"Gov. Arnold Schwarzenegger, the state controller and treasurer decided Monday to delay $2.9 billion a month in payments to school districts and counties sooner than expected so the state can meet debt and pension obligations." That's right, they are not paying for schools, not paying for health care, not paying for transportation, not paying for help for the poor in the worst recession in 80 years. But they are paying the retroactively enhanced pensions, and the debts run up by a generation of tax cutting spenders. And the federal government just voted to help reduce the level of public school layoffs caused by the soaring cost of teacher pensions by increasing school subsidies, and offset it by cutting food stamps.

That isn't what the term limits report said directly. But that would remain the reality under the commission's proposals (or more accurately lack thereof), with the one restriction that members of the City Council could not eliminate or extend term limits for themselves. They could only do so, and then resign before their last term was up, and have their spouse, child, or flunky selected in a special election no one knows about. As in the state legislature.

The need for a referendum to change the charter, or at least portions of the charter for which the politicians have a conflict of interest, is one thing I thought any decent group of people would propose. But they haven't, and there is no explanation as to why, although the report does mention that having he Council overturn a referendum without another one is something many objected to. Not only could the City Council eliminate term limits, but it could also eliminate initiative and referendum. This stunning omission has gone without comment. BTW, to change the NY state constitution requires the assent of two consecutive state legislative terms AND a referendum. If the City Council can just change the charter, why does it exist, since it is no more difficult to change than any ordinance?

That is what the opponents of the proposed "Ground Zero" mosque should be asked, with an answer demanded. Because the "Ground Zero" mosque isn't at Ground Zero, it is at a nearby site the people who want to build it happen to own. It may or may not be possible for those who seek to build Park 51 to acquire an alternative site in the vicinity of the Lower Manhattan population they seek to serve, particularly since anyone who would sell to them at this point might end up demonized as well. And the Governor's proposal -- to hand over state land to a religious institution -- is just as unconstitutional as having the state ban new mosques.

Even if they were successful in purchasing an alternative site while not losing their shirt on the old one, however, the fun could begin anew. "Terrorists" could be accused of planting a "trophy" in an area that was part of the "frozen zone" most affected by the attacks that day. What was that, south of 14th Street? South of Canal Street? South of Chambers Street? West of Broadway? As you recall, it shrank over time. Or building in the very area where the death dust fell, including much of Brooklyn. Or of planting their "trophy" in the very city that was attacked. Or in the metropolitan area where most of the victims lived. Etc. Who would dare to do this, or allow this? Are you in favor?

Mr. Skurnick has pointed out that the proposed language in the charter text amendment concerning signature requirements in the draft report is different than what was described in the executive summary, which I read before writing the post below. Hopefully, the language in draft text, not in the executive summary, is what is intended to be done. The executive summary is confusing, and should be modified, if the intent is make the number of signatures required for independent candidates the same as for party primaries. The executive summary language is below.

As some readers might recall, I wrote a series of posts based on a model of how much the pensions initially promised to New York’s public employees should have cost, how much they were underfunded based on excessive investment return assumptions, and how much some of the major pension enhancements (among the dozens) of the past 15 years and pension spiking have added to the cost. I found that most of New York’s public employees were promised pensions that, properly funded, would have cost 11.8% of their pay, with 8.8% paid by taxpayers and 3.0% by the employees themselves. For those in physically demanding jobs, the total cost would have been 16.2% of pay, with 13.2% paid by taxpayers; for police and fire it was 29.6% almost all paid by taxpayers. Subsequent deals and pension spiking have (just deals I’m aware of) more than doubled the expected taxpayer cost of pensions for teachers and those benefit from the “traditional pension incentives” repeatedly offered, while also drastically increasing the cost for workers in other categories.

Let’s say, however, that you are not a person who is in a position to live decades without contributing any thing to anyone else, and force other people who are worse off to pay for it, the way the public employee unions and politicians have? What does the model say about your retirement, assuming retirement for you will mean what it has generally meant historically – a few years of leisure at the end of a long working life? To answer that question, I have added a “reasonable” retirement scenario to the model, and find that you had better be saving 10.0% of your salary or more, assuming you are paying for your entire retirement yourself (or almost all of it).

That's what he said, but it isn't true. He had no trouble saying no when he wanted to, unlike his members who are required to say yes. What he said yes to is what he has done. Silver's supporters have been given taken the highest state and local tax burden as a share of personal income in the U.S., and have provided less in return, mostly by diverting resources to those who do not work. Yes the Republicans and their contractor and Wall Street backers got their piece and their tax breaks too. And to keep the serfs from objecting, most of the cost was pushed off to a future none of them cared about to be inhabited by people none of them care about either.  We will pay more and more, and get less and less, as the beneficiaries die or leave for Florida with the difference.

Pataki and Bruno are gone, Thank God, but their damage lives on. Silver's still increases.  There were no dictators.  Silver and his backers got their piece of our hides.

Frankly, I don't think it has anything to do with how his policies have affected or will affect business, although that is what has been and will be claimed. A rationalization. I believe it is because he has raised the issue of executive pay and appointed a "Pay Tzar" to question it. Which is the equivalent of a governor appointing a "Pension Tzar," and drawing an open comparison between the deals public employee unions have grabbed in the past 15 years and the situation of everyone else. So should Obama back off?

According to Governor Paterson, as quoted by The Daily Politics, "the temporary reinstatement of the 4% state sales tax on clothing and shoe purchases of $110 or less will put a strain on those who can least afford it." The state had backed away from a proposal to tax hedge fund managers the same way those working in other industries are taxed, because doing so might drive that industry out of the state. But all taxes on residents hurt their standard of living, and all taxes on businesses and their owners drive economic activity away. Why should spending on clothing, or the hedge fund industry, receive more consideration than anything else? After all, we've lost plenty of industries in this state over the past 40 years, and have a high tax burden overall.

I read over the weekend that President Obama might try to help Democrats in the Congressional election by staying quiet. After all, since he has been in office for, what, 17 months, some are beginning to blame him for the consequences of a 30 year debt binge by Generation Greed.

That would just extend the biggest mistake he has made. Obama built up a huge political organization during his campaign that attracted donations and support from millions of Americans. I had expected, with his campaign team joining him in Washington, that the campaign would be extended and its supporters mobilized to confront the country's problems. By, for example, providing support to members of Congress who supported his plans, and challenges to those who didn't. It hasn't really happened.

If that's the deal, and you are completely selfish, why not gamble more? So the city's public employee pension funds seem to have concluded. They want to put more money into hedge funds, which generally don't hedge (accept lower but more assured returns) at all. They leverage -- producing huge returns in some years, and 100 percent investment wipeouts at other times, all while charging massively higher fees to their massively overcompenstated managers.

What this is about is coming up with a rationalization to claim the pension fund investment returns will be higher in the future than they will actually be. So more pension enrichments can be awarded but not paid for, until the costs explode and devastate the future of younger generations.

I had to cut my prior post on the cost of pension enhancements short because it was already too long, and I was out of gas in any event, so I’ll finish the analysis here. To review, according to the model described in this post and present in the attached spreadsheet, I found that for those now approaching retirement from New York City, New York State and other New York local governments, the state had promised, when the employees were hired, pensions that would cost the taxpayer 8.8% of payroll for most workers, 13.2% of payroll for those in physically taxing jobs such as sanitation workers, and 28.7% of payroll for police and fire. But they didn’t set aside enough money to pay for those pensions, using the stock market bubble of the 1990s as an excuse (and still doing so a decade after it popped), as I showed in this post. In addition, the pensions were drastically, retroactively increased compared with those promised, in a series of deals between the public employee unions, representing those workers who were already or about to retire, and politicians seeking political support. At the expense of the general public, particularly those worse off, and the future, now the present. For most public employees, as this post showed, the result was pensions that, for those getting early retirement incentives, cost double what had been promised. Little of this has been paid for, and under a proposal by Comptroller Thomas DiNapoli, local governments outside New York City would not pay for another 10 years, up from the three year postponement the state legislature just passed.

So what about the cost of pension enhancements and other deals for those in physically taxing titles, police and fire? Read on.

Year after year, the New York State legislature passes bills that enrich the pensions of New York’s public employees. The employees who benefit are often already retired or about to retire, and thus offer neither improved work nor gratitude in return. Even this year, with taxes rising and public services being gutted, dozens of such bills were introduced and many were passed, with the Governor already signing a bill to possibly allow tens of thousands of government workers to retire years earlier than they had been promised – and decades earlier that most New Yorkers in younger generations will be able to.

So how much do all these pension deals cost? Most are passed in the dead of night with no analysis, no debate and no announcement. An irrevocable decision that future state legislators cannot reverse, no matter how disastrous, is hidden from public view. But to the extent the state legislature, Governor and/or Mayor do put a price on these deals, it generally falls into one of two categories. Either they claim it costs nothing, or they claim it actually saves money. I beg to differ. As the model in the spreadsheet attached to this post shows, newly re-attached for those who had trouble downloading it, just the recent deals I am aware have vastly increased the cost of New York’s public employee pensions far beyond what had been promised or admitted. Public services and benefits will be devastated to pay for them. This massive, bi-partisan transfer of wealth from those who are worse off to those who were already better off marks the beneficiaries as selfish and the state legislators as despicable. Totally despicable. Particularly when the unions and legislators subsequently have the nerve to pretend to object to service cuts, benefit cuts, and tax increases, staging a hypocritical show of protest.

We are just a couple of days past a ten-year anniversary. On July 11th 2000, then-Governor Pataki signed one of the biggest of the recent pension enhancements. Comptroller Carl McCall had pushed for some of the changes, which had passed the legislature several times without any votes against but had previously faced Pataki vetoes, and New York City Mayor Giuliani had pushed other changes as part of a deal he had cut with the public employee unions. Pataki, Giulani and McCall, all looking for support (or neutrality) in runs for higher office at the time, claimed that the pension enhancements (which will be discussed in the next post) would cost absolutely nothing. Because the pension law passed in 2000 asserted that from the high point of the biggest stock market bubble in history, the New York State and New York City pensions funds would earn an additional 8.0% per year on average into the future, not the 7.0% that had previously been assumed. New York State and its local governments, and those throughout the country, had already cut the amount that was being contributed to the pension plans based on high stock prices, to levels below what my model finds would be required to pay for the pensions. So how accurate has that 8.0% rate of return assertion turned out to be, and what are the consequences?

New York’s pliable pension actuaries have been subject to severe criticism on this blog, and by actuaries that now write for publications and no longer need to be “team players” with politicians and unions in order to earn a living. After years of pension enhancements, pension funding cuts, and inflated estimated investment returns, we need to figure out what our situation actually is, and our future actually holds. So in the “do it yourself” spirit of an era in which there are few people and institutions left worthy of trust, I’ve decided to take a shot at it myself, with the simplified model in the attached Excel file. This post will describe the model, and attempt to estimate how much the public employee pensions promised (back when they were hired) to those approaching retirement would have cost (without any subsequent deals for pension enhancements in exchange for campaign contributions and political support), and how much should have been set aside to pay for them. The information discussed will be in the worksheet in the “promised” tab. A second post will try to estimate how much pensions have been underfunded due primarily to inflated estimated future investment returns, as noted in the “underfunding” tab. A third post will attempt to estimate the impact of some of the major pension deals I have been aware of over the years, among the hundreds passed and thousands proposed.

I find that for a typical New York government employee now approaching retirement (or recently retired early under some deal), a pension was promised that would have cost 11.8% of total pay during their careers, with 3.0% paid by the employee and 8.8% by the taxpayer, plus retiree health insurance for three years before Medicare carries most of the burden after age 65. For those in “physically taxing” jobs like sanitation workers, the promised pension would have cost 16.2% of their pay, with 13.2% from the government, and 10 years of pre-Medicare retiree health care. And for police/fire, it would have cost 29.6% of their pay, with almost all paid by the taxpayer and perhaps 21 years of pre-Medicare health care. But future taxpayers and service recipients (if there are any more services) will face a drastically greater burden.

In my previous post, I looked at comparative public school spending per child in FY 2008 using data aggregated by the U.S. Census Bureau, with a flashback to the 1990s and a look ahead based on budget data. In the spreadsheet attached to this post, I compare the public school revenues and expenditures of the United States, New York City, the Downstate Suburbs, Upstate New York and New Jersey in FY 2008 with FY 2007, the year before the Campaign for Fiscal Equity Lawsuit was settled, and FY 2002, the last budget before the start of the Bloomberg Administration. The output pages of the spreadsheet are designed to print on two letter-sized pages. My review of the findings is below.