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Sunday, October 26, 2014

Relief and Pension Reform Plans Mandated

Lieutenant Governor Duffy Joins County Executives and LIA President and CEO at Long Island Association to Discuss How Plan Would Lower the Cost of Government for Taxpayers

From left: Nassau County Executive Ed Mangano,Lieutenant Governor Duffy, Suffolk County Executive Steve Bellone, and LIA President and CEO Kevin Law

Lieutenant Governor Duffy today joined Nassau County Executive Ed Mangano, Suffolk County Executive Steve Bellone, and LIA President and CEO Kevin Law to discuss how Governor Andrew Cuomos mandate reform proposals will save Long Island taxpayers more than $140 million over the next five years and his pension reform proposal will save $10 to 15 billion over the next 30 years. To get more information on mandate relief and to get involved in the process, New Yorkers can visit www.NYGetInvolved.com.

Lieutenant Governor Duffy said, "This is exactly the type of relief we should be providing to local governments. As the former Mayor of Rochester, I know first-hand of the pressure on municipalities to fund mandates and deliver services when budgets are tight. The Governors mandate relief package reduces the burden on the counties by moving Medicaid growth costs to the state and reforming our preschool special education system. As a result of the mandate relief package, Long Island will be able to save over $140 million, and billions more in the long term through a new tier to the pension system. I commend County Executives Mangano and Bellone and Kevin Law on their bold leadership and look forward to working with them as we continue to make government more efficient and effective for New Yorkers."

Nassau County Executive Ed Mangano said, "Under the Governors Executive Budget, Nassau County and Long Island stand to benefit from over $140 million in mandate relief savings over the next five years, and tens of billions more over the next 30 years. Not only is the Governor balancing New Yorks budget, he is also finally addressing the burden of state-imposed mandates on local municipalities with his mandate relief plan. His proposal to take over the growth of Medicaid costs for counties is especially welcome news. Furthermore, Governor Cuomo has presented a pension reform plan that will save billions of taxpayer dollars over the next few decades. I am proud to support his proposal and encourage the legislators in Albany to pass this budget – it is one that makes sense for all levels of government in New York today and in the future."

Suffolk County Executive Steve Bellone said, "Governor Cuomos proposed Executive Budget is the first step forward in providing real mandate relief for Suffolk County taxpayers. His mandate relief plan will provide over $140 million in the short term, and billions more for decades to come in savings for Long Island through a new pension tier for future public employees. New Yorks challenges have been compounded because leaders failed to take the long view and plan ahead. I am thankful for Governor Cuomos efforts to take the long view to achieve fiscal discipline and look forward to working together to move New York further on the path to recovery and prosperity. The Legislature should act on this budget as quickly as possible so we can start saving."

Kevin Law, President and CEO of the Long Island Association, said, "Since taking office, Governor Cuomo has rightly focused on making government efficient to work for the people. The Governors mandate relief plan will help Long Island save $140 million by having the state cover growth of Medicaid costs and from much-needed reforms to preschool special education and early intervention, and $10 to 15 billion over the next 30 years by establishing a pension Tier VI for new employees. This will go far to help local municipalities reach the goals of the property tax cap and relieve local tax burdens on communities and businesses. On behalf of our members, I commend the Governor for continuing to make Long Islanders a priority in his agenda."

The Governors Executive Budget closes the current $2 billion budget deficit with no new taxes or new fees. It also proposes sweeping mandate relief and pension reform that will save taxpayers and local governments billions of dollars.

Highlights of the mandate relief plan include:

  • Creating a plan for the State to take over 100% of the costs of Medicaid growth that will be phased in over three years, saving local governments $1.2 billion over the next five years;
  • Creating a pension reform plan that will save State taxpayers and local governments outside New York City $83 billion, and will save New York City $30 billion over the next 30 years

More specifically, the Governor proposed sweeping structural reforms to relieve local governments of State mandates that drive up local costs. These reforms, which address the largest cost-drivers for local governments, will help municipal leaders meet the pressures of the prolonged economic downturn, and will help local governments meet the goals of the property tax cap.

Reduce burden on counties by taking over Medicaid growth costs: Medicaid growth is a major cost driver for counties. In 2006, the State capped the amount of Medicaid cost growth that counties have to pay. Currently, the cap is 3% of growth; all growth over 3% is paid by the State. To provide significant fiscal relief to counties and to New York City, the State will phase in a 100% takeover of the costs of Medicaid growth. Effective April 1, 2013, the county cap will fall to 2% of Medicaid growth; in county fiscal year 2014, the county share will be reduced to 1%. Starting in county fiscal year 2015, the State will pay 100% of the costs of Medicaid growth. The takeover by the State of a greater share of local Medicaid expenses will save counties and New York City $1.2 billion over the next five years.

Below are the 5 Year (SFY) savings totals from the State take-over of the Medicaid Growth for both Nassau and Suffolk County.

SFY12/13
SFY 13/14
SFY14/15
SFY 15/16
SFY16/17
5 Year Total
Nassau
0
$1,928,667
$5,900,311
$11,660,177
$17,420,044
$36,909,199
Suffolk
0
$2,051,368
$6,275,686
$12,401,993
$18,528,299
$39,257,346

 

Enact pension reform: Next to Medicaid, pension costs are the most significant burden on local governments. The Governor called for a new tier in the State pension system that will save the State and local governments outside of New York City $83 billion and New York City $30 billion over the next 30 years. As a result of the pension reform, Long Island would save $10 to 15 billion over the next 30 years. The new pension plan would have progressive contribution rates between 4% and 6% with shared risk/reward for employees and employers to account for market volatility. It includes a voluntary option for Defined Contribution following the TIAA-CREF model. Employees taking this Defined Contribution will vest in this system after one year. This option will be portable. No current employees will be affected by the Governors pension reform plan.

Enact reforms to the Early Intervention and Preschool Special Education Programs: The budget also reforms the Early Intervention program to reduce counties administrative burdens and cut their costs by $99 million over five years. As a result of these reforms, Nassau would save $6 million over the next five years and Suffolk would save $5 million over the next 5 years. In addition, the Executive Budget reforms the Preschool special education program to reduce costs for counties outside of New York City by $150 million over five years. As a result of the reforms made to the Preschool special education programs, Nassau would save $25 million over five years and Suffolk would save $29 million over five years. The Executive Budget does not include any cuts to Early Intervention or Preschool special education services.

Aid to Local Governments: In addition to these reforms, the Executive Budget provides $715 million to local governments in unrestricted operating aid, and an additional $79 million in grants to promote greater efficiency.