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As discussions over the state budget reach their final stages, Governor Kathy Hochul is finally pushing back against the public-employee unions’ excessive demands for pension enhancements. Is it time to celebrate?
The unions are branding their campaign as “Fix Tier 6,” but in reality, it seeks to dismantle the Tier 6 reforms established over a decade ago. This would involve granting retroactive benefits to workers who accepted jobs with full awareness of the existing pension arrangements. Such changes could burden future state and local taxpayers with an additional $100 billion expense.
Currently, the benefits provided surpass those typically available in the private sector; so why consider lowering the retirement age from 62 to 55?
Moreover, why propose removing even the modest contributions that employees make toward their pensions?
The Hochul administration estimates that meeting the unions’ complete set of demands would cost a staggering $1.5 billion annually. In contrast, her compromise proposal, which includes adjusting the retirement age to 60, would impose a more moderate cost on taxpayers, amounting to $500 million each year.
Oops: We guess the unions should’ve just asked for $5 billion, then she’d have offered “just” $2 billion.
Mind you, whatever the unions get now, they’ll simply be trying for more next year: The only way to avoid them rolling back the reform completely is to never give an inch.
This is why New York had to do a “Tier 6”: Over the last half-century, the unions have eviscerated the Tier 2, 3, 4 and 5 reforms: They never relent, and eventually Albany hands out the candy.
Indeed, this endless cycle of scams shows why the Empire State should move all public pensions from 19th-century “defined benefit” plans to modern, 401(k)-style “defined contribution” ones — which is all that most taxpayers have.
That should be Hochul’s counter-offer, not a scheme to “only” partially betray the people of New York.