Governor Paterson showed some leadership the other day, and the state’s public-employee unions demonstrated welcome flexibility. That’s a good combination for New York’s taxpayers.
The governor and the unions agreed on a plan that cut expensive pension benefits for new members of the Public Employees Federation and the Civil Service Employees Association outside of the five boroughs. In return, the governor agreed to drop his plan to lay off nearly 9,000 workers. The state will go ahead with a planned 3 percent raise for its workers this year, and they will not have to give up a week’s pay to save money.
After months of indecision and drift, the governor appears to have found the will to just say no to the state’s special interests. Just days before his deal with the PEF and CSEA, Mr. Paterson took on the powerful police and fire unions when he vetoed a bill that would have extended generous pension benefits to new recruits. Mr. Paterson’s recent predecessors routinely agreed to give cops and firefighters pension deals denied state workers. Mr. Paterson, however, put his foot down, saying that the state simply could no longer afford such a sweetheart deal. If the governor plans to run for a term in his own right next year, he is doing it the right way—not by pandering to unions, but by doing right by the state’s taxpayers.
The newest pension deal will raise the state’s retirement age from 55 to 62 for new employees. It’s a commentary on state politics that this common-sense measure took so long to reach fruition. While some jobs, like firefighting and police work, become far more difficult with age, most public workers can and should stay on the job into their 60s. The new plan is more than reasonable, and the unions were wise to recognize that this is a fight they simply could not win.
The state’s public employees aren’t the only union workers who understand that they need to readjust their expectations in today’s economy. Construction workers recently cut a deal with developer Bruce Ratner to lower labor costs and allow him to proceed with his Beekman Tower project in downtown Manhattan.
Under the deal with Governor Paterson, new state workers will have to contribute 3 percent of their salaries to their pension fund throughout their careers. Currently, workers contribute to their pension funds only for their first 10 years of employment. Again, this is a common-sense measure that has taken far too long to implement. Credit Mr. Paterson and the union leaders for finally making it happen.
Bear in mind that this measure is not designed to relieve the state’s current budget woes. While the agreement will save the state $30 billion over 30 years, the savings will not kick in for another decade or so. All the more reason to cheer the result, for the plan suggests that the governor and the unions were capable of thinking big, and thinking long-term. This is not about today, or even tomorrow. It’s about the 2020, and beyond.
It’s important to remember that state workers, like public employees in many other states, still enjoy generous health and pension benefits. One could argue that the era of defined benefits should be over, that state workers ought to enroll in a 401(k) program like so many private-sector workers.
Now, however, might not be the best time to recommend a market-driven pension scheme. One step at a time. Mr. Paterson and the unions have shown that they understand that times are changing, and they have acted accordingly. That’s reason to cheer.