Hevesi Proposes Way to Delay $1.2 Billion in Pension Costs

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Hevesi Proposes Way to Delay $1.2 Billion in Pension Costs

By Al Baker, The New York Times

January 27, 2004

To address sharply rising pension costs, State Comptroller Alan G. Hevesi outlined a set of proposals on Monday to provide $1.1 billion in relief to local governments in the next fiscal year while also saving the state more than $100 million.

Mr. Hevesi, a Democrat, has already rejected the plan Gov. George E. Pataki advanced in his executive budget proposal last week to cap the state and local contributions to the state's $117 billion Common Retirement Fund.

Though Mr. Pataki said his plan would give county executives and mayors outside New York City $800 million in relief, Mr. Hevesi said the governor's proposed changes would be illegal because they would harm the fund's viability and violate a constitutional ban on using the pension fund for fiscal relief.

The comptroller said his own one-time plan, to help 1,100 localities and the state government, would not weaken the fund going forward.
"As a fiduciary, my primary responsibility is to protect the pension fund and its 964,000 members and their families,'' Mr. Hevesi said in a statement. "The law is clear. I cannot agree to any revisions that would weaken the fund.''

The comptroller's plan would allow for a six-week delay in pension payments, to Feb. 1, 2005, from Dec. 15, 2004, pushing them beyond many local governments' fiscal years, to save them $980 million, but keeping the payments within the state's fiscal year, which ends each March 31.

Also, the plan calls for a technical correction of the pension relief package approved by the Legislature last year. If passed, it would allow the state and local governments to start paying back deferred contributions over five years, beginning in 2005, rather than in 2004, saving local governments $172 million and the state $106 million, Mr. Hevesi said.
Spokesmen for the governor and his fellow Republican, Senate Majority Leader Joseph L. Bruno, each said they believed the governor's proposal was the correct way to help local governments, where officials have grown increasingly critical over costly mandates from Albany.

Kevin C. Quinn, a spokesman for the state Division of the Budget, said the comptroller's plan did not provide long-term relief, but said the Pataki administration was pleased that Mr. Hevesi seemed to recognize that moving to relieve local property taxpayers from soaring pension costs was a priority this year.

"Unlike the governor's pension reform plan, the comptroller's proposal would not provide the long-term relief and predictability that local governments need and instead would simply delay and push these skyrocketing costs for municipalities into next year,'' Mr. Quinn said.
Charles R. Carrier, a spokesman for Assembly Speaker Sheldon Silver, a Democrat, said Mr. Silver preferred the comptroller's plan.

Among other things, the governor's plan would set the contribution rate that local governments and the state pay to the retirement fund at 6.5 percent of their employee payrolls next year, which Mr. Hevesi said could not be done. The governor said his plan would save the state $500 million in rising pension costs.

After reviewing the competing plans, Edmund J. McMahon, a senior fellow with the Manhattan Institute, a conservative organization, said he disliked both.

"It delivers more immediate relief to the localities than the governor's plan did,'' Mr. McMahon said of the comptroller's plan. But he described it as "a one-shot'' - a one-time source of revenue.

In contrast, he said Mayor Michael R. Bloomberg of New York City had it right when he asked lawmakers to allow the city to establish another tier in the city's pension fund.

"He is the only significant official talking about structural reform," Mr. McMahon said.