As executive director of the not-for-profit Center for Cost Effective Government, I was at first excited to hear that an outfit called EffectiveNY will host a Jan. 20 forum in New York City about the exorbitant property-tax levels in New York state.
I was quickly disappointed, however, to discover that the organization promoting this forum is actually an umbrella group for some of the biggest spending interest groups in the state.
Their solutions to our high property taxes are twofold: 1) raise income taxes; 2) have state government pick up the full share of Medicaid costs.
We don’t oppose having the state pick up the full share of Medicaid costs; however, all that does is shift costs from one taxing entity to another.
It does nothing to control the forces behind driving costs up in the first place. New York pays more for Medicaid than Florida and Texas combined.
This is an illusory saving that these groups are clearly proposing so they can stop dead in its tracks any effort by reformers that would impact the unions and other big-spending interests.
EffectiveNY makes no mention of the need to reform the unsustainable pension system, let alone provisions like mandatory arbitration and the Triborough Amendment, which both strengthen public-sector unions in contract negotiations.
All across the nation, overgenerous pension awards made years ago are now coming home to roost; they’re one prime culprit in bringing many localities to the brink of bankruptcy.
While New York has made window-dressing attempts at pension reform, such as the new Tier 6 (which simply pushes out a retirement date from 62 to 63 years of age for new employees), state leaders made no effort to, for example, stop allowing overtime for current employees to be incorporated into a final pension benchmark.
This practice has left some Long Island law-enforcement employees retiring with pensions of up to $184,000 a year.
Meanwhile, the defined-benefit public pensions typical in New York provide for a taxpayer-guaranteed 7.5 percent return on the pension system.
This means, for example, that if the market is only going up by 2 percent a year, taxpayers make up the other 5.5 percent.
Long-term sustainability will only be ensured when, at least for new employees, we transform to a defined-contribution system, similar to the 401(k) programs now dominant in the private sector.
Mandatory arbitration has led to an escalation of salaries in public-sector law enforcement that will soon give some Suffolk County detectives an annual salary of $227,000.
Under this process, which came into effect through the Taylor Law in the 1960s, union leaders have very little incentive to negotiate anything but large salary and benefit increases — since they know they’re likely to get sizable awards from the arbitrator anyway.
In 2010, New Jersey placed a 2 percent cap on awards. It’s time for New York to follow suit.
Other municipal unions also lack incentive to negotiate due to Triborough, a doctrine unique to New York.
This rule dictates that, even after a contract has expired, employees still get salary hikes in the form of steps, 2 percent to 4 percent increases for simply living another year. The step is above and beyond the negotiated salary increase in the contract.
Triborough lets the union wait it out until management caves. Ask any school superintendent, ending Triborough would relieve tremendous pressure on property taxes.
All three mandates — pensions, arbitration and Triborough — can be cured with the passage of bill No. A8603, now before our state legislators.
So let’s be thankful for this forum to discuss property taxes in New York, but let’s be clear: We already know what’s pushing up already-high property taxes, and also know what the solutions are. What’s been missing is the will to implement them.
Hopefully, the interest groups behind this forum won’t impede our efforts to make these reforms a reality.
Steve Levy served as Suffolk County executive 2004-2011.