Pataki says Legislature's pension reform bill OK

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Pataki says Legislature's pension reform bill OK

By Michael Gormley
Newsday, May 14, 2003

ALBANY, N.Y. -- Gov. George Pataki said Wednesday he will sign into law the Legislature's bill to reform and stabilize public pension payments and save state and local governments $1.6 billion this fiscal year.

The law will save the state $650 million this fiscal year in pension payments for its employees and a total of $1.1 billion over the next two fiscal years, said Charles Carrier, spokesman for Assembly Speaker Sheldon Silver.

The pension measure will spread out the high costs state and local governments face to contribute to the pension fund after investments came up short in the sagging stock market. The reforms include requiring local governments to make pension contributions of 4.5 percent of payroll even when investments are high enough to suspend employer's contributions.

The Wall Street boom in the 1990s allowed many governments to forgo contributions, but led to a crisis in fiscal planning when state and local governments were faced with major contributions this year to cover investment losses.

"We felt all along the pension issue was extremely important," said Mark Hansen.

"While this pension reform measure provides some short-term relief, it simply doesn't go far enough to help localities and taxpayers deal with these costs in the future," Pataki said.

Pataki is seeking further administrative changes to help stabilize the fund. His promise to veto other bills approved along with the Legislature's 2003-04 budget measures had raised questions whether the governor would sign or veto the pension bill on Wednesday.

The bill is based on a proposal by state Comptroller Alan Hevesi, a Democrat in his first year in office.

The law will:

_Give governments a one-year grace period under which they can make the same pension payments as they are making in the current fiscal year, although no less than 4.5 percent, according to the Comptroller's Office. Starting next year, governments would have to make payments into the system of at least 4.5 percent of payroll costs _ and he said the price tag will actually be 11 percent of payroll.

_Payment for fiscal 2005 would be based on fiscal 2003 pension costs, 2006 would be based on 2004 costs, and so forth.

Hevesi had said the proposal would cut the cost to state taxpayers in the December 2003 payment from $1.1 billion to about $480 million. Payments by local government taxpayers would fall from $1.6 billion to about $650 million.

Municipal and county government officials had called on the state to provide them with relief, arguing that their budgets were already set when the size of the big contribution increases became clear.