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Legislation Would Save Local Governments $1.2 Billion
Tuesday, July 20, 2004
The New York State Senate today passed a pension reform bill (S.7677), sponsored by Senator Joseph Robach (R, Rochester), that will save local taxpayers approximately $1.2 billion this year, stabilize the pension system to prevent surprise spikes in pension costs in the future and generate significant out year savings for local employers.
The Senate Majority targeted relief from increased pension costs as a significant part of a comprehensive mandate relief plan advanced by the Senate Majority earlier this year.
"Local governments and taxpayers have been hit hard by dramatic increases in pension costs resulting from stock market volatitlity and previously enacted benefit enhancements," said Senate Majority Leader Joseph L. Bruno. "In an effort to ease the burden on taxpayers, this bill would provide more than $1.2 billion in relief to local governments throughout New York State and would help create additional future savings for local employers. I'd like to thank the Governor, the Speaker, and Comptroller for making this a reality."
"Pension reform is an issue that is long overdue and I commend my colleagues for passing this bill," Senator Robach said. "Costs have increased dramatically in the past years and this legislation will provide significant relief to taxpayers, employers, and local governments at a time when it is needed most."
"Our balanced proposal addresses three pension issues for local governments -- costs, stability, and flexibility -- and, in doing so, would save taxpayer dollars over the short and long term," said Senator Betty Little (R-C, Queensbury), Chair of the Senate Committee on Local Governments. "The most immediate effect of the measure is it will help municipalities avoid the current spike in contribution rights."
Over
"By giving local governments flexibility in addressing their costs and helping to ensure that the state does not unfairly tie their hands, this initiative will help localities to pass savings along to local taxpayers," said Senator Mary Lou Rath (R-C, Williamsville).
Under the provisions of the pension reform bill, local employers would be able to bond or amortize all pension costs for SFY 2004-05 in excess of 7 percent of employees� payroll for a period of ten years, with the first payment of those pension costs not due until the fiscal year succeeding that fiscal year in which the amortization was instituted. This change would generate $106 million and $184 million in SFY 2004-05 savings for the State and local employers, respectively.
In addition, local employers would be allowed to bond or amortize for up to a period of ten years all pension costs for SFY 2005-06 over 9.5 percent of employees� payroll and all pension costs for SFY 2006-07 over 10.5 percent of employees� payroll.
The bill also changes the date on which local employers� pension payments are due from December 15 to February 1, providing a one-time cash deferment totaling $980 million for those local employers who operate with a calendar fiscal year.
The pension reform bill also authorizes local participating employers to create "retirement contribution reserve funds" that would help facilitate the financing of future pension costs. Reserve funds would be allowed to receive transfers from various municipal reserve funds, provided that no funds are transferred or expended contrary to existing law.
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