State pension costs draining village finances

By CHRIS EBERHART

As Tuckahoe and Bronxville prepare their budgets for the 2015 fiscal year, unfunded state mandates, such as rising pension costs, are often seen as boulders crushing local governments and crippling their budgets.

Democratic state officials Assemblyman Tom Abinanti, right, and Sen. George Latimer proposed a pension reform bill that would impose a 2 percent cap on local governments’ expenditures to the pension system. File photos

Democratic state officials Assemblyman Tom Abinanti, right, and Sen. George Latimer proposed a pension reform bill that would impose a 2 percent cap on local governments’ expenditures to the pension system. File photos

Two New York State Democrats—Assemblyman Thomas Abinanti and Sen. George Latimer—are trying to lighten the load with a pension reform proposal originally filed in 2012 by Abinanti in the Assembly. Latimer sponsored the bill in the Senate last year. But, it is uncertain if the bill will gain any traction in the State Legislature.

Essentially, the proposal would cap pension expenditures by local municipalities to lessen the burdens of unfunded state mandates.

“The single-worst mandate is the pension requirements, and we should put an all-out press on that,” Latimer said. “Relieving unfunded mandates on local governments is the simplest way to lowering property taxes. Right now, they’re burning the furniture for fire wood.”

According to the proposal, pension costs would be capped at 2 percent, meaning the amount a jurisdiction is paying can’t exceed more than 2 percent more than the prior year’s expenditure or the inflation factor, whichever is lower.

The proposed 2 percent pension cap directly correlates to the 2 percent tax cap levy, which caps how much local governments can raise property taxes to cover services.

“A tax cap without mandate relief is insanity,” Latimer said. “If you put a cap on how much you can raise property taxes, you must also cap how much mandatory pension cost a local jurisdiction has to pay.”

But the proposal does not cut the pension benefit retirees are entitled to. Instead, it would force the state government to pay into the pension fund and stop, as Latimer sees it, kicking the can down the road.

According to the proposal, the state would use its general fund to pay the difference between the maximum amount of money required to fully fund the pension and the amount that’s due by the local municipality.

“If a jurisdiction’s revenues are capped, then my argument is the state is going to have to pick up the difference because it’s the state that is making the decisions and getting the return on the investment,” Latimer said. “That’s just a practical way of looking at things. That is a point of principle I want to argue this year.”

Tuckahoe is in the fetal stages of its budget creation for the 2015 fiscal year, which begins April 1, 2014, and Tuckahoe Mayor Steve Ecklond, a Re-publican, said pension costs are the village’s biggest challenge.

Bronxville is at a similar point in their 2015 budget process and Village Treasurer Robert Fels said the pension costs are “not sustainable” in light of the tax cap.

“Over the past several years, pension costs have gone up and it’s not sustainable to keep paying these costs while remaining under the 2 percent tax cap,” Fels said. “It’s forcing us to cut in other areas of our budget.”

The town-wide budget for Eastchester, which includes the villages of Tuckahoe and Bronxville, was adopted in late December 2013 by the Eastchester Town Council. Eastchester Town Supervisor Anthony Colavita, a Republican, said the single greatest challenge to the budget is pension costs.

“Without it, we would never have a tax increase,” Colavita told the Eastchester Review.

Colavita said when he took office in 2003, pension costs were $100,000. Now, it’s $3 million, making for a 3,000 percent increase.

To further the numbers, Latimer’s proposal estimates a $400 million decrease in contributions to the New York State and Local Retirement System for this fiscal year.

“But I don’t dream stupid dreams,” Latimer said. “It’s a very tough sell.”

As of now, the proposal sits in its respective committees and Latimer said because he and Abinati are proposing the state pick up the tab for what the local governments can’t pay, he doesn’t envision the bill being popular.

Contact: christopher@hometwn.com