bonuses.” Retired police officers and firefighters already received such checks, and the correction officers reasoned that they should, too.

When the union asked for the money during contract negotiations, the city said no, saying it could not afford such largess. But the matter did not end there.

The union turned to Albany. It endorsed Gov. George E. Pataki’s 1998 re-election bid and gave state lawmakers and political parties $79,000 in campaign donations in 1999. Then, after more lobbying and contributions, it persuaded the City Council to ask the state to pass the bill.

That year a bill establishing the annual bonuses sailed through the Legislature. The Giuliani administration, disturbed about the city’s being stuck with the cost, howled in protest, and both the city and state comptrollers and the governor’s own budget division recommended a veto. But the governor signed the bill.

Over the last six years, those checks have cost the city $60 million — during a period when big budget gaps forced the city to lay off workers, close firehouses and raise taxes to balance its budget.

The bill was hardly an aberration. At a time when many businesses are reducing or eliminating pension plans, Governor Pataki and the Legislature have approved billions of dollars in new pension benefits for government workers after lobbying from politically connected unions, an analysis by The New York Times of pension bills and campaign contributions shows.

In recent years, the state decided to let city auto mechanics retire at age 50 with full pensions. It allowed the city’s 911 operators and urban park rangers to retire after 25 years of service, even if they are still in their 40’s. It passed laws decreeing that heart disease be considered a job-related ailment for correction officers, emergency medical technicians and sanitation workers, qualifying more workers for lucrative disability pensions equal to three-quarters of their salary, all exempt from state and local taxes.

The state also gave death benefits to people who had quit their city jobs before retirement age, enabling survivors of people who left the city work force to collect payments, often in the tens of thousands of dollars, when their spouses die.

Some city workers are entitled by state law to pensions that are too big even to be allowed under federal Internal Revenue Service regulations. So in 2004, citing “the numerous new plans and benefit improvements” that allowed city workers to retire earlier with bigger pensions, the state passed a law allowing the city to set up a special fund to pay those workers the difference between what the federal government allows for their pensions and what the state says they are owed.

The enhancements come even as some calculations by the city suggest that its pension funds, which officially appear to be nearly fully funded, may in fact have a combined shortfall of as much as $49 billion.

Many of these expensive pension promises were made over the strong objections of the city. Albany’s power to dictate pension costs that the city must pay infuriates mayors and puzzles pension experts.

“In any structure when the people who are making those decisions are not financially accountable for the impact of those decisions, by definition it will not be prudent,” said John Por, the president of Cortex Applied Research, a firm that advises both public and private pension plans.

Mayors have complained about the system for decades. “It’s outrageous,” said Edward I. Koch, who was forced by the state to spend millions more on pensions when he was mayor. “The municipal unions own the State Legislature.”

Mayor Michael R. Bloomberg said on Monday that the city’s official method for calculating the value of its pensions, which shows that they are close to fully funded, and an alternate method that shows a shortfall of $49 billion, both seem “very rational methods” to him. And he said that while the city is careful to fund its pensions, the enhanced benefits awarded by the state all involve trade-offs.

“If we enhance the pension system, then we can’t afford to pay as much in salaries,” the mayor said. “If we enhance the pension system and salaries, we can’t afford to have as many employees or to provide as many services. And that’s what everybody is unwilling to face.”

The move towards more expensive pension benefits is not a partisan one. Governor Pataki, a Republican who ran for office in 1994 on a conservative platform of cutting government spending, approved many of the enhancements, and in the process won the support of labor unions, which helped him get re-elected twice even though New York is an overwhelmingly Democratic state. In the Legislature, the bills are championed not only by the Democratic-led Assembly, but also by the Republicans who lead the State Senate, who increasingly rely on campaign contributions of labor unions to help them retain their slim majority. 

Aides to Governor Pataki said that he made the decision to improve certain pension plans on the merits, and that he had not been influenced by campaign contributions, endorsements or political considerations. And they noted that he has vetoed nearly 200 pension bills since 1995.

“Since taking office, Governor Pataki has consistently protected taxpayers and vetoed nearly 95 percent of the more than 200 broad pension bills that the Legislature has sent to his desk,” said Michael Marr, a Pataki spokesman. “In those isolated instances when the governor did sign a particular pension bill, he did so after carefully weighing both the bill’s merits and its fiscal impact.”

Turning to Albany

In the past, unions frequently sought improved pension benefits during contract negotiations with the city. If they reached an agreement, both sides sought state legislation setting the agreed-on benefits. 

It still works that way, sometimes. But increasingly, in cases where unions fail to get what they want during negotiations with the city, they are doing what is known in Albany as an end run around the city, lobbying state officials to win richer pensions.

Some unions are so big that they represent voting blocs unto themselves. Smaller unions have established their power in other ways: by endorsing candidates, by providing ground troops during campaign season and, especially, by donating large sums to state officials and their political parties.

Take the recent proliferation of “heart bills.” The city’s police and firefighters have long had the bills, which declare that heart disease should be presumed a job-related disability, enabling workers with heart disease to get tax-free accidental disability pensions worth three-quarters of their final salaries. (High-ranking chiefs have been known to retire with disability pensions for heart disease and then go on to earn six-figure salaries elsewhere.)

In 1998, the politically connected correction officers won their own “heart bill.” Again, it was over the objections of Mayor Rudolph W. Giuliani. “There is no valid medical study that has confirmed that a police, fire or a correction officer’s heart disease is a direct result of performance of duty,” his office wrote. 

There were more heart bills to come. In 2002, after the economy soured and the attack on the World Trade Center left the city facing large deficits, the union representing the city’s emergency medical technicians sought one. The union contributed more than $70,000 to state officials. It endorsed Governor Pataki, who was running for re-election, and gave him $32,000. The bill passed, and the governor approved it over the protests of the city, which warned that more unions would demand the benefit.

Sure enough, heart disease was declared a job-related condition for the city’s sanitation workers two years later. Again, the city objected, complaining that the change would cost it $1 million a year. But unions representing sanitation workers gave more than $50,000 to state officials that year, including one check for $500 that was sent to the Senate Republican Campaign Committee on the day the Republican-controlled Senate sent the bill to the governor for his signature.

Heart disease is not the only ailment that is increasingly presumed to be job-related for pension purposes. In 1997 the state passed a law declaring that hepatitis, H.I.V. and tuberculosis should all be considered a line-of-duty disability for correction officers. The city warned that the police and firefighters would also want the benefit.

They were right again. The state made the ailments job-related disabilities for police officers and firefighters in 1999. The city complained that shifting the burden of proof from government workers, who previously had to prove that their ailments were contracted in the course of official duty, to the city, which would now have to prove that they were not, would make disproving such claims nearly impossible. 

“The employee has only to prove that he or she may have been exposed to the bodily fluid of a person under the care of the employee,” the city wrote in its objection. “It will be virtually impossible for the city of New York to disprove the presumption and assert that the condition was not contracted in the line of duty. This is particularly true in the case of H.I.V., where it would be illegal for the city to test for the presence of the disease prior to hiring a police officer or firefighter.”

Patrick Lynch, the president of the Patrolmen’s Benevolent Association, wrote to the governor urging him to sign the bill. “Since police officers are required to pass a physical examination upon entry into service, and to follow lifestyles that would preclude their contracting H.I.V., tuberculosis or hepatitis, it is reasonable to presume that by far the most likely cause of contracting one of these diseases would be coming into contact with an infected individual in the course of performance of duties,” he wrote.

An Expensive Year

By far the biggest increases in pension benefits came at the end of the stock market boom in the late 1990’s. The city’s pension funds are heavily invested in the stock market, and the boom sent the funds soaring, which emboldened unions to seek better pension benefits and state and city officials to grant them. 

The most expensive year was 2000, when Albany, even as the dot-com bubble was already bursting, approved billions in benefit enhancements, citing the soundness of the city’s pension investments. 

It provided automatic annual cost-of-living adjustments for retirees, which are extremely rare in private business. It eliminated or reduced the contributions many employees had made to their pension funds, at a cost of $269 million a year for the city.

That measure was supported by Mayor Giuliani, who seized on the recent stock market gains to drastically reduce the city’s investment in its pension funds.

The cost-of-living adjustments had long been championed by H. Carl McCall, the Democratic state comptroller, who was preparing to run for governor. Governor Pataki, the Republican incumbent, was preparing to run for a third term in 2002. He agreed to the idea, one of many union-pleasing actions that helped him win much of the labor support that Democrats typically counted on. 

The bill called for raising pensions as much as $540 a year, depending on the rate of inflation. But altogether, the long-term cost to the city was pegged at $8.4 billion. The Giuliani administration won an agreement to phase in its increased contribution to the pension plans over five years.

Governor Pataki’s budget division insisted that the annual cost-of-living adjustment, known as the COLA, was affordable. “The COLA is affordable due to the excellent financial condition of the retirement systems and reasonable limitations included in the benefit design,” the budget division wrote in support of the bill.

Then the stock market plummeted, the World Trade Center was attacked and the city’s pension fund investments lost billions. The Bloomberg administration won permission to take another five years to phase in the payment for the increases. 

The governor’s budget division, which had called the program “affordable” in 2000, noted just two years later that “the city’s fiscal situation has changed” and cited “downward trends in the stock market and increases in pension benefits.” (This year the city agreed to end the phase-in, and begin paying what it owes for the increases.)

The Bonuses Grow

It was the city’s desire to invest more heavily in stocks in the late 1960’s that first led to the annual bonus checks it sends to retired police officers and firefighters and, now, correction officers. 

Although pension benefits are guaranteed by the State Constitution — which means that taxpayers must pay them even if their funds are wiped out in the markets — the police and fire unions argued that their members should be rewarded for allowing the city to invest their pension funds in riskier, but potentially more lucrative, stocks. 

The unions got the city to agree to use its stock earnings above a certain amount to pay extra benefits to retirees. Initially, the payouts depended on how well the investments did. But the bonuses became fixed annual payments in the 1980’s, increasing by $500 each year, after the unions agreed to let the city use some of the money to close its budget gap. 

The bonus payments — soon to reach $12,000 a year — had an unintended consequence after Sept. 11, 2001. Many police officers worked a great deal of overtime that year, pushing up the base from which their pensions would be calculated. On top of that, each year they worked was a year they would not get the bonus payments, which were then $9,000 a year. Many police officers felt they could not afford not to retire. 

So, to try to retain veteran officers at a crucial period, the state took action: it allowed officers eligible for retirement to bank their bonus payments while continuing to work, and to collect them after they retired. The solution cost an estimated $40 million a year.

The correction officers, though, do not now have the same guarantees that they be paid each year. (Their guarantees do not start until 2019.) So retirees get paid only if the stocks perform well enough to keep their fund — known in Albany as the skim fund — flush. There was enough to pay the first six years of benefits, but with around $34 million left in their fund, there is not quite enough to pay retirees the $11,500 they were expecting this December.

There are, however, bills pending in Albany that could help them. One would simply guarantee the next payment, while the other would allow the next payment to be less than the scheduled $11,500.

So far, the City Council has not asked Albany to take action, and neither bill has passed the Legislature. But it could always resurface when lawmakers return to Albany this fall. All 212 seats in the Legislature are up for election in November.