Gov. Kathy Hochul is negotiating a $1.5 billion union-pleasing scheme to fatten government workers’ pensions — and it could cost the cash-strapped Big Apple a staggering $328 million.
The stunning figure would consume more than half of the revenue the governor claims that Mayor Zohran Mamdani and city would gain from her proposed pied-a-terre tax on multi-million dollar secondary homes in the five boroughs.
Union bosses — including United Federation of Teachers President Michael Mulgrew — are putting on a full court press in Albany to undo the reforms approved a decade ago by then-Gov. Andrew Cuomo that aimed to rein in pension costs.
Gov. Kathy Hochul’s plan to boost government workers’ pensions could cost New York City an extra $328 million. Stephen Yang for NY Post
Under the controversial “Tier 6” reforms, public workers hired after April 2012 saw their pension benefits slashed and their retirement age raised to 62, from 55. The legislation also raised employee contributions toward their pensions.
Labor leaders have lobbied to scale back the changes ever since.
The proposed porkapalooza now being eyed as part of the ongoing state budget negotiations would allow civil servants to retire at 55 and contribute less toward their pension — while requiring state and local governments to pay more.
Budget watchdogs said it would be fiscally irresponsible to impose such the unfunded mandate on local governments.
“New York state should not enhance Tier 6 pension benefits. The expansions under consideration would cost the state, local governments and school districts billions of dollars next year and annually in the future, likely driving property tax increases or siphoning money from other programs,” said Citizens Budget Commission director Andrew Rein.
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“That is just a large tip of a multi-billion-dollar iceberg that threatens to increase taxes, reduce services, or destabilize the budgets of New York City, other local governments, school districts, and public authorities,” he said.
The plan under consideration by Hochul and the Democrat-controlled state Legislature would cost $1.5 billion a year: $242 million for the state, $328 million for New York City, $480 million for school districts and $407 million for local governments, the CBC estimated.
That’s on top of Tier 6 boosts in 2022 and 2024 that cost state and local governments $438 million annually, Rein said.
The Conference of Mayors, Association of Counties and Association of Towns recently issued a joint statement opposing the pension sweetener — unless Albany picks up the cost.
But Mamdani has said he was open to the rollback, even while he pushes for other assistance from the state.
“I’ve long said that I think there need to be changes to Tier 6 because we need to make it as easy as possible for New Yorkers to enter a life of public service,” said Mamdani, a former state assemblyman.
That was before Hochul on Wednesday proposed the new tax on luxury second homes that’s intended to raise $500 million for the city, in the aims of helping Mamdani cover an estimated $5.4 billion budget gap. She also agreed to give the city $1.5 billion in February to help with the purported deficit.
Rein said the Tier 6 reforms have not been impeding recruitment, as opponents have claimed, and still provides a more generous “defined benefit” pension rarely offered in the private sector.
He said local governments should lift the pay for for hard-to-fill jobs and challenging working conditions, rather increasing pensions.
Mayor Mamdani said he is open to the pension reform. Stephen Yang for NY Post
Hochul has confirmed discussions about a potential pension changes as part of budget talks that have extended past the April 1 deadline, but stopped short of saying what the outcome would be.
“The governor has a strong record of supporting New York’s workers and will continue to negotiate in good faith with the Legislature to pass a budget that makes New York more affordable for working families,” a Hochul spokesperson said.
Sources close to the budget talks said Hochul will likely agree to some sort of pension deal — but likely at a price tag lower than $1.5 billion.
Several Republican lawmakers recently appeared at rallies on Long Island sponsored by law enforcement unions lobbying for the pension boost.
City Comptroller Mark Levine, a former city councilman who is a member of Tier 6 and has been quiet on the issue, declined to comment.
The pension deal will likely be among the last items dealt with in the state budget, along with Hochul’s controversial proposals to delay implementation of the state’s green energy law and curb fraud and lawsuits in auto insurance market in a bid to save a bundle on car insurance.