Needless to say, Mr. Silver took this position while addressing a luncheon for public-sector union member with more than 2,000 people in attendance. Union support can be impactful on a political career but, in almost all cases, leads to significant conflicts of interest. The speaker’s refusal to weigh in on the issue is evidence enough of this.
Smartly, the governor has included pension reform in his budget proposal, which carries symbolic significance. Therefore, the Legislature will have to decide either to accept the reform as proposed, and pass the budget, or to reject it and perhaps initiate a shutdown of the government.
It is always possible that a compromise can be negotiated, but it’s highly unlikely that the unions will agree to any concessions provided the Legislature runs and hides instead of dealing with the issue head on. As Mayor Bloomberg said in a recent radio address, “Why would a union leader ever negotiate with the city when they know the State Legislature is going to protect them anyway?”
The governor’s proposal takes nothing away from current workers (unlike what is portrayed in union ads) and simply makes new workers contribute more to their pensions and work longer before they can retire, prohibits the use of spiking to calculate pension amounts, and offers a 401(k) style option. The governor believes his plan would create savings of $113 billion over 30 years.
As we have seen most recently throughout Europe, and particularly in Greece, the bank account is now drained and Legislatures there are forced to ask people to retire later, make contributions to their pensions and agree to defined contribution plans rather than defined benefit plans. What the governor has proposed is actually rather benign in that it leaves existing public-sector union worker’s benefits unaltered and would impact only new workers. The extent to which the governor is able to prevail on this issue would enhance a presidential run. To the extent he doesn’t, these costs will continue to rise and the future of our city, and our state, will be in significant jeopardy.
And, of course, the larger the budget deficits, the higher our real estate tax obligations will be.
rknakal@masseyknakal.com
Robert Knakal is the chairman and founding partner of Massey Knakal Realty Services and in his career has brokered the sale of more than 1,200 properties, having a market value in excess of $8 billion.
