September 2, 2010
PUBLIC PENSIONS: AVE
RTING NEW YORK’S LOO
Taxpayers for Wilson19. W. 44th Street, 1401New York, NY 10036(212) 221-7809www.wilsonfornewyork.com
This paper examines the looming public pension catastrophe approaching our nation generallyand New York State specifically. There are several key points we will consider in detail:
The coming public pension crisis is the largest financial problem our nation faces at thestate level, and the cost to taxpayers will dwarf that from TARP, the Fannie Mae/FreddieMac bailout, the S&L bailout or any other recent American financial crisis.
The magnitude and nature of the pension crisis is disguised by the application of lax government accounting standards that allow for accounting deceptions and donot stand up to private sector scrutiny.
An honest accounting of pension assets and liabilities would reveal a substantialunderfunding in
New York State’s
Common Retirement Fund of anywhere from $30billion to $80 billion.
The current New York State
Comptroller’s pension borrowing
legislation willfurther increase the level of underfunding.
Under the current Comptroller,
investment returns have been significantlybelow the median of other comparable public pension funds for the last year, the last twoyears and the last three years and have thus further exacerbated
he Fund’s cumulative underperformance, relative to
its 8% target investmentreturn over the past 3 years, totals nearly $50 billion.
Pension promises to state and local government workers and retirees are guaranteed bylaw, legal precedent or, in some cases like New York, state constitutions.
Ultimately,these shortfalls are borne by unsuspecting taxpayers who are on the hook for highertaxes.
In dealing with New York’s
pension underfunding, the State and its leadership mustadhere to three bedrock principles:
The true extent of our shortfall must be made clear through an honest accounting.
New Yorkers are already the most heavily taxed people in the nation and cannotafford additional taxes, so increased taxes cannot be a part of any solution
The benefits of N
ew York’s government
workers, retirees and their beneficiariesare to be provided for in full. They have earned these benefits as part of theirnegotiated compensation on the basis of a contract that must be honored.