February 16, 2010
Recession. What recession?
New York state employees, unlike those in the private sector, have been largely untouched by the recession.
State workers elsewhere have faced layoffs, benefit cuts and unpaid furloughs to help close massive budget gaps, as I point out in an op-ed in the New York Post( here). For example, Connecticut state workers, seeking to avoid layoffs, agreed to a one-year wage freeze, seven unpaid furlough days and higher employee health insurance contributions. New Jersey civilian workers agreed to 10 unpaid furlough days and deferral of a cost-of-living increase; state police and corrections employees opted for a one-year wage freeze.
In these neighboring states, public employee unions negotiated savings through the collective bargaining process. They concluded it was better for every union member to make a relatively small sacrifice than to throw thousands of young co-workers onto the unemployment line.... In contrast, New York public employees have rejected Governor Paterson's pleas for shared sacrifices. In 2009, they refused to give up a 3 percent pay raise or take a five-day payroll lag—even when threatened with 8,700 layoffs. Three months later, the unions got the better of the governor.
The Civil Service Employees Association and the Public Employees Federation agreed not to fight a modest change in the pension system (which would not affect current members). In exchange, Paterson agreed to a $20,000 buyout for up to 4,500 employees and a promise not to lay off members of the two unions until December 31, 2010.
That no-layoffs pledge will make it harder for Paterson to squeeze concessions from the unions this year to help close a $8.2 billion budget gap. Paterson want them to agree to a five-day payroll lag and delay or reduce a 4 percent raise scheduled for April 1, save $250 million in the coming year. But his plan merely pushes costs into the future. That's also true of his plan to "amortize" sharply increased pension costs over a 10-year period--which will reduce a 52% annual increase in pension contributions to a still-whopping 33% increase.
The state's propensity to shift costs to future taxpayers is best illustrated by its promise of lifetime health insurance for retirees. Retiree health benefit costs, which grew nearly 11% annually over the past decade, are funded on a pay-as-you go basis. As a result, New York state's retiree health insurance promises amount to a $55 billion unfunded liability for the future.
Paterson's budget would put a miniscule dent in that liability by requiring retirees over 65 to pay a small portion of their Medicare Part B premiums, saving taxpayers $30 million in fiscal year 2011-12. But the state could save four times as much by requiring retirees to pay their entire premium, a common practice throughout the private sector.
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