Mayor Zohran Mamdani has called the $5.4 billion budget deficit a “generational fiscal crisis.” One idea to solve it would entail pushing off or decreasing payments to pension funds for city employees, possibly to the next generation.
“Why should my child pay for his fifth-grade teachers salary and pension benefits in 2040?” said Andrew Rein, the president of the Citizens Budget Commission.
What You Need To Know
Mayor Zohran Mamdani is floating an idea to change pension fund payments
The move would free up tax dollars to help close the deficit
Council Speaker Julie Menin proposed a similar idea to save more than $1 billion a year
The apparent answer from the Mamdani administration — to free up tax money to help close the deficit.
A spokesman for the mayor confirmed the idea, first reported in The New York Times.
There are no details, but options are under discussion in City Hall and shared with officials in Gov. Kathy Hochul’s administration.
“Quite frankly, it would cost more in the long run and make the wrong people pay the obligation,” Rein said.
The city has been on a $60 billion pension payment plan for more than a decade with six years to go, finished in 2032. The City Council proposed a similar idea, estimated to save more than $1 billion a year.
It could be a point of agreement between Council Speaker Julie Menin and Mamdani, who’s been pressing Albany leaders to solve his budget problems
As Assembly Speaker Carl Heastie put it to reporters Wednesday, after speaking with Mamdani, “I told him, it’d be helpful for him and the City Council to reconcile where they are.”
Pension benefits are guaranteed under the state constitution. Michael Mulgrew, the head of the United Federation of Teachers, said pension trustees make decisions.
“Periodically, we make changes when it’s in the best interest of the pension fund,” Mulgrew said.
Among the considerations, Mulgrew said, “Right now, the pension funds are in phenominal shape and what is the city proposing? Are they proposing lowering payments right now, in lieu of making additional payments later on? Or are they proposing lowering payments right now in terms of making higher payments later on. We don’t know what the proposal is.”
Ken Girardin, a fellow with the Manhattan Institute, suggested it would be penny wise and pound foolish.
“Mayor Mamdani is essentially considering a payday loan, where the city would get a short term benefit but would pay considerably more in interest by kicking costs out beyond 2040,” he said.
But that would be a problem for a future mayor, a future council and future taxpayers.