What if the Pensions Are Never Paid For?
New York's pension rules automatically allow the taxpayer contributions that are theoretically required today to be put off until tomorrow, through "smoothing." That makes it easier to, among other things, retroactively enhance pensions while deferring the costs until they could be blamed on something else. But that wasn't enough for State Comptroller Thomas DiNapoli, who proposed that the pension contributions by the State of New York and local governments outside New York City be re-smoothed – by borrowing money from the pension funds to defer costs until the stock market went back up. Then-Governor Paterson and the State Legislature readily agreed back in 2010. Well, the stock market went back up and now it’s time to pay back the pension funds under the DiNapoli deal, but guess what? No one wants to do that. So now-Governor Andrew Cuomo has proposed re- re-smoothing by having school districts borrow against the pension funds yet again. This will be counted as state school aid.
Meanwhile, New York City is contributing $1 billion less to its pensions than it admits is required, to smooth out the consequences of admitting that the pension funds will only earn 7.0% per year rather than 8.0% in the future. Having smoothed out the cost of the 2000 pension enhancement for several years. And having unsmoothed the huge but temporary increase in the purported value of the funds during the stock market bubble, so the money could be grabbed immediately, and then smoothed the subsequent reversion to the mean.
This goes on and on. The unions seem to be in favor, assuming that the under the state constitution ensures that everyone else will be eventually reduced to slavery if that is what it takes to pay those pensions in the end. Anti-tax groups like it because they assume that somehow, some way, the pensions will be taken away if they are not paid for. Or everyone figures that they'll be dead or have moved away before the consequences arrive. But they already have, and it keeps getting worse. We are approaching the 13 year anniversary of the bursting of the 1990s stock market bubble. Isn't that long enough for this crap?