State pension boost price tag: Nearly $1.5 billion a year

ALBANY -- The cost of a pension upgrade for state workers, teachers and others would run almost $1.5 billion annually, with school districts and local governments – and, more importantly, their taxpayers – covering the bulk of the outlay, according to new details emerging Wednesday from budget talks at the State Capitol.

A cluster of unions has advanced three-part package it is asking Gov. Kathy Hochul, the Senate and Assembly to consider for workers who were hired by April 1, 2012, or later, those currently in the least lucrative set of pension benefits, known as Tier 6.

Among the proposals being reviewed by legislative leaders, would permit all Tier 6 workers to retire at 55 instead of 62 or 63 if they had 30 years of service.  Another would change the formula for how much a worker has to contribute to his/her own pension. For example, a person now making $74,999 now pays 4.5% but it lower to 3.5%.

Unions say workers hired in the last 14 years shouldn’t have to wait as long as their predecessors who can retire at 55, among other complaints about Tier 6, which then-Gov. Andrew M. Cuomo and legislators approved as a way lower pension costs. They also contend Tier 6 has made it challenging to recruit and retain workers.

Allowing a 55-year-old retirement age would be the most lucrative element of the pension sweetener being discussed in Albany, estimated at $836 million annually, according to a rundown circulating among legislators and obtained by Newsday.

The changes would affect those working in local and state government, teachers, firefighters, police and health care workers at public hospitals such as Stony Brook University Hospital and Nassau University Medical Center.

But the price tag would be substantial for local entities.

According to the new details, of the $1.5 billion to annual pension costs, $480 million would come from school districts, $407 million from local governments outside New York City, and $328 million from the five boroughs.

The pension issue is one of the sticking points in state budget negotiations, which now have run past the April 1 fiscal deadline.

Dishing out pension goodies also clashes, some say, with the “affordability” theme Hochul and state legislators of either party have been pushing this year, an election year.

“You call that ‘affordability’?” E.J. McMahon, an adjunct fellow at the Manhattan Institute, a right-leaning think tank, wrote on the website formerly known as Twitter.

The three associations that lobby for New York counties, cities and towns haven’t opposed a pension boost while issuing a statement saying state government alone should cover the $1.5 billion increase. That’s the same position taken by Assembly Minority Leader Edward Ra (R-Garden City South) and a number of other state legislators.

But Blake Washington, Hochul’s budget director, said Wednesday that’s not under consideration.

“Shared responsibility for financing the public pension system has been a bedrock principle in New York and hasn’t changed,” Washington said.

Hochul appeared at a recent union rally, boosting the call for a Tier 6 “fix.” Washington said no deals have been reached on the issue and leaders were still discussing “what we can afford.”

By Yancey Roy

yancey.roy@newsday.com@yanceyroy