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Mike Groll / AP, file
New York Gov. Andrew Cuomo says public pension reform was needed to stave off tax hikes.
ALBANY, N.Y. -- Future public workers in New York will have their retirement benefits cut under a sweeping pension reform measure passed by state lawmakers.
The measure, aimed at reducing future public worker retiree benefit costs by some $80 billion over 30 years, was approved by lawmakers early Thursday morning after Gov. Andrew Cuomo, a first-term Democrat, struck deals with legislative leaders late Wednesday.
The legislation was tied to a clutch of bills that passed, including measures to expand Las Vegas-style casino gambling and the state's criminal DNA database.
"Without this critical reform, New Yorkers would have seen significant tax increases, as well as layoffs to teachers, firefighters and police," Cuomo said in a statement.
The approval was a defeat for labor unions, who claimed they were sold out by Cuomo. New York has the highest union membership rate among states, at just over 24 percent, according to the U.S. Bureau of Labor Statistics.
“This deal is about politicians standing with the 1 percent — the wealthiest New Yorkers — to give them a better break while telling nurses, bus drivers, teachers, secretaries, and laborers to put up and shut up,” Danny Donohue, the president of the state’s largest union of public workers, the Civil Service Employees Association, was quoted as saying by The New York Times.
Spiraling public-sector employee pension obligations are one of the top financial problems faced by state and local governments across the U.S.
The pension reform reduces retiree benefits for future state and local government workers, increases the amount higher-earning public employees contribute toward their retirement plans, and raises the retirement age by a year to 63, among other measures.
New York City Mayor Michael Bloomberg applauded the bill.
"Skyrocketing pension costs have caused fiscal crises in many cities and counties around New York, cutting into local governments' ability to deliver core services," Bloomberg said in a statement. "That's why mayors and county executives - from both parties, and from every region in the state - came together to support Governor Cuomo's plan."
A senior official in the Cuomo administration said that the deal will save local governments about $80 billion in pension costs over three decades. Cuomo had proposed a pension overhaul estimated to save $113 billion over three decades and relieve local governments of a growing cost in employer contributions that could threaten solvency. The deal worked out late Wednesday made changes to the plan, reducing the total but still producing a hefty savings.
In striking the deal, Cuomo scaled back the most contentious portion of his pension proposal, which would have given new public workers the option of forgoing a traditional pension and instead choosing a defined contribution plan, similar to a 401(k), according to the Times.
Reuters, The Associated Press and msnbc.com staff contributed to this report.
More content from msnbc.com and NBC News
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Thank god......Sooooo many people leave New York State due to high taxes.......Anyone not living in this state complaining has no idea how bad the taxes are.....My annual tax bill (including school, property) is almost 6,000 on a house valued at 130K...I have friends who work for the state and even they say its crazy....
because the state is broke, they cannot hire new employees. So police stations, who have to solve crimes and must have a specific amount of cops on duty (because of union contracts), pay a @!$%# load of over-time....This OT then counts towards you salary which then determines your pension.
Its a total scam.....Cops know this so their last 3 years before retirement, they work crazy OT to boost pension to unreal amounts....Oh yeah, then they pay 0% NYS tax on the pension.... until they die
I am not quite sure what to think about this. Besides the corruption that exists within the "government" system, do you think that a lot of this cut of pensions throughout America is because of the baby boomers who are starting to retire/already retired? I mean, there are a lot of us in this group (not me, yet - if only.) Like Social Security threatening to go broke? I do not know what to expect anymore.
I wouldn't depend on the government for anything in retirement.......I am basing retirement 100% on my own savings...If Social Security is still around when I retire, then its a bonus....
I don't depend on the government for squat other then entertaining me during this election year.
Besides we are all just muppets, right? (Goldman Sachs)
How many elected officials had their pensions cut?
When will politicans and companies come clean and state that 401ks are just a scam designed by Wall street to get and keep your hard earned money. While you cannot access it (except for a few major reasons), they have access to it all the time just use it to gamble for themselves, and if they loose - whoops you loose too. 401ks are a scam and pretending they are an investment while Wall street or the Managing fund firm that is supposed to be watching out for you when they could really cares less about you. The bottom line is they scam you for your money so they have gambling money to earn for the firm - not for you. You are stuck with supposedly what stocks you invested in. The entire stock market is run by computers who trade in nanoseconds and wizards who seek get rich quick schemes to scam your 401k investment. It is worse than going to Vegas and gambling. Take matters in your own hands and keep out of 401ks, CDs, IRAs and all the other scams they have created to get your money. The market is the beast and I don't feed the beast.
Hello??? Wehave a choice if we want to go into a company's 401k, it is NOT required. Other the other hand, The Taxpayers are forced to pay for pension plans of public sector employees. If Public Sector Employees want a Pension Plan, then great, but they ALONE pay for it just as a private sector employee as to fully fund their OWN 401k plan.
We hard working taxpayers have been robbed for decades by Public Sector Employees subziding sometimes at a full 100% their pension retirement programs. In the name of "fairness", for the next few decades, Public Sector Employees can pay for pensions of PRIVATE sector employees. Of course, this would not happen, they only want to take rather to give
Nice to hear from you Mr. wall streeter.
Mark, nice to hear that you heard from "Mr. Wall Street", whoever that is. Let us hope no matter what "Mr." you might be, you take the responsibility of funding your OWN retirement instead stealing from the taxpayer to fund your retirement.
Don't worry Coumo you not be elected to another term. Why not raise taxes on the rich. Who did they become successful. Some had to answer their phones, take care of the kid, partner with them, employees working their asses off. So the notion you got rich on your own is BS.
Did the politicians include themselves in the pension cutting plan? I doubt it.
Just keep enough money set aside for building a dike/levee system, like New Orleans. I'm not sure if I'll be here, but happy to give y'all a heads up. 2030 if the water keeps rising and the sun still shines. Also keep in mind, you got the land at a helluva good price, suckers. haha. Seriously, with all this country got for nothing how is it so few claim the most, and say they worked for it ?
Cuomo will be voted out in the next election. Did you notice he was applauded by "Mr. 1%" Mike Bloomberg?
Hopefully Cuomo will be voted out and replaced with someone who is a lot less of a taxaholic. The Taxation in NY is insane
If the public sector employees have to put their money into a pension that is designed the same way as a 401K so does elected official must put their plans in the same fund.
401K is a scam. The Fund Managers take 5% to 8% in fees away from the fund each and every year.
So if I have a fund of 2 billion dollars and my fee was 0.05% that comes out to $100 million dollars and if the fund grows about 10% you only grew the fund by .05%. And here is the kicker if the funds looses 10% the fund manager still get's his .05% or $100 million dollar all the time.
Union Pensions do not work like that.
Fight Coumoo to the end. Tax the F-N rich an I am one of them
You mean every time you buy anything in NY, it is a scam? The fee to buy something in NY is at least 8% in most counties see > http://ny.rand.org/stats/govtfin/salestax.html
So a Fed Income tax rate of 28% must be REALLY a scam
A couple things here. First off, government pays for nothing - the taxpayer does. So those who love huge government worker pensions, just remember that money is coming out of your income, your parent's income, your grandparents income, and your children's future income. Secondly, the issue here is not government worker's pensions - it is government worker's pensions that are totally out of wack with reality and what they should reasonably expect to receive. Up to a couple years ago many government workers did not contribute one dime to their own retirements - and yet rigged it with government workers in management, who slop at the same public trough, to give themselves benefits totally out of line with what anyone else can expect in the private sector. And before someone says that the private sector should simply catch up with the public sector, try again. If you think Social Security and other such private-sector retirement plans are in trouble now, try paying their beneficiaries the same Replacement Income that public workers get - SS would be broke within a few years if all social security recipients got the same income replacement, as a percentage of working wages, that public sector workers enjoy. The real problem is that government worker jobs cannot be outsourced overseas, and government workers know this. This is why public service workers treat the taxpayer with such contempt when it comes to this disparity of benefits - they have a captive audience and they know it. Anyone who thinks public service workers are a friend of the private sector, and care about just who is paying for all these public pensions, is simply either foolish or a direct beneficiary of the pensions in question.
The screaming and squawking from those saying "they were promised a pension and benefits, and they should get it," is why so much of online commentary shows the ignorance of the masses. The bill has absolutely NOTHING to do with those currently employed by New York. It impacts those who aren't even working for the government yet. If you don't like the new package, don't apply for a government job. End of story.
The retirement age was raised to 63? Oh, the horror! Cry me a (Hudson) river.
There should be no unions for government employees. Even Democratic icon FDR opposed government unions. In a letter to Luther Seward, FDR said, "All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service."
Unions are fine in the private sector, as consumers may choose with whom they will do business -- union or otherwise. Unfortunately, we do not have that luxury in the public sector. As a taxpayer in the private sector, a union-based employee structure, coupled with the power of taxation, makes government unions wholly unworkable. Unions drive up costs (read, taxes) with arcane featherbedding work rules and demands for a benefit structure that is financially unsustainable.
If applicants for these future positions think that they have lousy benefits then don't apply for the positions.
Once upon a time, large corporations paid pensions to all of their workers. In many instances they continued health care as well. When it no longer became affordable benefits were changed. In many instances pensions were done away with entirely. Corporations used retirement programs such as IRAs with employee contributions. Government hasn't done away with pension systems, but it is time they have to change. I have read of judges who receive pensions in excess of their highest salary level. In addtion people are living far longer. There are many working people who have never received a pension. The pension system in no longer sustainable.
According to politicians on both sides neither pensions or SS is sustainable. But they are the ones spending our hard earned money from these funds and giving everything to corporate America who is sending jobs overseas so fast our heads are spinning - not to mention hiding their earnings in the Caymine Islands to avoid fair taxation on those earning and not givining it to employees as raises or the investors as dividends - both employees and invstors get scammed. For over 20 years all I hear is unions demand too much, we need to cut benefits because they are too expensive, pensions are unsustainable, we can't afford raises or COLA - and yet the rich and corporations and fraudulent Wall Streeters get mega richer by the day and the worker is poorer by the minute. That trend is most notable and anyone who cannot see that trend is deaf dumb and blind. It is the worker who is the grease that makes the engine run and yet they are always and I repeat always the first to suffer cuts and the last to get a raise. Obama proposes income tax cuts of 7% to corporations and makes the poor worker get their puny 2% tax cut from payroll (SS and Medicare) which is the money I have already paid into SS and medicare and what I should get out in the future. so for the working class we have to rob our piggy bank today but corporate America gets 7% tax cut from the income tax. WOW both parties are out to destroy the working class and turn us into a thrid world country in so far as labor is concerned. The rich are point blank stealing from the working class and government is allowing it.
New York would not have to get rid of any of the retirement benefits if they were to disband the secret police they use in the state to track muslims and and also get rid of their international NY police department. These programs cost close to a billion dollars a year to operate. Cuts in the police and fire department could save another 100 million dollars a year. If you don't think cops are scum go to New York and just say hi to a police officer, he will look at you like( don't talk to me I am better than you). I planned a 2 week vacation to NY and the area and cancel the rest of my vacation after 1 day in that cesspool of a city. Every on is in a hurry to go nowhere to do nothing. We saw purse snatcher run by police officers carrying the purse and the officers did nothing.
This is what the Obama Administration called, "quanatative easing".
Next, the state employees who are RECEIVING PENSIONS ALREADY will be cut! (and not just in New York)
States, (and not just New York), can not make their budgets, can not print money as the Federal Government Can, and because of poor negotiations, poor budgeting and the reality of inflation versus earnings, states are broke.
New York State Workers are some of those who are made up of the "rich", that Obama wants to tax, "rob earnings from", to pay for the entitlements of the lazy, living off of the Federal Government.
Get ready America, the worst is far from over. This is what happens when one "kicks the fiscal can" down the road, rather than deal in the here and now.
Is it better to let the "air" out of the ballon quickly, punishing the thieves that caused this mess, or let the air out of the ballon slowly, instead of rewarding the thieves that caused this fiscal mess, as was done. (paying themselves their bonus's along the way)
Millions across America are still "upside down" in their housing and yet paying on their mortgages.
What about those "honest folks" who did everything right, yet, are getting "hosed" by their crooked, bought and paid for Federal Government?
Neither bought and paid for Political Party is offering the necessary solutions to solve America's Fiscal Problems. Neither!
Stupid is as Stupid does America!
Yeah, like the tea bagger extremists and Romney, all pro business and pro rich, giving more tax credits to the wealthy and the corporations will save the economy. Trickle down economics doesn't work- it's a fraud - if it worked we would all be living like kings.
You forgot to mention "It is Bush's fault."
While we are at it, don't forget to mention the corporate jets (not to mention the limited liability partnership jets -- now those you should see) flown by the Koch brothers to attend a super pac meeting.
I'm single and do not own a home and I have no children. From my point of view (and I've paid taxes every year for 43 years even if I only made $3,500) my only deduction is my exemption, so I pay dearly and therefore have less to save or live on. Those who have more children or a home or some other form of exemption or deduction or tax credit pay far less percentage than I do. I feel every exemption, every deduction, every tax credit, every subsidy is a form of welfare. People getting back money rather than paying the full amount. Thus our entire tax system is a giant welfare machine. Corporations are welfare recipients if they have tax loopholes, or get tax credits etc. This is welfare just as much as those at the bottom who get welfare for being poor. So the rich get tons of welfare and the poor get some and those with the most deductions get a lot too. It is people like me who get zippo!
John465
Please explain what does work?
Obama's soloutions, printing money, inflation, the Federal Government spending ONE TRILLION PLUS a year more than they bring in, creating a nation that is dependent on government aid, food stamps, welfare, endless unemployment, grow government aid that can not be paid for does not work.
Neither bought and paid for political party is offering the difficult fiscal decisions America needs to make for their future. Neither!
Take everyone's money and make sure the 1%er's and corporations make billions. Then take that money you stole and spend it on security cause you all will probably need it.
Common sense finally prevails. Good for you New York.
Election year stunt.
The News the Democrats don't want you to read. The bank account is empty and the credit cards are maxed out. looks like the Gov. of Wisconsin is right. Belt tightening now or lay-offs later. I smell a real BIG bail-out coming. I wonder what they will call it, Stimulus,Re-investment or FRAUD?
My response to the person who wrote the post about the rich are being punished in NYC: you have got to be kidding! This is a joke right? LOL. First of all they are not leaving in droves. It's the little guy who is leaving in droves. I am a retired HS teacher and although I loved NYC, I had to leave because of the high rent. I moved down here to GA - a move that I regret as there are too many narrow minded people like Mush Limbaugh around. By the way I have to thank former Republican Mayor Jiuliani for this as he basically murdered the little guy by killing a part of rent control.
Last point while the modern robber barons are making a killing they raise the retirement age of the people who provide us with vital services. The new retirement slogan should be you work until you drop.
No public sector employee should ever receive a retirement advantage over the private sector employee who subsidizes that retirement.
Its difficult to understand all this union hate,whatever they have was given to them by the same politicians who give themselves raises and benefits that far exceed what any union worker will ever see.The problem is not the union,management with no foresight is the cause of the problem.
No, the politicians (mostly Democrats) are willing accomplices to further the union goals. Any wonder why over 90% of union contributions go to Democrats. Those politicans don't care about "foresight." They care about returning a political favor in return for generous union political contributions. (contributions that come from forced union dues)