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NY pension obligations are unsustainable, and represent a $120 billion bomb, could explode!

December 7, 2010

New York’s pension obligations are unsustainable, a report claims, and represent a $120 billion bomb. (DN)

NY Pension Costs Could Explode

Updated: Tuesday, 07 Dec 2010, 2:23 PM EST

MICHAEL HILL, Associated Press

ALBANY, N.Y. – Taxpayer-funded contributions to the pension systems for New York’s public employees could balloon by billions of dollars over the next five years, diverting scarce resources in tough times, a fiscally conservative think tank said in a report Tuesday.

The Empire Center for New York State Policy report predicted how state public pension funds could fare based on the performance of investments and other variables, but even the forecasts based on pensions hitting their investment targets are alarming.

The report said taxpayer contributions to the New York State Teachers’ Retirement System could increase from about $900 million this year to about $4.5 billion in five years. State and local employer contributions to the New York State and Local Retirement System could more than double to add almost $4 billion to taxpayer costs, even with a cap that allows governments to defer a portion of higher pension contributions.

The pension report was released at a conference in Albany that featured local officials concerned that high benefit costs could force them to cut services during difficult economic times.

Syracuse Mayor Stephanie Miner said high pension costs could threaten essential services like snow plowing.

Westchester County Executive Robert Astorino said rising personnel costs put local officials in “an impossible place.”

“New York’s pensions are the financial equivalent of the neutron bomb: kill taxpayers right away, but save the bill for future generations,” Astorino said.

Empire Center analysts suggested pension system changes, including introduction of so-called defined-contribution plans for public employees. Such plans, popular in the private sector, specify the amount employers contribute to employees’ pension plans instead of guaranteeing a specified benefit.

Stephen Madarasz, a spokesman for the 300,000-member Civil Service Employees Association, told conference attendees that workers deserve a guaranteed benefit according to what they’ve earned.

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NY Pension Costs Could Explode

The state’s fiscal problems go much deeper than the roughly 10 billion dollar deficit facing lawmakers and Governor-elect Andrew Cuomo next year.

A new report out Tuesday suggests taxpayers will be forced to pony up billions of dollars in the coming years to keep the ever-growing state pension system afloat.

Stefanie Miner is the Democratic Mayor of Syracuse and Republican Rob Astorino is the Westchester County Executive. Liz Benjamin was also joined by EJ McMahon, the Director of the Empire Center for New York State Policy.

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