by
Brian Mann on September 3rd, 2010
The Albany Times-Union is reporting this morning that a drop in New York’s state pension fund will force local governments to hike property taxes.
Mandatory pension contributions for the state as well as municipalities — including cities, towns and counties — will jump 37 percent within two years thanks to a drop in the value of the recession-battered pension fund, Comptroller Thomas DiNapoli said Thursday.
And that likely means higher property taxes, deep cuts, or a combination of the two are just around the corner.
“Unfortunately, it takes the economy a lot longer to climb out of a hole than it takes to fall in it,” DiNapoli said when he announced the rising contributions.
Read the full article here.
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I never understood why the State had to run a retirement program. Why not use something like TIAA-CREF where the employee basically is responsible for their own investments and retirement options. The employer still contributes, but in most cases the employee determines how much of their own salary will also be contributed.
Isn’t it great that public employees have a decent pension system in this state?
Shouldn’t everyone have a good pension system? Would I happily pay more taxes so that everyone could have a decent pension and good health care?
You bet!
KHL, the question is; will you happily pay more taxes so that those who have state pensions can continue to have them while those that don’t continue to not have them?
Seems there are only two solutions to the problem of rising pension costs.
One, we could TRY to take away a person’s option to retire. They could only retire if their superior accepts their request to retire. If it is not accepted, they could quit but could not receive retirement benefits.
Two, draw a line in the sand and not offer pensions to any new hires after a certain date. They would be entitled to Social Security but nothing more.
We all know or should know the history of pensions. They were away of offering more benefits down the road in place of pay increases in the here and now. Same can be said of health insurance. Promises of money in the future as opposed to paying the money now.
Both seemed like good ideas at the time. It was basically kicking the can down the road. The problem developed over time and now all the chickens are coming home to roost.
The state has created a new, less generous tier for new hires. New York is one of 3 or 4 states whose pension system has enough money to meet its obligations. I am grateful the state has the marbles to makes real fixes like this instead of ignoring the reality when it come to state pension systems. The Pew Center did a study of states pension and health care systems for state employees and it is scary. New York was one of the only states that isn’t in terrible shape. Its worth the read.
khl:
In fact, we are paying more taxes so that those pensions can continue.
And it’s unsustainable as it is, which is why there is a problem.
And you want to double-down on this idea? ????
Oh oh JDM. You and the Bretster are going to butt heads on this one.
Okay, so the answer is to pull the rug out from under retirees? Gee, that’s sooo Enron of you. What the heck, Obama did it to all the GM stock holders, why not do it too your neighbors too.
Look, I’m sorry that some people have pensions and others don’t. That’s just your tough luck for not looking to your own future I guess. But those of us that worked and earned our pensions didn’t do it with the thought in mind that it would cause our property taxes and yours to rise. The State, County, Towns and Cities agreed to the contracts that were accepted, it’s a legally binding contract. We have the same issue with Social Security at the Federal level and Medicare/Medicaid. The plans were set up and little thought was given to possibility the goose would stop laying those golden eggs. Duuhhhh. And some of you wonder why people like me get so irritated with politicians?
So, what options do we have. You can do as some many here seem to think is perfectly fine and void all the pension plans for teachers, fire and police, DOT, DEC, DOC, CSEA, etc. That’s one way to ensure the very real possibility of vigorous protests in Albany, not to mention the lawsuits that would follow. Or we can simply raise property taxes on the already hurting landowners. Take a City like Ogdensburg where 70% (IIRC) of the properties are tax exempt- you will kill any chance of that city growing at all (as if it had a chance in the first place). No one seems to talk about cutting spending, selling off State Lands, making NY more business friendly or anything like that. Nor do they mention the possibility of using other more broad based tax options, not that I like the idea. But a tiny hike in the sales tax might do it.
Despite the spitting and sputtering of the pension haters you still have to deal with reality. The State is over employed in some areas. IT doens’t make me any friends but we got along just fine for years with a lot less Troopers, DEC Officers, Forest Rangers, Park Police, SUNY employees, etc. Those are good jobs and the people in them are hard working professionals. Lowering the numbers through attrition to more reasonable levels is one option. At the COunty level the same thing can be one to an extent. But some of those line numbers are mandated. So we either have to change the mandated levels or tell the State/Federal Gov’t that we simply can’t sustain these numbers.
I don’t have any easy answers. Go ahead and void all the State and County pensions and see what you get. A lot of vacant homes, a much higher unemployment level, more on social assistance and probably protests the likes of which NY hasn’t seen in decades.
State pensions are a big pile of money. And the big-money people are coming after them. And then they’ll come after Social Security. It’s what they do. All in the name of “sacrifice,” of course. As long as the sacrifice comes from people like Bret, and not, God forbid, from them in the form of an estate tax.
A pension is a promise that we must keep. The problem was that we made too generous of promises; but that is not the fault of the people getting the pensions.
The key is what we do in the future and certainly pensions and health care contributions should all be on the table for the next round of union negotiations. I don’t see any real effort by those who are charged with minding the public purse to negotiate hard, these type of pensions may simply not be an option in the future and that is that, but that will never happen in my opinion because unlike in the private side; the people charged with negotiating with the Unions are the ones benefiting from the Unions, it is an incestuous relationship. But when the economy goes south into a depression and you have the haves and the have not’s with the have not’s being forced to fund the salaries and benefits of the haves’ you will have a backlash and resentment.
One option is indeed phasing them out for an employer employee contributory system into a funded 401K or whatever is comparable on the government side, that way future generations are not on the hook for past generations over spending.
So once again Bret, you are saying taxes are impacted by pensions(including both your pension and your taxes) Is that correct? Sometimes I have trouble interpreting your posts and I don’t want to put words in your posts. But also we need to get rid of both people who have not EARNED their pension yet(like you earned yours and your publicly funded heath care) as well as, eliminating other entitlements that were not appropriate or simply can not be maintained. Please correct me, because I’m certain in your true conservative mind I have it all messed up.
AT a bare minimum, the state should allow local governments the discrection to opt out of the pension system for new employees.
Good point scratchy. So consider why would the state of New York have a vested interest in forcing local governments to be in the pension system for new employees? Why would they want to increase these costs. We must ask who benefits by doing that and who is pulling the strings.
We could always do to public pension plans what conservatives want to do to social security. Raise retirement age to 70 and cut benefits.
Mervel said: “I don’t see any real effort by those who are charged with minding the public purse to negotiate hard,”
Mervel, I think there may be some truth to this, but the bigger problem, especially with local governments, is that the local officials are simply overwhelmed, inexperienced and outnegotiated by better-organized union leaders. I don’t hold that against the unions, but it’s part of a real case for consolidating local government functions–merge towns and cities and hamlets, as well as school districts. That way, they can sing from the same hymnal and be big enough to hire good representation when bargaining, not just with labor, but with all sorts of contractors.
People you are back to the same old issue as far as your NC goes. There are not enough people here to pay for the services that people need. You are going to continue to rely on other parts of the State(and FED) to keep this area vibrant. And that is okay. It is a great part of the State, USA and world. As far as changing laws(mandates) there is not enough of a voting block here to do that. You need to hope and pray that groups (politicians, Unions, Sierra Club etc. etc.) protect you from those that would ravage your beautiful corner of NYS. Personally I believe that if we would stop ravaging other countries and cultures and worry here it would improve us economically and morally. But that is just my “stupid” opinion.
Betty, you’ve been jumping all over me lately. Why I have no idea. So let me ask you, do you work? Do you have a job of some sort? I get the impression you do and that you don’t like paying your income tax. Could you clear this up for me? Your general age and employment history, stuff like that.
As for you recent post, my understanding was that the Police and Firemans Pension Fund was in fantastic shape until today when I saw DiNapolis statements. A good portion of my paycheck went into my retirement and I was truly unaware that the fund was approaching insolvency. Last I heard the fund was in the hundreds of billions and Andy Cuomo was looking into a way to legally raid it. I’m confused as to what the truth actually is at this point. I was, and still am, of the opinion that the promise made to retirees should be fulfilled. Do I want to do that on the taxpayers back? No. I’m not sure just how many different pension funds there are, but I find it amazing that they can all be in trouble at the same time. There are supposed to be managers watching over those funds and ensuring they remain in extremely conservative markets. At this point I’m not sure just who to believe.
Incidentally, I paid/pay for my health care. It’s not a freebie. I also pay to keep my family covered in the (foolish?) belief a little more insurance is a good thing.
When you say “But also we need to get rid of both people who have not EARNED their pension yet…” just what do you mean? Fire all State employees?
Your the first liberal I’ve run into that has a problem with the income tax. Why?
I am happy to keep paying more; even if it is for Bret.
There is a bigger picture here. The society as a whole benefits more as each individual benefits more–as long as the majority are gaining. It doesn’t help to have a small percentage get very well-off while the majority become poorer.
Bret, consider yourself on my dole.
By the way, I just got my property tax bill today. As a loyal true-blue American I will happily write out a check and send it in so that my local government can keep providing me, and everyone else, services for the next year. Maybe I’ll go do it now and crack an Ubu Ale in celebration of our great country.
Mmmmm, Ubu ale! God bless America; love it (and don’t bitch about your taxes) or leave it!
I don’t know if this would work but how about all benefits be given a cash value. Then all benefits are eliminated and the employee is paid the current cash value of the benefit, which they can then spend or invest as they choose. This would include health insurance and pensions. Of course the downside would be their state and federal taxes would go up. But stop and consider the fact that there are clever people at the IRS who are plotting to tax your benefits anyway and it will probably happen sooner or later.
Do people really realize how high our property taxes are here? How much higher they are than the rest of the nation? Now as Knucklhead says I can change that by moving, which is very true. But if we had really really great schools in fact given our property tax rates we should have some of the best schools in the nation, I would say okay yeah this makes sense. But that is not the case and it is not the case with the rest of our public services. They are all “okay”, which is a good thing, but it does not square with what we are paying in comparison to other states.
Not to worry Knuck, every bit of that money is going back into the economy, I can assure you of that. But I wonder, if I pay more taxes than you, am I truly on the dole? And since I did contribute a large portion of my pay to my retirement and still pay all those taxes, I don’t think I’m getting more back than I paid in.
Yeah, great idea, “anyone that doesn’t like the taxes here can move”. Great, so 40% of us leave and you all have to make up that money. How’s that work out for you now? Spending is the issue friends, it’s not going to get solved overnight, but if we don;t start now and make long term plans the whole thing will collapse.
Someone came up with the idea of “Why not use something like TIAA-CREF where the employee basically is responsible for their own investments and retirement options.” Now that makes sense to me and I knew I’d heard the idea somewhere before. Turns out that a guy named GW Bush proposed letting those who chose to invest 3-5% of their Social Security “fund”. But that was just a crazy idea then. Why is it a good idea now?
Someone said “I knew I’d heard that idea somewhere before”. “Why is it a good idea now?” Because they are not the same, as you probably know. Job-related pension plans are not the same as social security. SS was never meant to be a retirement plan.
And, I’m with KHL. I just received my property taxes also. I will go to the school district office and pay them on Sept. 30 without complaint. Are they high, I think so. My house is way over assessed. I’m currently appealing the assessment as is my legal right. Is the school district budget too high. I think so, and I go to school board meetings and tell my elected representatives that they are too high. I also have voted against the budget the last two years.
I guess it would be easier to whine and be a victim of too much government and all these “fines”, but drinking Ubu eases the victimhood.
There is an interesting article in ADIRONDACK LIFE (Oct. issue) titled “The Other Side of Paradise”. It talks about poverty in the ADKs and the first guy they profile is a 79 YO retired county highway worker who’s living on one of those “too generous” pensions. The article also mentions that the poverty level for a family of three is $18k which I recently read elsewhere was the average amount received by a retiree in the NYS retirement system.
The guys who work a lot of overtime in NYPD or the fire dept. and pad their retirement to the point that they get more in pension than their base salary get the attention of the media but they are the exception. Most retirees are not living high on the hog courtesy of taxpayers.
My Senior Man’s ( the guy that trained me) Senior Man ( the guy that trained him) is still alive and kicking last i knew. He retired making an obscene amount of money, probably averaged around $35K!!! Of course the greedy sob retired at the far too generous half pay. Imagine that, a guy who worked for the State a mere 25 years or so pulling in almost $20K in retirement! The shame of it all.
As for investment, no, they end up being the same since Social Security IS considered a de facto retirement plan for an awful lot of people. Investment of a small percentage in secure markets over a 30-40 year period would undoubtedly result in higher earnings than soaking the taxpayer. Plus, we could tax those rich guys and then tax anything they left their kids yet again. A win-win-win. But, better to be indignant and whine about the rich getting richer than to actually do something about it.
Oh de facto retirement system! Well that makes a big difference. SS is a safety net, not a retirement program because you can’t retire on what SS pays the average worker. SS is part of a retirement program. As for investing in the vaunted stock market. Yeah, that’s great, depending on what the market is doing when you decide to retire. Personally, I’m very happy that SS is making up for some of the mistakes I’ve made in investing.
At least we’re staying away from the words “death tax”. I guess that is something to celebrate. Yeah, it really makes me made that the little I save to leave my daughter is all going to go to the Federal government. Yet another fine. I guess I should whine about that more. Victim-hood really sucks.
James, don’t forget the worker who takes the day off from their State job to work their real job. That is where a lot of the overtime was coming from – at least in the prison system.
What is the inheritance tax exemption these days, $3.5 million?? Something more than “the little I save” in my book
I think the inheritance tax is great. I would raise it actually. It does not cause work distortions, if someone wants to help their children they should do it while they are alive anyway, there is a lot of weird family dynamics in some of these families over inheritance, the person who earned the wealth is dead, the people who are getting the wealth did nothing to earn it except be born, America is about earning our own keep not living on the wealth and labor of our parents; so yes in my opinion among all of the taxes, it is a great way to tax.
Hooray for the Paris Hilton Tax!
And Bret said: “Investment of a small percentage in secure markets over a 30-40 year period would undoubtedly result in higher earnings than soaking the taxpayer.”
Bret, tell me, on what planet are these “secure markets” you speak of? I would like to buy a rocket ship and invest in one.
OA, do the research on long term stable market investments. There ARE long term investments that will pay off. They certainly aren’t going to put you in the Taj Mahal but you end up doing better than depending on gov’t (taxpayer) largess for your retirement.
Bret,
Come by sometime and I’ll show you my IRA and 401K statements. Would have been better off under a mattress.
oa has a point on this. The market was at 11,000 when Bill Clinton left office in 2000, eleven years later the market is lower, zero growth indeed your money would have been better of in the mattress for the past 11 years.
Defined benefit Pensions are better than a 401k in this environment.
I remember the day the Dow broke 5000. People said it simply couldn’t go higher. Seems to me it topped out above 14K. It’s at 10k+ now. If I had started investing in the 70’s (when I should have) I’d be doing very well today. http://stockcharts.com/charts/historical/djia1900.html If you invest with the idea of making a bundle in a few years you stand a good chance of losing. Invest in long term strategies and chances are you’ll do fine. That doesn’t mean invest in the Acme Buggy Whip Company or in a Leisure Suit concern (tell me I’m not the only one who wore one!) or in a dot com start up after the bubble is over. There are historically stable investments that can be made. But those are dull and boring and a few percent a year or decade just doens’t look like much. Your investment councilor will tell you to put your money where HE thinks it’ll do best. Better you do your own homework and make your own decisions.
The market looks like crap right now, I’m betting it will for some time and will probably get worse for a good long time, say 12-15 years, but it’ll eventually come back.
Waaaait a minute here Bret, I think you were saying that we were all going to be digging potato’s and relying on barter after the great collapse which is coming!
Mervel, I said I fear it’s coming. We’re talking investments, not prepping. I have no money to invest. If I did I wouldn’t invest now because I’m old enough that I’ll never see the benefits. If my kids could invest a little, yeah, they probably would in 40 years. The realities of whats around the corner, the one I hope we never see, are a collapse of the US dollar/deflation/hyperinflation, depends on which theory you buy. I have no disposable income so I just reinvest what I can in my farm/business.
BTW- I have zero faith the Social Security as we know it will be there when I reach the age.
I have more faith in Social Security than my 401k. Of course that is not saying much! You can mandate social security you can’t mandate returns in the market. But yes I agree over a very long time horizon you must be in equities to get the returns from the economy. The problem is we have had periods where it took 20 years to get back to the original investment. Take the period 1925-1945 for example. We may be in that sort of period now, it may be another ten or even 20 years for the market to get back to 14000.