September 08, 2008

Paterson allows harnessing of retiree health benefits

With his veto of a union-backed bill, Governor David Paterson has given local governments--and state government itself--the ability to contain growing costs of providing health benefits to their retired employees.

The bill would have made it impossible for government employers to make any changes to retiree health insurance plans--unless unions representing active employees agree to the same changes.
With health costs soaring and retirees living longer, post-retirement health benefits consume an increasing share of local budgets. For example:

• In 2006, the city of Binghamton spent $2.5 million on health benefits for 413 retired employees--equivalent to 10 cents of every dollar it raised in property taxes.


• In 2005-06, the city of Syracuse spent $27 million on health benefits for retired municipal and school district employees--equivalent to 30 cents of every local property tax dollar collected that year.


• In 2007, Westchester County spent $37 million to cover 3,700 retired employees--equivalent to six cents of every property tax dollar collected that year.

With costs like those, it's no wonder that Stephen J. Acquario, executive director of state Association of Counties leaped to praise Paterson's veto Friday.

With this veto, Governor Paterson demonstrates he understands the direct correlation between the budgetary and policy decisions made in the State's Capitol and the plight of New York's local governments and property taxpayers.

Paterson's empathy for "the plight of local governments" comes as he struggles to close a projected $5.4 billion budget gap in the fiscal year beginning April 1, 2009.

On Friday, he ordered all state agencies to submit "zero growth" budget requests for the coming year. He warned his commissioners he didn't want to hear it can't be done.

Certainly, some agency expenses - such as for food, fuel, and health care - have rapidly increased compared to last year. Yet, average New York families have had to face these same rising costs at the grocery store, gas station, and doctor's office every day. We cannot continue making excuses for why the state is unwilling to limit its expenses at a time when hard-working taxpayers are forced to do the same thing every day.

Posted by Lise Bang-Jensen

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