Janison: NY pension gap fix a familiar borrowing plan?
New York Gov. David Paterson speaks during a legislative leaders budget meeting at the Capitol in Albany, N.Y. (June 9, 2010) Credit: AP
In an almost traditional piece of Albany finesse, state leaders - their backs to the wall on immediate budget deficits - reportedly are eyeing a major strategy for putting off costs.
As best we can tell, state and local governments would essentially borrow money owed to the pension system - from the pension system that it owes.
In New York City, where employees' municipal pension funds also are huge, an expert reached Saturday expressed intrigue and surprise at the plan - but found its underlying principle somewhat familiar.
"We've had issues in the past where there was no city budget. So the city came to the pension fund boards and asked for a waiver of the monthly payments. And the payments would be waived, and this went on for one, two, three months. The money would eventually come in to the pension fund - with appropriate interest," said the pension professional, who declined to be identified.
"But what's interesting here is, Tom DiNapoli, the state comptroller, also is the sole trustee of the pension fund. How does he go to the pension fund for a waiver? Does he ask himself for the money? It sounds like, to keep it clean, they make it instead into a formal borrowing. . . . "
Quickly, the situation gave Harry Wilson, the GOP candidate for comptroller, fresh ammunition to denounce Albany-style gimmickry, from the outside.
Those inclined to defend this maneuver will say it's too late in the annual process for leaders to cut their way out of the operating deficit. They'll say the state is good for the loan, and that the pension now is among the best-funded in the nation. They'll call this more of a "smoothing out" of payments than a raid or a gimmick, and so on.
Recent decades have produced ample precedent for big cost-stalling moves. Officials created "lease-backs" of public assets. They generated general income from supposedly single-purpose public authorities. They stretched out debts for longer than initially planned.
Beyond that, the floating of this proposal could revive, for the thousandth time, debate over whether the comptroller, assigned to protect the state's interests, should simultaneously be the singular master of the sprawling pension fund.
If old habits die hard, then old habits at the Capitol die hardly at all.
