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Filler: Tom DiNapoli on socially responsible investing, pension costs and debt
New York State Comptroller Thomas DiNapoli was at Newsday for an editorial board meeting Thursday morning.
A former Long Island assemblyman, DiNapoli is in charge of the state’s pension funds, and also runs an office that oversees the state’s spending and contracts and does some of the same for local governments and authorities.
An affable and friendly guy, DiNapoli generally doesn't look for fights but he's had them, of late, with Gov. Andrew M. Cuomo, over how to soften the staggering costs of pensions for municipalities.
His big concerns these days:
Morality versus profit
In the wake of the Newtown shootings, DiNapoli says he’s been facing a lot of questions about the state pension fund’s investments in gun businesses.
The fund never had much money in the arms makers, he said, and has sold its holdings in one investment and was supportive of a private equity firm it is invested in selling another. Additionally, he has frozen that sector, meaning there won’t be any new investments in that arena, although it still maintains a share of one gunmaker.
The problem is that so much pension money is in investment funds that hold broad ranges of stocks, DiNapoli says, so it can be difficult to keep a portfolio pure. This is particularly true when it comes to a contentious issue like hydraulic gas drilling, where companies involved in energy will show up in every possible index fund investment.
What makes it even more difficult for DiNapoli and his staff is that they are charged with making a profit, not bettering the world, yet know they have to keep the people’s money away from evil endeavors.
Those pension costs and the fund
The New York State pension fund is a $150-billion giant, and it’s also one of the best-funded of its kind in the nation, holding almost 90 percent of total liabilities.
The problem is keeping it that way at a time when municipal contributions to the fund have had to go from almost zero to close to 20 percent of salaries, paid out, in just 10 years. Over the past few years it has become legal for municipalities to amortize their pension payments in the hope that this will soften some of the sharp increases while the markets rebound from the stock market's crash in 2008.
DiNapoli believes this is a good program, but said not many governments have taken advantage of it. What he’s more leery about is Cuomo’s plan to allow municipalities to begin paying less in pension costs now, and make it up years down the road when the savings kick in from Tier 6, the new level of pension adopted last year by the State Legislature.
DiNapoli fears that in the case of another market setback, the pension costs would go beyond what the contributors can pay.
The debt burden of the state of New York
By law, the state can only borrow so much money, a percentage of the state’s total income. Current debt is at $63 billion, or $3,253 for every person in the state, and DiNapoli says New York is very close to running out of room to borrow.
DiNapoli would like to see the state go back to the past system in which the voters, and not just the legislators, had to approve big borrowing. However, he says that prospect is unlikely.
Fiscal stress monitoring
DiNapoli’s office is setting up a system in which every municipality in the state will have its finances evaluated to determine how stressed their fiscal situations are.
The comptroller conceded that many leaders already know when they have financial troubles, but argued that others don’t, and many don’t want publicity when the money is running out. DiNapoli believes it’s important that the state continue its history of never letting government entities go bankrupt.