NY Gov. Cuomo Proposes Deferring $1 Billion in State Pension Contributions

512px-Andrew_Cuomo_by_Pat_Arnow_cropped

New York is one of a handful of states that has a great track record of making its full annual pension contributions over the last 10 years, according to a report by the National Association of State Retirement Administrators.

It has achieved that result, in part, through a process called amortization, which lets the state defer part of its obligation.

The amortization process was set to end this year. But in his recent budget proposal, Gov. Andrew Cuomo recommends the state defer an additional $1 billion in pension payments over the next five years.

From Capital New York:

Governor Andrew Cuomo, a Democrat, proposed another five years of “pension amortization” in his proposed $141.6 billion budget, the state’s most recent financial plan shows.

[…]

The amortization program lets them defer a portion of their bills and pay them back over 10 years, at interest rates between 3 percent and 5 percent, a move critics say is akin to borrowing. Dozens of municipalities have used the program, holding their short-term costs down to prevent tax hikes or reductions in other services.

The state has deferred $3.2 billion in payments since 2011, and was set to stop borrowing this year. The budget division reversed course in October, after DiNapoli’s office announced it was adjusting the way contributions are calculated to reflect longer lifespans.

Cuomo’s spending proposal includes another five years of amortization, including $395.1 million in the upcoming fiscal year. Members of both the State Senate and Assembly accepted the idea in their one-house budget resolutions.

One group, the Citizens Budget Commission, estimates that amortization has cost the state $144 million in interest payments so far. The latest round could increase the tab to almost $800 million.

The New York State and Local Retirement System (NYSLRS) is 92.2 percent funded.

 

Photo credit: Andrew Cuomo by Pat Arnow.jpeg: Pat Arnow derivative work: UpstateNYer (Andrew Cuomo by Pat Arnow.jpeg) [CC BY-SA 2.0 (http://creativecommons.org/licenses/by-sa/2.0)], via Wikimedia Commons

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