Aug
16

Harry Wilson Shares Pension Concerns

August, 16, 2010 - From News Channel 34 Binghampton:

Republican candidate for New York State Comptroller, Harry Wilson says some Southern Tier residents are going to be socked with what he calls the DiNapoli tax.  Wilson, who most recently served on the auto industry crisis federal task force team, was recently in Binghamton outlining his concerns.

Wilson says over the next six years the pension contributions of state and local governments will roughly triple and as a result the average New York household will see its share of pension contribution costs skyrocket by $1,300.  Currently, the average is $500 and Wilson says they will increase to $1,800 per household.  He says the reason is due to a secretive pension borrowing scheme to mask an under-performing pension fund, which state comptroller Tom DiNapoli is in charge of.

Wilson says the scheme would let the state borrow money from the state pension fund to make constitutionally required payments to the same fund, but with interest.  Wilson also says borrowing equals not paying the state pension fund what it's owed and that while borrowing can give municipalities some immediate relief in the short-term to delay payments, he says it makes things worse in the long-run because municipalities will have to make up for what they don't pay now with interest.

"What I really want to alert New Yorkers to, what we're spending all of our time focused on, is explaining New York State is in the early stages of a massive fiscal crisis. That's really horrible news because I know New Yorkers across the state are hurting right now, but if you look at how bad the numbers are over the next two years, the state budget, our pension problems all get dramatically worse. And, that's going to result in higher taxes for a state that's already paying the highest tax burden in the country. The only way we can fix that is if we bring in new leaders who are honest with people about the size of our problems, not just hide them so they can get past another election and keep their jobs. We need people who are more interested in saving the state than their jobs. And, secondly we need people who are tough enough to be able to deal with them. There are going to be some really tough choices. There are no free lunches out there."

Wilson says if elected one of the things he would do is lower the 8 percent pension fund return assumption to a rate of 5% or 6%.  He says the return rate hasn't reached 5% in the past decade.  He also says making lower risk investments would be wise and the idea of having 401k's instead of pensions for new workers should at least be looked at.

A spokesman for DiNapoli says Wilson's claims are inaccurate and misleading.  He says, for one, the proposed borrowing option has been in the legislature for the past year and has not been secretive.  Robert Whalen also says lowering the assumption rate would boost combined contributions from employers from $3.5 billion to about $10 billion, which taxpayers would have to make up.  He says Wilson's plan takes the hammer to taxpayers.  Wilson responds by saying any gap shouldn't be filled with increasing taxes.

Instead the legislature would have to look at cutting spending more.  Wilson says the state needs to apply private sector standards to the problem and deal with it.