Imagine that a patient, hemorrhaging uncontrollably, lies on an operating table. He is surrounded by doctors who all acknowledge the man’s grave condition. Each one states, “He’ll die unless we stop the bleeding.” They decided to apply bandages despite the man clearly requiring more effective medical procedures. By not effectively treating their patient’s gaping wound, these doctors are committing medical malpractice.
A similar situation occurs with pension reform in New York State. The political body continues to bleed tax dollars due to defined-benefit pension plans. Many politicians and pension reform experts state that unless we effectively reform the current model--i.e., change to a defined-contribution model--unfunded liabilities will continue to grow and sap more taxpayers’ dollars. In his State of the County address, Nassau County Executive Ed Mangano identified “rising pension costs” as a contributor to our County’s burgeoning deficit. The New York Times echoed this in its March 10, 2012 article titled “Deficits Push N.Y. Cities and Counties to Desperation.”
Even as there are glimmers of a national economic recovery, cities and counties increasingly find themselves in the middle of a financial crisis. The problems are spreading as municipalities face a toxic mix of stresses that has been brewing for years, including soaring pension, Medicaid and retiree health care costs. And many have exhausted creative accounting maneuvers and one-time spending cuts or revenue-raisers to bail themselves out.
Arthur Gianelli, president and C.E.O. of Nassau Health Care Corporation, also attributed . (Nassau Health Care Corporation is a public benefit corporation that manages Nassau University Medical Center.)
Although the creation of a new pension tier has some Albany politicians backslapping, E.J. McMahon of the Empire Center for New York State Policy is not as optimistic. “History would suggest that as long as the traditional defined-benefit pension structure remains in place, changes will occur,” he stated in “Another step on the trail of tiers” on NYTorch.com. The new tier does create a defined-contribution option; however, it only applies to nonunion government employees who earn at least $75,000 a year.
Considering the perilous state of Nassau County’s finances, the State must give the County Legislature the ability to effect real pension reform. As Nassau County continues to downsize its headcount, now is the time for County legislators to pass an emergency home rule message that asks the State Legislature to grant the county the ability to opt-out of the State pension system for new employees. All new employees of Nassau County government should be mandatorily enrolled in defined-contribution pension plans. New union (i.e., Nassau County P.B.A., C.S.E.A. Local 830, etc.) and nonunion appointed personnel could contribute part of their income with a capped County match.
A capped, taxpayer-funded match worked in other states throughout our nation. In “New York’s Exploding Pension Costs,” the Empire Center reported successful defined-contribution plans in Michigan and Utah. Utah capped tax-funded pension plans at 10% of salaries. By comparison, Nassau County Comptroller George Maragos stated in August 2011 that County taxpayers could fund a 26% increase in pension contributions in 2012 and a 19% increase in 2013.
Nassau County is hemorrhaging hard-earned, taxpayers’ dollars. County residents cannot afford a government loaded with debt and deficit. Ask your local County legislator to support passing an emergency home rule message that asks the State to grant the County the ability of mandatorily enrolling all new employees in defined-contribution pension plans.