Syracuse Mayor Stephanie Miner did not back down from earlier comments she made regarding Gov. Andrew Cuomo’s proposed pension-smoothing plan, but criticized the media for trying “to make this a personal issue.”
Miner last week said Cuomo’s proposal to give local governments the option of locking in a set pension-contribution rate—essentially allowing them to pay less now and more later over a 25-year period—is “puzzling” and “raises more questions than answers.”
Light criticism from a mayor of a major New York city is not always newsworthy. But Miner is Cuomo’s hand-picked co-chair of the New York State Democratic Committee, and her comments received pushback from Lt. Gov. Robert Duffy and Cuomo’s budget director, Robert Megna.
After testifying at a budget hearing in Albany Monday, Miner characterized her relationship with Cuomo as “professional” and said she’s just “asking questions.” She said she hadn’t spoken to the governor directly in the last week.
“This is about having a robust debate in order to try to find the best solution—or perhaps a robust discussion,” Miner said.
Miner was in Albany to testify in front of a joint legislative panel on Cuomo’s $136 billion budget proposal, which he first laid out last week. She used her testimony, in part, to lay out five questions about the pension-smoothing proposal. Among them: “Will we end up saving money if we defer these payments to a later time?”
(You can read a portion of Miner’s testimony after the jump.)
Miner was asked whether she thinks she would remain the co-chair of the state Democratic Party, a decision she said is “up to the governor and the state committee people of the Democratic Party of New York.”
Asked whether she would like to remain co-chair, she said: “I am happy with the jobs I have currently.”
A clip of Miner’s exchange with reporters is also after the jump.
From Miner’s written testimony:
V. Stable Rate Pension Contribution Option
The Governor’s proposed Stable Rate Pension Contribution Option offers to reduce near-term payments for the City but will require higher than normal contributions in the latter years. If enacted, Syracuse will have the option to immediately reduce pension contribution rates by locking in a stable pension rate for a 25-year period and requiring higher contributions in the latter years.
While I am eager to accept an opportunity to provide immediate relief of our pension costs, I have the responsibility to also act in the best interest of the future fiscal condition of Syracuse. In doing so, my administration and I will prudently examine the Governor’s plan in conjunction with our budget projections to determine whether this option will offer a long-term solution or defer the crisis for someone in my position to mitigate in the future.
Before authorizing this program, I believe there are questions that need to be answered and issues that need to be investigated.
1. How do we know that this plan is viable 25 years down the line? Reviewing an actuarial report from an independent analyst would be helpful to municipalities in deciding whether or not to opt in. Published materials such as this could speak to the stability of the fund in the long term.
2. This plan hinges on a high turnover rate of current employees being replaced by new ones entering Tier VI. Overall, employees are staying in the system longer and retiring later. It is our experience that public safety employees are not retiring after twenty years of service. In Syracuse, the higher the rank of a firefighter or police officer, the longer they stay in the system at the higher contribution rate. We are looking to trim an already lean workforce and are reviewing every position and not filling it where necessary. This program is based on the idea that we could reap long-term savings of Tier VI, but it may turn out that the rate of new employees coming into the system at Tier VI may not be fast enough to make the program effective. The City of Syracuse has only hired 24 replacement employees since the enactment of Tier VI, which will save the City $38,000. While this provides some relief, it is only a sliver in comparison to the costs that the City must pay for the other five Tiers.
3. Will we end up saving money if we defer these payments to a later time? According to this proposal, the plan would save Syracuse $43.5 million over a five year period—which would certainly help the immediate problem of funding these costs—but what about when it’s finally time to pay them? Without carefully vetted projections, we can only speculate. The near-term savings are calculated on events in the future that may not occur. I am concerned that in the first five years of this plan, we may be financing another liability that we may not be able to pay.
4. This proposal has implications that will have a long-term and lasting impact. I fear that opting into this program could be a hasty solution for cities to fix immediate cash flow needs. Volatility in the market place and changing economic conditions have a way of altering the best laid plans. Should challenging economic conditions present themselves in the future and cities are unable to pay this liability, NYS Retirement System could be seriously at risk. Consider this—if the Legislature knew today what would happen in 2008, do you think they would have suspended employee contributions as they did in 2000 for Tier III and IV employees?
5. Is there a definitive end date to this program? The plan proposes that at various intervals it will be re-evaluated, and if the ROI (return on investment) in the retirement fund does not meet expectations, they will just lengthen the term of the plan. A 25 year plan could potentially turn into a 30—maybe 40—year plan, and the taxpayers are always responsible for funding it. The municipalities that have already availed themselves of the current pension amortization plan have growing debt, and if they opt into this program, it would grow larger. In FY2011, 57 municipalities took advantage of the pension amortization plan and financed $43.5 million of their pension costs. In one year, it had ballooned to 165 municipalities in the amount of $200.6 million.