State Budget

Amid Senate Chaos, Hope Fades for a Bill to Raise Jobless Benefits

By Patrick McGeehan

A campaign to increase New York’s unemployment benefits for the first time in a decade has been sidetracked by the political stalemate in Albany — possibly for the rest of the recession.

Despite having the support of the governor, labor leaders and advocates for the unemployed, a bill to raise weekly jobless benefits on July 1 and close the gap in the state’s unemployment trust fund was not addressed by state lawmakers before their regular session ended this week.

The maximum benefit, which had been $405 a week for about 10 years until the federal economic stimulus program temporarily added $25 a week, is significantly smaller than those available to residents of New Jersey and Connecticut. New Jersey’s maximum is $584 a week; Connecticut’s is $576.

Negotiations to make the bill more palatable to employers continued through the weekend, giving its supporters hope that Gov. David A. Paterson would present a compromise that could be enacted. But with party leaders distracted by the battle for control of the State Senate, no progress was made.

The issue was not among those taken up by the Assembly in the final hours of the session that ended early Tuesday, nor was it on the governor’s list of measures to be considered by the Senate in special sessions on Tuesday and Wednesday. The Assembly is not currently scheduled to convene until January.

The lack of action left advocates worried about the fate of the growing ranks of unemployed New Yorkers.

“Meanwhile, the unemployment rate keeps going up, and more and more people are losing their jobs,” said James Parrott, chief economist for the Fiscal Policy Institute, a research group that focuses on tax, budget and economic issues. “New York doesn’t look good compared to its neighboring states.”

Last week, the state’s Labor Department said that more New Yorkers were out of work than at any time in more than 30 years. For May, the state’s unemployment rate rose to 8.2 percent and the city’s hit 9 percent.

For certain groups, the situation is much bleaker, Mr. Parrott said. He said that the official unemployment data showed that more than 23 percent of all black men in New York City were either unemployed, working less than full time or had become too discouraged about their prospects to look for work.

With many economists forecasting that the national recession will end by late summer, the recovery could begin before additional relief arrived for New York’s unemployed.

The rapid rise in unemployment has also strained the state’s trust fund that provides the weekly benefits. The fund has been borrowing from the federal government to cover a shortfall this year.

To fill the gap, which is projected to grow through next year, the bill before the State Legislature would have increased the amount of a worker’s annual pay that is taxed. Only the first $8,500 is currently taxed to finance the unemployment insurance system, a much lower limit than those in New Jersey and some other states.

The bill called for annual increases in benefits, starting next Wednesday, July 1, that would raise the maximum weekly benefit to $625 and adjust it for inflation each year after that. Along the way, it would have also gradually raised the payroll tax that goes into the unemployment trust fund.

But representatives of employers, led by the Business Council of New York State, have opposed the bill, arguing that the automatic annual increases would make the payroll tax too onerous for some businesses. Last week, the Business Council called the legislation a “job-killing proposal” that would raise the tax by almost 15 percent in a year.

The governor’s office had signaled that it would create a revised bill that both sides could support, but hopes for a compromise before July 1 faded as the chaos in the Senate dragged on.

“It’s a big problem that we’ve fallen so short in terms of not doing this,” said Andrew Stettner, deputy director of the National Employment Law Project, which advocates for the unemployed. “What was nice about this legislation was it got the benefits out during the recession and it had a plan for paying back the fund over several years. It was a smart approach.”

by James M. Odato and Rick Karlin, Capitol bureau

ALBANY — Gov. David Paterson and public employee unions are closing in on a deal to avoid the governor’s proposed 8,700 layoffs. Under the preliminary plan, the state would provide $20,000 “buyouts” to workers who voluntarily leave the payroll, people briefed on details said Wednesday.

The deal, the subject of serious discussions in recent days, calls for the unions to endorse a new pension package — the governor’s proposed Tier V — with more modest benefits terms than those available for decades to public employees.

The deal calls for the governor to drop his layoff plan. But the departures would have to take place this year.

Officials with the Civil Service Employees Association and the Public Employees Federation declined to discuss the deal, and the governor’s spokesmen would not take questions on it.

People briefed on details, however, said momentum for the deal has been building for days, and an announcement appeared imminent on a resolution to the layoff plan. But talks lost steam after news circulated Wednesday that the governor had vetoed a bill to extend expanded pension benefits for newly hired cops and firefighters.

The buyout offer would be for workers eligible for retirement, according to the people briefed, but details were still being sewn together. Initially, the deal would be an expense rather than a savings for the state. The costs could mount, into the tens of millions of dollars, to pay for the buyouts of almost 7,000 workers.

Savings from a Tier V package wouldn’t be realized for several years. Nevertheless, Paterson would be able to boast that he accomplished a major pension change that no other governor could produce.

Paterson accomplished something along those lines Tuesday when he vetoed a generous but costly police and fire pension bill that critics called a symbol of the state’s profligate spending.

The veto came without fanfare and took many in the Capitol by surprise. Noting that “state and localities are hemorrhaging revenue at an alarming rate,” Paterson vetoed a measure — identical to one approved by lawmakers and signed by the governor every year since 1981 — that allowed police and firefighters to continue collecting a more generous pension even as other public employees saw their benefits reduced.

The veto could put police and firefighters on the same footing as other public workers. Currently, so-called “uniformed” workers can retire with half-pay after 20 years of service. Although other state employees also can retire in 20 years under the system, they receive less of a payout, around 40 percent of pay.

Only future hires are covered in the veto, which has no impact on anyone now employed in the public sector.Labor advocates weren’t happy: “I’m kind of puzzled more than anything,” said state Sen. Diane Savino, D-New York City, who co-sponsored the bill extending the fire and police benefit. “This is something you would think the governor would have let us know. … If they’re using this as a bargaining (tool), this is not the way to do it.”

Budget watchdogs hailed Paterson’s veto for breaking what they described as a woeful tradition that favored powerful unions but shortchanged taxpayers.

The veto “is sending a really strong statement,” said Elizabeth Lynam, deputy research director at the Citizens Budget Commission, which studies state spending.

“Gov. Paterson made a gutsy decision,” agreed New York City Mayor Michael Bloomberg.

The higher police and fire benefits force municipalities to put about 15 percent of their payroll toward retirement costs, compared to 7.5 percent for other municipal jobs.

As of March 2008, the average person enrolled in the police and fire pension program earned $88,440, while the average pensioner collected $37,030, according to data from the state comptroller.

Paterson’s veto could be overridden if two-thirds of lawmakers in each chamber vote against him. But that could draw the Legislature into a potentially bruising and high-profile discussion of the state’s growing public employee cost, and the influence that police and fire unions wield over the Assembly and Senate.

Moreover, the veto is a concrete move in a legislative session that’s seen numerous calls for caps on spending as well as property taxes — pleas that have been met with indifference in the Legislature.

James M. Odato can be reached at 454-5083 or jodato@timesunion.com; Rick Karlin can be reached at 454-5758 or rkarlin@timesunion.com.

State pension tiers

New York’s pension system for public workers has changed over the years. Current workers can fall into one of four “tiers,” with benefits dropping from first to last. The tiers are based on the hire date of a worker:

Tier I: before July 1 1973

Tier II: July 1, 1973-July 26, 1976

Tier III: July 27, 1976-Aug. 31, 1983

Tier IV: Sept.1 1983

Police officers and firefighters fall into Tier I or II regardless of their hire date.

Source: Office of the Comptroller

BALCONY-Rochester invites you to attend a meeting with NYS Comptroller Tom DiNapoli

Tuesday, June 2, 2009
5:00 - 9:00 p.m.

New York State Comptroller Thomas P. DiNapoli and a panel of private equity professionals will discuss the Common Retirement Fund’s In-State Investment Program that is looking to invest $528 million in New York-based companies, including early stage and growth capital for Upstate New York businesses.

The New York State Common Retirement Fund invests with private equity managers who seek to invest in companies in New York state that require capital for growth or to refinance ownership. The program, created in 1999, targets investment of state funds in the New York state economy. The program aims to help generate jobs and private sector investment in the state.

The event will also offer an opportunity to personally network with Upstate and NYC capital providers; legal and accounting firms; and others interested in venture and private equity transactions.

For more information, click: DiNapoli

by James T. Madore

Gov. David A. Paterson is unlikely to resort to widespread layoffs of state workers this summer to cut about 8,900 jobs, despite the tough talk between him and labor leaders.

The Budget Division said last week the state payroll had shrunk by around 1,200 positions since the job-cutting plan was drawn up. The reductions were because of a hiring freeze and people leaving for retirement or other reasons.

So, the positions on the chopping block now stand at 7,687 from a workforce of 136,490. These cuts will be achieved primarily through more attrition and wiping out unfilled jobs. At most, only a few hundred layoffs are expected, experts said.

Lowering the state’s labor costs has been complicated by Paterson’s weak position in negotiating with the powerful Civil Service Employees Association, Public Employees Federation and eight other unions. Besides having dismal poll numbers, he limited his leverage by not inflating the jobs at risk. Previous governors attempted to scare rank-and-file union members with higher numbers to lobby their leaders into making concessions, experts said.

Limited success in the past

Govs. Mario Cuomo and George Pataki had limited success in the 1990s, however. The unions refused to grant significant concessions and thousands of jobs were shed to close budget deficits. But this was largely done through attrition and early retirement incentives, not massive layoffs.

“Historically, these things tend to get worked out,” said Robert B. Ward of SUNY’s Rockefeller Institute of Government in Albany. “The conventional wisdom is that the level of vitriol is higher than ever this year . . . but my sense is that things may have calmed down a bit.”

He added, “the number of actual layoffs is likely to be relatively small, if any.”

E.J. McMahon of the conservative Empire Center for New York State Policy agreed, though he said the unions had been emboldened by Paterson.

“He has shown no will power. . . . There is no reason to believe he will actually do anything,” McMahon said. “He should have threatened to lay off 30,000; then you would have union members thinking their jobs were in danger and pressuring the [union] leadership to accept what Paterson is offering.”

Experts pointed to California, Michigan, Wisconsin and other states that have compelled workers to take unpaid furloughs. New Jersey is calling for 14 furlough days from this month through June 2010.

Paterson so far has pushed for union members to skip this year’s 3 percent raise and postpone five days’ pay until they leave state service. He also wants to raise the minimum retirement age from 55 to 62 for new hires and require them to contribute more to their pensions.

A call for sacrifice

“We’ve offered a menu of ways that [the unions] could prevent the layoffs but they seem to want to try to vest the responsibility on me,” Paterson told Newsday. “I think the responsibility lies with them. They have got to show us that they are willing to make some sacrifices.”

Asked if he was committed to the job cuts, Paterson said he was, because otherwise $450 million in savings would be lost over the next two years. He also predicted the $131.8-billion budget would fall out of balance by $3 billion before the fiscal year ends in March because of plummeting tax collections.

Paterson’s job cuts affect only unionized workers at agencies under his control. Those taking the biggest hits would be prisons, 2,021; mental retardation, 1,434; mental health, 1,054; transportation, 624; and the State Police, 386.

Long Island would be spared somewhat because SUNY, the largest state employer locally, isn’t affected. Neither are the legislature and courts. There also aren’t any state prisons here.

Still, reductions are probable at institutions caring for the mentally ill , such as Pilgrim Psychiatric Center and Long Island Developmental Center, each with more than 1,500 unionized workers.

CSEA, in advertising critical of Paterson, has highlighted services for the disabled. Spokesman Stephen Madarasz said, “We’ve offered the governor lots of ideas for ways of saving money without layoffs. But this isn’t about money, it’s about trying to extract concessions from us to boost him politically.”

CSEA and PEF have called for using fewer consultants, hiring more workers to reduce overtime and expansion of flexible work schedules. Both have refused to amend contracts negotiated in better economic times.

State’s budget gap could hit $6 billion by next year, says Governor Paterson

By Glenn Blain

More bad news out of Albany: The state’s projected budget gap could more than double to nearly $6 billion by the start of next year’s budget.

Gov. Paterson said Wednesday he’s bracing for a more than $3 billion shortfall in state revenues this year, which would come on top of the $2.5 billion deficit already projected for the 2010-2011 budget, which begins on April 1.

“We are going to have to look at further cuts,” Paterson said.

Paterson’s warning came less than two months after lawmakers adopted a $131 billion budget for 2009-2010 that boosted overall spending by about 9% and included more than $4 billion in new taxes and fees.

“New York doesn’t have a revenue problem, it has a spending problem,” said Senate Minority Leader Dean Skelos (R-Long Island).

Paterson said his prediction was based on what happened to the state in the 2008-2009 fiscal year, when the state lost $3 billion in revenues.

“I guess I’m the eternal pessimist,” Paterson said.

Paterson’s pessimism was not shared by Assembly Speaker Sheldon Silver (D-Manhattan) and Senate Majority Leader Malcolm Smith (D-Queens).

Both said it was too early to predict the state’s financial fate.

“There are hopeful signs of improvement,” Silver said, referring to the economy.

Even Paterson’s budget office said the latest estimates don’t back up the dire predictions.

“What we see is that we are essentially in line with the financial plan,” said Budget Division spokesman Jeffrey Gordon.

Gordon said Paterson was simply “voicing his concerns about the uncertainties in the economic climate.”

State Controller Thomas DiNapoli warned this week that the state’s budget year got off to a “poor start,” collecting only $4.8 billion in revenues in April, about $239.1 million below projections.

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