Pension problems

Newsday had a story the other day about a $30 billion drop in state pension funds that includes a paragraph I find staggering:

(State Comptroller) DiNapoli announced in early September that the average contribution rate for state and local government employers would be 7.4 percent of payroll in 2010, down from 8.5 percent in 2009. The rate for police and fire departments would fall to 15.1 percent of payroll in 2010 from 15.7 percent in 2009.

Which is to say, that for every cop making, say, $75,000, the city, town or village they work for has to kick in another $11,775.

It's no wonder that a study by the Empire Center for New York State Policy found pension costs are bleeding budgets around the state.

The last few years have seen a dramatic surge in public pension costs in New York State ... Tax-funded contributions to public pensions in New York State rose from $1 billion in 2000 to $6.7 billion as of 2005.

Could this state be in any worse financial shape?

Comments

[BobbyCat]

It looks like New York state is bankrupt, on paper,at least, if not in fact. The beleagured NY taxpayers cannot be expected to continue to subsidize these pension deficits. A federal bailout is not the solution. If public employee unions will not renegotiate pension benefits, the govenor will need to take extraordinary action -fire everybody and rehire those who agree to a new benefit package. Yes, it's draconian, but do you have a better idea? You cannot get more blood from the taxpayers's stones.

[mike moore]

Help me get up to speed on why NYS pensions are so horrible.

Tier 1s are generous but Tiers 3 and 4 are quite meeger. I believe 1.3% per year and out at 62. California is 3%.

What is so generious about 1.3%?

[hatemenow]

Bobbycat your so smart. fire everyone? Draconian, no ignorant.

I don't think it is too much to pay high pensions for police officers, firefighters, and teachers. I do think that politicians should not receive such high pensions. I would like to see police salaries actually increase, and other fields decrease, but I'm sure that I'll be the minority on this one, as it is vogue these days to bash the police.

[BobbyCat]

(You have to wonder about a guy who feels no qualms being called "Hate". Eeeeeee! (Oopps, please excuse me, if "he" happens to be a she. That might explain the runny-mouth.

Dear Ms/Mr Hate,

I admitted that it was a draconian option but only if someone had a better solution. You didn't offer any. In case you don't understand it, paying coppers more money is not a solution.

Where do you find the money to make up the enormous pension shortfall? For that matter, how does the State make-up the crushing multi-billion dollar deficit that is forecast by Gov Patterson?

Your hateful insults won't pay those bills, Mister/Miss Hate.

[hatemenow]

Sorry but your option is ridiculous. We don't need an alternative to your choice of chaos, because it would be so insane. To even think of that as a solution, shows a lack of intelligence. I'm not trying to insult you on this, I'm just trying to say this thought of yours is a terrible one. Fire all police officers and rehire them at a lesser penion. yep, that would work.

I would decrease the rate of pay for sanitation workers, I would decrease the pay for highway workers. I would outsource the maintainence at government offices. I would also decrease the pay and benfits for park workers. These are very easy jobs that can be performed by anyone. I would also decrease the rate of pay for toll collectors, and create more lanes for ez pass lanes, where you could. Thus for those who do not want to purchase the technology will have to wait in line. The technology is there, take advantage of it.

Quite honestly I would remove many of the non essential jobs in the state and out-source them. This puts more money into the private sector and helps the economy. It would also go a long way to spur creation of non government jobs, and eliminate many government jobs, thus showing a positive impact on the balance sheet. I think that there would be plently of landscaping companies that would do just as good of a job, if not better in maintaining the parks and roadways within the state. And probably for cheaper. This would free upmore money to employ and pay our police officers a better rate of pay, for doing a very stressful and dangerous job. While offering the pay increase and the benfit of a better pension, I would cut out the provision of free healthcare for elective surgeries that costs the state a lot of money. I don't feel that teachers, and police officers should be able to get boob jobs,tummy tucks, and laser hair removal for free.

Mr/Mrs. Bobbycat, I think I have offered some options. Now you can tell me which you would like to accept or reject, but I really think that the government screws a lot of things up, and if we could get rid of a lot of the jobs/ processes that could be outsourced to private companies I think we should.

[BobbyCat]

Ok, now you've given us some reasonable options. Now, maybe somebody can crunch your numbers and see it the savings solve the problem. I'm guessing they won't. You'll likely need more cuts, and I'm not sure you can find enough cuts. I'm not ruling it out, mind you, but I think that drastic measures may be needed. Gov Patterson's projected deficit numbers are so gargantuan as to be ridiculous. I think that Americans are in denial about the massiveness of the problem. It's bigger than big.

[Hank]

This is simply not news since the dot.bomb crash of 2000-2002. Wall Street advisory services were piling up risk business assets all along, their bonuses paid by taxpayers.
New York is de facto unable to provide its contractual obligations ongoing because it cannot print money. At some point the state will, like Argentina, default on its debts. When that happens, all pensions, health care and other obligations will re-negotiated under court supervision. Just as their is a private employer PBGC, there is a public employer PBGC. Limits will be imposed.
But not until taxes are raised ever higher and unsustainably. Most able families have relocated and are in the process of doing so for the most part.
Your question of "Can this state be in any worse financial shape?" is answered in the affirmative.
The greatest bubble, now that real estate is being flattened, is the U.S. Dollar. When it is burst, interest rates are going be like Paul Volcker's era in the 1980's: double digits. Your pension won't buy much, and health care will be take two aspirins and see me in the morning, if I'm still in-state.

[RocketKid]

With a Democrat majority in the NY Senate, I feel the crisis will be solved with shrewd political management and this crisis will be over. A one party state now will enact what it needs to get this crisis solved. I have all the confidence in the world that our elected officials are aware of the timebomb and will diffuse it. It may require tax increases but what's a little more to solve this crisis. We've been paying high taxes, what's a little more for the betterment of our state's pension obligations. You'd pay more for a Bills or Sabres game if they raised prices 10%.