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Bill's Cost Could Be Impossible To Count


Bill's Cost Could Be Impossible To Count

July 26, 2005
Urban PolicyNYC

Amid the hundreds of arcane laws enacted every year in Albany, how's a taxpayer to know which ones actually represent a huge favor to a powerful special interest group - with huge cost implications for the rest of us?

Here's a tip: Keep your eye on the stuff that flies under the radar. If a bill (a) pops up in the final week of the session, (b) is not called to the news media's attention or (c) passes just hours before legislators skedaddle out of town for the summer, it just might be important. And if it meets all three criteria, it's probably a blockbuster.

A classic example landed on Gov. George Pataki's desk last week. The bill would prohibit the state and its local governments from in any way "diminishing" the lifetime health benefits provided to retired public employees - unless the same changes are made for active employees.

The bill sponsors' memo described its "fiscal implications" as "none" - because, after all, public employers would still be free to negotiate such changes with unions. But in practice, this simply means it would be much harder for government managers to adopt any kind of cost-saving reform in retiree health policies, even one that costs retirees little and doesn't affect coverage at all.

In the Alice-in-Wonderland world of the state Capitol, "fiscal implications: none" is often just another way of saying, "The sky's the limit."

What the memo didn't say is that health benefits for government retirees in New York already are significantly more generous than those available to the dwindling number of retired private sector workers who have any health insurance at all, aside from Medicare.

The steadily rising cost of all this largesse is straining budgets at every level of government in New York. However, because the retirees' benefit costs are generally lumped in with those of active employees in annual budgets, they are now hidden from public scrutiny.

That will soon change, however. Over the next two years, new government accounting rules will require the state to clearly disclose the true cost of continuing retiree health benefits into the future. In New York, the resulting unfunded liability will probably amount to tens of billions of dollars.

The accounting change explains why the Legislature felt pressed to pass a law shielding retiree benefits from any effort to save money. Far from merely "protecting" an already privileged class of retired workers, the measure is an effort to empower unions by locking in current retiree health benefits before their true costs are known.

A similar law for school district employees has been periodically renewed since its first enactment in 1994. But this is no grounds for extending the same entitlement to all state, county and municipal government workers.

The "anti-diminution" bill has been vetoed by Gov. Pataki twice before. If he puts a higher priority on the interests of all taxpayers in New York, he'll do the same this year.