Sep
03

Wilson Releases "Public Pensions: Averting NY's Looming Tax Catastrophe"

September 3, 2010 - From Wilson for New York campaign for State Comptroller:


"Albany Politicians Have Been Hiding Truth to Get Re-Elected"

New York-September 2...Unelected New York State Comptroller Thomas P. DiNapoli (D-WFP) and other career Albany politicians have been hiding -- and making worse -- an enormous underfunding of the New York State Pension Fund that, if left unchecked,  will require massive tax increases in the coming years, New York state comptroller candidate Harry J. Wilson (R-C-I) - who led the restructuring of General Motors for the U.S. Treasury Department - today charged.

Mr. Wilson made his case in a 50-plus-page white paper entitled: "New York Pensions: Averting The Looming Tax Catastrophe," released today (link to paper here). He urges in the paper "an honest accounting of New York's pension problems in order to expose the true extent of our deficits, and a long-term collaboration with all stakeholders to return the Fund to fully funded status over time without requiring tax increases."

Mr. Wilson stressed that New York State leaders must adhere to three bedrock principles in addressing the State's shortfall:

1.       The true extent of our shortfall must be made clear through honest accounting.

2.      New Yorkers cannot afford additional taxes, so increased taxes cannot be a part of any solution.

3.      The promises already made to New York's government workers, retirees and their beneficiaries must be provided for in full.

Mr. Wilson has been speaking out on this issue for more than two months and has repeatedly asked Mr. DiNapoli, without success, to release key actuarial information and assumptions that would show the exact depth of New York State's pension shortfall. 

"It is unconscionable that Mr. DiNapoli has been hiding - indeed, making worse -- this looming tax catastrophe in order to keep the job to which he was never elected by the people," Mr. Wilson said. "The bottom line is that New York's taxpayers have been lied to by the very people who are supposed to be looking out for them.  It is scandalous that Mr. DiNapoli has wasted the past four years issuing empty press releases and creating a foolish pension borrowing scheme when he should have been working day and night to find a long-term solution to the coming tax disaster."

Mr. Wilson said that, as New York State Comptroller, he will immediately begin working with the next governor and Legislature to develop long-term reforms to avert the looming tax catastrophe and ease our Pension System back to solvency. He also called on Mr. DiNapoli - "for the umpteenth time" - to release data on his assumptions to allow for more fulsome analysis of the problems so that stakeholders may begin to examine the full set of solutions that are available to us.

Public Pensions: Averting New York's Looming Tax Catastrophe examines the looming public pension catastrophe approaching our nation generally and New York State specifically. Its key findings include:

·         The coming public pension crisis is the largest financial problem our nation faces at the state level, with a cost to taxpayers that will dwarf that from TARP, the Fannie Mae/Freddie Mac bailout, the S&L bailout or any other recent American financial crisis.

Ø  The magnitude and nature of the pension crisis is disguised by the application of lax government accounting standards that allow for accounting deceptions and do not stand up to private sector scrutiny. 

·         An honest accounting of pension assets and liabilities would reveal a substantial underfunding in New York State's Common Retirement Fund of anywhere from $30 billion to $80 billion.

Ø  DiNapoli's pension borrowing scheme will further increase the level of underfunding.

·         Under the current Comptroller, the Fund's investment returns have been significantly below the median of other comparable public pension funds for the last year, the last two years and the last three years and have thus further exacerbated New York's pension shortfall.

·           The Fund's underperformance, relative to the median, in just the past year cost New York taxpayers nearly $8 billion.

Ø  More importantly, the Fund's cumulative underperformance, relative to its 8% target investment return, during Mr. DiNapoli's unfortunate, accidental tenure totals nearly $50 billion.

·         Meanwhile, pension costs, guaranteed by the State constitution, are skyrocketing. They have doubled in the past 10 years and some forecasts project they will triple again over the next several years.

·         In dealing with New York's pension underfunding, the State and its leadership must adhere to three bedrock principles:

Ø  The true extent of our shortfall must be made clear through an honest accounting.

Ø  New Yorkers are already the most heavily taxed people in the nation and cannot afford additional taxes, so increased taxes cannot be a part of any solution

Ø  The benefits of New York's government workers, retirees and their beneficiaries are to be provided for in full. They have earned these benefits as part of their negotiated compensation on the basis of a contract that must be honored.