When financial markets crashed more than seven years ago, state and local employees’ pension funds faced different degrees of crisis as their investments swooned.
As in previous downturns, that pressured public officials to keep those systems afloat using tax revenues thinned by the battered economy.
So it may have felt just a bit like a chilly reminder of bad times this week when State Comptroller Thomas P. DiNapoli told a gathering of the New York Conference of Mayors that the state’s retirement system would fall short of its set 7 percent goal once total returns are calculated next month.
Should everyone be thinking, “Here we go again”?
No, DiNapoli, said, “it’s way too soon to project” at what rates New York’s local governments will need to ante up for pension funds.
He said there’s no reason to believe New York faces a spike in those rates as dramatic as one that occurred in 2009.
“We are following a number of years of positive return so whether a year of being less than 7 percent will have any impact in terms of rates going in the opposite direction, I don’t know yet,” he said.
And, he added for perspective: “It’s way too early to predict the end of the world.”
The state smooths out the impact of annual ups and downs in investments by using five-year averages to figure out how much in tax revenues will be needed for the pension systems.
The past four years’ results have been above the 7 percent mark, DiNapoli noted.
That would help cushion any immediate shortfalls.
Prompted by DiNapoli’s public remarks, however, Suffolk Legis. Tom Cilmi (R-Bay Shore) issued a warning statement.
“I certainly hope the Comptroller doesn’t look to local governments for additional funding,” Cilmi declared. “Suffolk County has already amortized nearly $300 million of prior years’ pension obligations. We are being crushed under the weight of required contributions.
“In 2003, Suffolk’s required pension contribution was just $13 million. This year it will exceed $250 million,” Cilmi said. “It’s completely unsustainable. Something has to change.”
The pension burden for local governments is long-running. Some note that the state’s 2 percent tax-hike cap also squeezes expenses.
DiNapoli said that as for public employers, “I think we’ve been very sensitive to their needs. I hope we will be able to, at a minimum, keep rates stable. But we can’t make judgments until the numbers are in.”
Pension pressures create periodic calls for a different, less-expensive retirement system for future public employees. Warnings such as Cilmi’s could multiply as discussions build and final annual figures are tallied.