New York is in decline, not a gentle managed decline, but an accelerating downward spiral.
According to the non-profit Empire Center, more than 1.6 million people left the state between 2000 and 2010 taking with them $97 billion in adjusted gross income.
The cause of the exodus is evident. New York has the highest tax burden of any state in the nation.
Rather than leave, some tenacious residents have begun the long and arduous task of revitalizing the state.
On May 8, 2014 taxpayer reform advocates including Long Islanders for Educational Reform, Best 4 New York, The Center for Cost Effective Government and representatives from unions, and government will assemble at the Melville Marriott to discuss state Assemblyman Mike Fitzpatrick’s Bill A8603, a comprehensive plan for taxpayer protection and mandate relief.
The bill addresses three drivers of ever increasing taxes: mandatory arbitration, the Triborough amendment and pensions.
Mandatory Arbitration entitles New York police and firefighters to seek compulsory binding arbitration when contract negotiations reach an impasse. The Empire Center has found that in addition to annual salary step increases, arbitrators have awarded base salary increases averaging 3.6 percent a year from 2003 to 2007 and 3.3 percent from 2008 to 2012.
Only four out of 136 arbitrations included a pay freeze in any year.
Assemblyman Fitzpatrick’s bill would offer taxpayers relief by limiting mandatory arbitration awards to 2 percent. The process would encourage employer and employee to negotiate in good faith.
The second driver of rising taxes is the Triborough Amendment which continues terms of a union contract, in particular, salary step increases even after a union contract has expired.
The amendment is a detriment to employee-employer contract negotiations because the employer is at a disadvantage when employees continue to receive salary step increases during negotiations.
Bill A8603 would eliminate the annual salary step increases when a union contract expires thereby placing both employer and employee on an equal footing.
Most public sector employees qualify for pensions through a taxpayer guaranteed defined benefit plan, which is a fixed payment for life based on years of service and a final average salary.
Since the ultimate guarantor of a defined benefit plan is the taxpayer, increases in public sector salaries and fluctuations in the stock market put the taxpayer at risk.
In 2013, Mayor Bloomberg commented “every penny in personal income tax we collect will go to cover our pension bill”, obviously crowding out funding for other vital services.
Assemblyman Fitzpatrick’s bill would address the problem by offering certain public sector employees and elected officials the option of a defined contribution pension plan, similar to private sector retirement plans.
Future public sector employees will be required to join a defined contribution plan. The advantage of defined contribution pension plans is twofold: the taxpayer will no longer be the guarantor of public sector pensions and employees can exit the retirement system with their retirement money intact, an advantage denied them under defined benefit plans.
New York is at a crossroad.
We can seize the opportunity and pass Assemblyman Fitzpatrick’s bill into law which will begin to correct inequities that have allowed taxes to soar, or we can tinker at the edges which will accelerate the great exodus and decline of New York State.
Laurann Pandelakis
Manhasset
