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Zack Hutchins
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For Release — May 14, 2008

Statement by Kenneth Adams, president and CEO of The Business Council of New York State on the council's opposition to legislation on public retiree health benefits (S.6457-A/A.9393-A)

ALBANY— “New York's state and local governments need budget transparency and fiscal discipline to control costs and lower taxes but this legislation does exactly the opposite. This bill would prevent any changes in public retiree health benefits until a task force completes a study in 2009. At a time when government needs all options available to balance spending with revenues, it should not tie its own hands. Governor Paterson has been telling his colleagues to “get the erasers out,” but this cynical proposal locks them in the supply closet.

This bill is cleverly designed to lock in benefits that are the fastest-growing part of health insurance costs for local government before new accounting rules give taxpayers and policymakers the real bottom line on these lucrative deals. The benefits include free or nearly free lifetime health insurance for public retirees, far more generous than any similar benefit in the private sector. And the costs are staggering.

Estimates are that the unfunded liability for this benefit is $50 billion for the state, $75 billion for local governments outside New York City and $58 billion for New York City. In many municipalities the liability will be bigger than their entire budgets. We have to deal with this crisis now, not run from it under the cover of yet another study group.

In business and in family budgets the costs of long-term commitments must be accounted for. But until now, government's “pay as you go” accounting allowed the real long-term cost of these benefits to be hidden from our view. That is about to change with new federal rules for government accounting taking effect. Passage of this bill will lock-in those benefits before their real costs are widely known.

Taxpayers have a right to know the true costs of these benefits. Local governments should have ability to fix the problem without being handcuffed by the state government. This bill tells local elected officials your only choice going forward is to raise taxes to pay for these benefits, not find reasonable ways to reduce the costs.

If that is the case the result will be billions of dollars added to New York's already crushing tax burden, making it harder to grow our economy and create jobs.”

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