Gov. Kathy Hochul and lawmakers quietly delivered a gift to public employee unions — by partially rolling back the decade-old pension reforms that curbed runaway costs to taxpayers and overtime abuse, The Post has learned.
The rollbacks were tucked into the record-breaking $220 billion election-year state budget in a deal reached last week.
“It looks like ‘big labor’ got things they were seeking and rolling back pension reform is one of them,” said Peter Warren, research director with the Empire Center for Public Policy.
The pension laws approved in 2010 and 2012 required new state and local government workers hired under new Tiers 5 and 6 to work 10 years to be vested in the pension system instead of five years, as is the case for previously hired employees.
But under the new budget, the vestment requirement is dialed back to 5 years for Tier 5 and 6 employees, which consist of most occupations other than police and firefighters.
It also waives overtime costs for Tier 6 workers — who were previously thrust into a higher contribution bracket, requiring them to pay more toward their retirement account — for the next two years.
Legislative sources said the move would cost taxpayers at least $11 million this fiscal year alone.
“This is a step back for the state. The changes to Tier 5 and 6 were huge victories for taxpayers,” said Warren.
The Cuomo-era pension changes approved in 2012 imposed a progressive payment system — employees who made more paid a higher percentage of their compensation toward their pension.
“That was done to address overtime abuse — workers gaming the system to boost their overtime and pension before they retire,” said a source who worked with Cuomo.
This came at a time when workers’ overtime abuse — and sometimes fraud — ran rampant in the state, including within the MTA’s Long Island Rail Road service.
Under the reforms, workers who earned between $45,000 and $55,000 had to contribute 3.5% of their compensation toward their pension. Workers making between $55,000 and $75,000 contributed 4.5%. Employees collecting between $75,000 and $100,000 contributed 5.7% and those earning over $100,000 contributed 6%.
One pension analyst said the changes have saved taxpayers a bundle.
“The reforms have saved billions of taxpayer dollars for the state and local governments over the past decade — including $1 billion this year alone — plus significant added savings for New York City’s separate pension systems,” EJ McMahon, an adjunct fellow for the Manhattan Institute, recently wrote in a Post column.
Warren noted that even under the Cuomo reforms — which came over the objections of public employee unions — the state’s pension plan was still more generous than that in the private sector.
“Why go back? There’s no recruitment crisis,” Warren said, questioning Hochul’s partial rollback.
Hochul spokesman Avi Small said, “Governor Hochul worked with the legislature to deliver a budget that makes bold, fiscally responsible investments to attract and retain hard-working public servants while — for the first time in history — putting New York on stable fiscal footing by setting aside more than $5.1 billion in our reserves.”
Lawmakers want to go even further to chip away at pension reform.
“It’s a good start,” said Assemblyman Peter Abbate, chairman of the committee on government employees that oversees pension legislation.
“The unions were active pushing for changes and so was I.”
Abbate said he wants to reduce the pension contributions for all government workers to 3% from a high of 6%, depending on salary.
“Everyone should pay 3%,” he said. “To me, that would be fair.”