Cuomo's Pension Proposal Rejected by Assembly Democrats, Gov Threatens Shutdown

(March 12, 2012) — “I’m trying to bring the people’s voice to the Capitol,” Andrew Cuomo says on his Twitter page. 

He’ll have a hard time doing that with pension reform, however, as Assembly Democrats rejected the governor’s proposal to raise the retirement age and offer a 401(k)-type option to future workers. Meanwhile, Senate Republicans will act on its own budget resolution and is expected to contain a limited statement of support — if any — for pension system changes. 

The governor has reiterated his decision that he wouldn’t approve a state budget that doesn’t include pension reform. He has repeatedly asserted that he could force lawmakers to either approve his plans or risk a government shutdown. Last month, for example, Cuomo stated that he would be willing to take the risk of a government shutdown to create a cheaper pension system. “It is one of the seminal clashes of this budget and of my administration,” Cuomo told reporters, as initially reported by the Wall Street Journal. “The question is, does this body, does this government, does this Legislature perpetuate a pension system that is on the verge of bankrupting the state … or does the Legislature respond to the needs of the people?”

“I said clearly if we don’t have pension reform, I’m not going to pass the budget. Period,” Cuomo said on 1300-AM (WGDJ) in Albany.

According to Cuomo, his overhaul of the pension system would save local governments and the state $113 billion over the next three decades as the retirement age would be raised from 65 from 62 for most new workers. At the same time, industry sources say it will be many years before taxpayer money makes up for the heavy losses pensions suffered during and following the financial crisis. Ironically, New York’s pension system ranks as the state with the highest funding level in the US, with a 101.45% funding level as of 2010, according to Bloomberg data. 

Cuomo could refuse to accept a budget from the Legislature that excludes a pension proposal. He could then include his changes in an emergency “extender” budget bill after the budget became late, after the April 1 due date, according to the WSJ. It would then be up to the Legislature to accept or refuse the plan and shut down government.

This is the first time that Cuomo has threatened an all-inclusive budget extender if a spending plan that he agrees on is not enacted on time.