Unsustainable and Getting Worse

Hi Everyone:

On 5/24/09, I wrote about excessive overtime in municipalities and the consequences of including OT in calculating monthly/yearly pension amounts. It took some time since then, but the issue is back at the forefront and people and finally politicians are looking closer at the cost of pensions for teachers, firefighters, police etc.

I recently found out that a firefighter in a certain New Jersey town with 25 years of service can retire with 65% of their yearly pay. If that firefighter waits until completing 30 years of service, they can retire with 70% pay. I would be the first in line to stand up for firefighters, police and teachers. But retiring at 70% pay or even at 65% pay is not only unsustainable due to the ever increasing taxes needed to pay for it, but it also no longer makes any common sense.

In New York State, for the Employees Retirement System, the average 2011-12 contribution rate will increase from 11.9% of payroll to 16.3%. For the Fire and Police Retirement System, the average rate will go from 18.2% of payroll to 21.6%, according to the state comptroller's office. The payroll and benefits are soley paid for by taxpayers and the percentages are way out of line and will continue to get worse if it isn't fixed.

The old saying goes, if it ain't broke don't fix it. Well the system is broken and now is the time to fix it. I know that the biggest obstacle to fixing the system will be the numerous unions that represent all those employees. Their stance will be that a legally binding contract is in place and no changes will be permitted. That fight will be an interesting one to say the least. We can only hope that common sense will be used and cooler heads will prevail to be able to fix the system and relieve taxpayers of the huge burden that school and city/county/town and village taxes have become.

Til next week.

Peter