Pension Costs for Local Governments May Triple

Pension costs are going to kill us and here is more proof. I said this last year, then again a couple weeks ago. Albany loves to point the finger of blame at the local governments but most if not all of the fault goes right back to their mandates and pensions have got to be the biggest.

Read this, read what our future holds as the legislature, mainly the assembly run by dictator Silver refuse to do anything about it. He has not even considered another tier. We will get buried and he could care less.

ALBANY — Local governments in New York State face an unprecedented increase in pension costs that will force them to triple their contributions to the state pension system over the next six years, according to an analysis prepared by the comptroller’s office.

By 2015, pension costs borne by local governments upstate, on Long Island and in New York City’s suburbs will exceed $8 billion a year, compared with $2.6 billion last year, under the analysis, which was circulated to legislative and county leaders and obtained by The New York Times this month.

The analysis predicts that counties will have to contribute an amount equal to nearly one-third of their civilian payrolls to the state pension system and more than 40 percent of their payrolls for police and fire departments.

County leaders fear that the soaring contributions will put heavy pressure on their budgets as they struggle to keep up with retirement promises made in times of prosperity.

And there is no clear strategy to mitigate the damage, as Gov. David A. Paterson and Comptroller Thomas P. DiNapoli have clashed over plans to provide even modest pension relief.

“It’s alarming, eye-popping and unthinkable,” said Stephen J. Acquario, executive director of the New York State Association of Counties. “To manage that liability in the face of this deep decline in government revenues is going to be a challenge,” he said. “Where is this money going to come from?”

A less sharp rate of increase has been forecast for New York City, which has its own pension system, but only because it is more poorly funded than the state pension fund and already requires steeper contributions. Still, Mayor Michael R. Bloomberg suggested in January that the city could face a 50 percent increase in contributions over the next six years, potentially rising to about $9 billion from $6 billion.

Much depends, of course, on how the financial markets perform: The state’s pension fund was $109.9 billion at the end of March and $153.9 billion a year earlier. It lost $44 billion in the fiscal year that ended on March 31. The loss represents 26.3 percent when considering the sharp downturn in the stock market, but does not reflect the contributions and payouts into and out of the pension system last year.

Mr. DiNapoli’s office cautioned that the figures it circulated represented only one possible chain of events, and depend in part on a healthy stock market recovery in the first half of the next decade.

The analysis envisions a market rebound similar to the one after the crash of 1987, with a return of 1.5 percent in the current fiscal year, annual returns in excess of 13 percent in the next two years and more than 10 percent in the succeeding three years.

According to the analysis, pension contribution rates for civilian employees in local governments will soar to 30.3 percent by 2015, from 7.4 percent of payroll this year. Contributions to police and fire department retirement plans are expected to increase to 41.1 percent in 2015 from 15.1 percent this year.

“It is staggering,” said Peter Baynes, executive director of the New York Conference of Mayors. “The only way they’re going to deal with it is through property taxes and reductions in the work force.”

Pension Costs for Local Governments May Triple