Politics
Disability Disaster
Newer police officers and firefighters want the same disability benefits that their older colleagues and predecessors get—and Gov. Andrew Cuomo wants the mayor to cave in to their request. The governor’s way will be expensive—$400 million over five years, the mayor says. No matter what the city and state do, though, it’s going to cost us all a lot, because it’s increasingly hard to get out of the pension mess we’ve created over the decades.
Some background: Back in 2009, then-Gov. David Paterson inherited a budget disaster—precipitated by the 2008 financial meltdown, but caused by governors from both parties giving away more in pension promises than their successors could afford.
To fix a tiny portion of the problem, Paterson enacted a pension reform that pared back New York City cops’ and firefighters’ disability benefits. Instead of getting 75 percent of their final-year salaries, plus Social Security, new firefighters get 50 percent of their average salary over the previous five years. They also have to deduct half their Social Security benefit from that pension.
Since the city didn’t hire any new firefighters between 2008 and 2012, nobody cared much.
But with the economy doing well again, with a governor who is done with the budget-reform phase of his tenure, and with a new mayor who has been free with the taxpayers’ money, the unions figure it’s a good time to win the old benefits back. De Blasio is pushing a cheaper compromise.
No matter who “wins”, though, the city won’t emerge fiscally unscathed. Even with this modest reform, the city already can’t afford its police and fire pensions.
The proof? We’re not affording them. The city will spend $1.1 billion this year on firefighter pensions, getting close to the $1.6 billion we’ll spend on salaries for current firefighters. We’ll spend $2.5 billion on police pensions, more than half what we spend on staff. Still, though, our police and fire pension funds had an $18.3 billion shortfall as of last year.
That means, even if the city were to stop giving out new benefits altogether, we can’t afford what we’ve already promised. It’s hard for the city to make up for that shortfall; last year, the two pension funds took in $3.3 billion in contributions from taxpayers—and sent out $3.9 billion to retirees and their survivors.
Further proof is in the Paterson reform itself. The only reason a liberal government would slash benefits for new workers in such a draconian fashion is because we cannot pay what we’ve already promised to older workers and retirees.
It is immoral to leave a truly disabled firefighter or cop without a middle-class income—but the city simply cannot afford to be moral and fair.
With the average firefighter making a $107,734 salary and then retiring on three-quarters of that for life starting in his late 40s or early 50s—with free health care, too—we have given away too much already. (And as my colleague E.J. McMahon points out, most firefighters were retiring on disability even before 9/11.)
We may not have much of a choice, though. The city didn’t hire any firefighters between 2008 and 2012, partly because it was in the middle of a court fight over discrimination—that is, whether the test to become a firefighter discriminated against black and Hispanic applicants.
The judge found that the test was discriminatory—and so now the city has a new test, and more black and Hispanic firefighters.
That means, though, that black and Hispanic firefighters are getting the shaft so that the city can afford to pay its white retirees their much more generous benefits.
If the state and city don’t restore benefits, it’s quite likely that a court would.
This isn’t a fight the city and state want to engage in—because its outcome could imperil any future attempts at pension reform.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal. Twitter: @nicolegelinas
NEXT STORY: Opinion: De Blasio Complacent on Crime