New York state’s tax cap gets first test Premium content from The Business Review by Adam Sichko, Reporter Date: Friday, October 14, 2011, 6:00am EDT
Albany County plans to bypass new limits on property taxes and hike levies 19 percent next year—raising costs for business executives such as Todd Danz. Danz has already squeezed margins at Family Danz Heating & Air Conditioning Inc., based in Albany with 42 employees. Danz now often competes against twice as many bidders as before the recession, including firms as far away as New Hampshire. The Albany County budget plan leaves Danz wondering: Whatever happened to the state’s new tax cap, which was supposed to restrain tax increases? “They just keep kicking us,” said Danz, general manager and partner at his family’s company. “I sure hope there’s hope for the tax cap. But is it only a show?” October marks the first test for the tax cap as towns, cities and counties roll out their 2012 budgets—wrestling with soaring pension and health care costs. The cap limits tax increases to 2 percent or inflation, whichever is lower. The cap doesn’t actually cut taxes, and municipalities can vote to remove the limit year after year. Still, business groups trumpet it as the first step toward slicing New York’s business costs, notorious as among the highest in the nation......................>>>>...................>>>>........................http://www.bizjournals.com/alb.....t-test.html?page=all
Should full pensions be allowed if you keep working?
BY: Girard Miller | December 17, 2009
Girard Miller Girard Miller is the Public Money columnist for GOVERNING and a senior strategist at the PFM Group.
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Commented May 31, 2011
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Recent news coverage in USA Today highlighted the public-sector practice of "double dipping" -- receiving pension benefits intended for retirement purposes while drawing a salary with another employer (or in some cases, the same employer).
Pension watchdogs loathe double-dippers, and progressive reformers are now wondering whether something is indeed wrong when retirement benefits are paid to employees who are obviously capable of earning an income. Critics say the practice is akin to doling out farm subsidies for big, successful farmers who are already making good money.
Most notorious are senior management employees, police and fire chiefs, and others who draw six-figure pensions before age 60, and then work for another employer at the six-figure level. Some states are considering legislation to curb what are perceived as abuses.
There are several sides to this issue, and I'll try to provide an objective analysis and provoke a thoughtful debate to encourage suitable and sensible reforms. For starters, I'll suggest that with a few notable exceptions - such as the former California administrator who manipulated his way to a $500,000 lifetime pension - most public employees have earned a right to a decent and modest public pension that assures them a secure retirement. If they work part-time in a second career after toiling for 30 years at $50,000 or less, I have no issue with their work ethic and their right to supplemental income to pay for travel or a new car. That's not what this column is about, however. We're focused here on the highly visible double-dippers who game the system to collect big money from a system that never intended to create pension millionaires and pension aristocrats at taxpayer expense.
Replacement income vs. deferred compensation. Pensions were intended to provide retirement security, not pre-retirement wealth. To provide security, they should provide replacement income in retirement. Replacement income is not dual income. Pensions were not designed to be "deferred compensation" as some would argue. IRS codes provide plenty of arrangements for deferred compensation, including 457 plans common in the public sector which limit the annual contributions and thus the total accumulations that can be withdrawn later. That said, there are some parallels to consider when evaluating the double-dip phenomenon. We should always think about how we would feel if a corporate employee with a 401(k) plan begins to withdraw retirement plan assets while working for another employer. If the net financial result is the same for a double-dipper, then the problem is not with the pension system. Conversely, if a pension recipient receives benefits unavailable through a defined contribution plan, including tax preferences, then suspicions should arise.
A lack of self-awareness. Most public employees feel that they have earned their pensions, but many seem to be unaware of how much earlier they are able to receive substantial benefits than their counterparts in the private sector. It is their entitlement to pre-retirement income that is disputed by the watchdogs. Many of the early "retirees" who double-dip clearly view their pension as deferred compensation and pre-retirement income, not retirement security. They also tend to overlook the gamesmanship that transpires in the pubic pension arena, where workers can transfer service credits from one employer to another and parlay benefits that could never be attained in the corporate world. Portability is one thing; triple-dipping is another.
Double-dipping would be much less frequent if public employees were required to work until Medicare or Social Security age before retiring -- unless they take an actuarial reduction in their pension, just like early retirees under Social Security. Such a system would impose a financial penalty on early retirees which would also reduce the costs of funding the system properly. Then, an employee could supplement her reduced pension with outside income from a second career or a job with a new employer.
Unfortunately, it is difficult to impose such requirements on incumbent employees who view their pension benefits as property rights. Some states have laws making their benefits irreversible once they are vested. However, there are other ways for legislatures to skin this cat, including an excise tax on double-dippers, as I'll discuss below.
For retirees who have reached Medicare and Social Security age, the double-dipping issues are less prevalent. Historically, most workers quit laboring at that point. However, there are new issues that we as a society must face as Baby Boomers reject their parents' shuffleboard retirement paradigm and seek relevance in our society by working in a second career. In most cases, they will downshift to lower-compensated work that gives them personal satisfaction and a sense of involvement with lower stress. What we need to think through is whether the pension should be adjusted in such instances.
Tax the double-dippers? Financially strapped states could impose an excise tax or an income surtax on double-dip income, which would be one way to restore funds to the pension system. For example, states could collect a 15 to 25 percent surtax on income received while earning more than 50 percent of the annual pension, or a similar surtax if combined pension and earned income exceeds the employee's previous five years' average income. The latter arrangement would also address excessive pension ratios.
Low-income retirees and those older than 66 should be exempted, of course. I would prefer to see the tax revenues returned to the pension systems, especially if they are significantly underfunded. This would be an example of a tax that produces in insignificant statewide revenue, but serves as an equalizer for public policy purposes.
Federal law imposes a 15 percent surtax on early distributions before age 59 1/2 in qualified defined contribution plans. I'd say that what is good for the goose is good for the gander and that a similar tax should apply to early pension payments that are not actuarially reduced or reflective of a 30-year career. An excise tax on premature pension distributions could be triggered by excessive supplemental employment earnings prior to Social Security age (for state taxes) and age 59 1/2 for federal taxpayers.
Presently, 10 states do not tax public employee pensions, and some of them will be forced to consider pension income taxes as revenue-raising measures -- including Michigan, which offers the biggest loopholes. I won't be surprised to see legislators and pension watchdogs in several of these states take a hard look at the double-dipping issue when the general tax policy for pension income is reviewed.
Allow a benefit-bump instead. An alternative approach to mitigating the double-dipper syndrome is to reduce pensioners' benefits while they receive outside income, and then permit them to receive a bonus payment later in the form of an increased annuity. The Social Security system has figured this out, so why haven't pension funds? For example, a pensioner entitled to a $40,000 benefit while working a second job could receive $20,000 in a reduced pension while still working, and then receive a pension greater than $40,000 after leaving the workforce altogether. The increased life pension after age 66 would be approximately one-fifteenth of the reduction taken each year, so in this example, a three-year pension reduction of $20,000 annually for double-dipping before age 66 would entitle the her to a subsequent increase of $4,000 annually for life -- thus an enriched $44,000 pension thereafter.
If faced with an excise tax, double-dippers could elect this reconfiguration of their pensions, minimize taxes, and still come out equal actuarially. Some may actually prefer this arrangement because of high marginal federal tax rates on their combined income while they work the second job. In fact, there may be other ordinary pensioners who would prefer to elect a deferral arrangement, which might even include enhanced spousal survival benefits if properly designed by the actuaries. Obviously IRS codes or letter opinions may need adjustment to enable such flexibility, but that will become increasingly necessary as Baby Boomers adopt alternative lifestyles in their retirement years.
We need creative solutions, not finger-pointing. I don't purport to have all the answers here, but our lawmakers and taxing authorities need to address these thorny problems. For starters, we obviously need to raise the regular retirement ages for public pension plans to align them with Social Security, which would eliminate most of the double-dipping. Other reforms such as those suggested above would eliminate the remaining abuses by incumbent employees whose benefits formulas are untouchable. Otherwise public confidence in the public-sector retirement system will continue to erode and future employees will bear the brunt of the punishment for the sins of their predecessors.
State Comptroller Tom DiNapoli has numerous employees working under him who are pocketing both a state pension and a paycheck -- a dubious practice known as double dipping that pension-reform advocates fear is bankrupting the system, the Post has learned.
DiNapoli -- who has railed against the soaring costs of the pension system -- has more than a dozen double dippers, but could possibly have far more, according to a Post analysis of comptroller employees listed on SeeThroughNY.net, a database of public employees.
The Post initially discovered a whopping 50 possible double dippers, and asked the office to confirm whether or not they were in its employ.
After two weeks of repeated calls and e-mails from The Post, DiNapoli spokesman Dennis Tompkins said that the list wasn't accurate, and promised to provide an accurate accounting of the agency's double dippers. He never did.
In an e-mail, he defended the practice -- which is legal in special cases -- by saying that using retirees saves money, because the state doesn't have to pay health insurance and retirement contributions.
Critics charge that double dipping is bad for the $120 billion pension because those limited funds were intended for use only for retirees unable to work.
We have our own handsome "double dipper" hoping we will make him a "triple dipper." Are the Rdam voters seeing that?
"While Foreign Terrorists were plotting to murder and maim using homemade bombs in Boston, Democrap officials in Washington DC, Albany and here were busy watching ME and other law abiding American Citizens who are gun owners and taxpayers, in an effort to blame the nation's lack of security on US so that they could have a political scapegoat."
Sponsored by the Empire Center for New York State Policy
State and local government employees in New York collect taxpayer-guaranteed pension benefits that are far more generous than those available to most private-sector workers.
(Use the calculator at left to see just how generous those benefits can be.)
The cost of public pensions is about to blow through the roof, with financial consequences that could affect generations of New Yorkers to come. And it's not just pensions: state and local governments have promised over $200 billion in post-retirement health care -- but set aside no money to pay for it.
To learn more about the problem: • Read the Empire Center report, “New York's Exploding Pension Costs.” •Search the pension database of more than 340,000 retired state and local government employees at SeeThroughNY.net. • Read “Iceberg Ahead, ” the Empire Center's study of unfunded government retiree healthcare obligations. •Join our email list and keep up to date with the latest on this and other Empire Center reports and projects. • E.J. McMahon discusses the report on YNN's Capital Tonight and with Joe Spector of Gannett News Service. • Visit Public Sector Inc., the Manhattan Institute's website focusing on the national problem of burgeoning liabilities for government employee pensions and other compensation.
New York State Department of State 2010 - 2011 Local Government Efficiency Grant Program Awards
Government Reorganization
Village of Altmar - $45,000 The Village of Altmar will create a village dissolution plan.
Village of Hoosick Falls - $48,910 The Village of Hoosick Falls will study village dissolution and alternatives to dissolution.
Village of Keeseville - $45,000 The Village of Keeseville will study village dissolution.
Village of Malone - $49,500 The Village of Malone will study village dissolution.
Village of Mannsville - $45,000 The Village of Mannsville will study village dissolution.
Town of Seneca Falls - $406,500 The Village and Town of Seneca Falls are implementing the recommendations developed in the Village of Seneca Falls Dissolution Plan. The Village will dissolve on December 31, 2011.
Village of Victor - $49,500 The Village of Victor will study village dissolution.
General Government Projects
Town of Fishkill - $50,000 The Town of Fishkill will study the consolidation of some or all of the various special improvement districts in the Town into one or more, larger districts.
Franklin County - $11,690 Franklin County will study the establishment of a countywide shared services and planning office.
St. Lawrence County - $27,000 St. Lawrence County will analyze the existing Justice Court structure for the Towns of Edwards, Hermon, Russell and Clare.
Sodus Central School District - $23,400 The Sodus Central School District and the Village and Town of Sodus will study options for shared transportation/fueling and records storage.
Education Projects
Hamilton Central School District - $35,000 The Hamilton and Morrisville-Eaton Central Schools will study reorganization to merge the districts.
Mayfield Central School District - $35,000 The Mayfield and Northville Central Schools will study reorganization to merge the districts.
Pavilion Central School District - $35,000 The Pavilion and Wyoming Central Schools will study reorganization to merge the districts.
Rensselaer City School District - $172,500 The Rensselaer City School District with eight additional districts will implement shared of out-of-district student transportation services and centralized purchase of materials and equipment.
Stockbridge Valley Central School District - $35,000 The Stockbridge Valley and Madison Central Schools will study reorganization to merge the districts
Wells Central School District - $35,000 The Wells and Lake Pleasant Central Schools will study reorganization to merge the districts.
Public Safety Projects
Town of Clarkstown - $50,000 The Towns of Clarkstown, Haverstraw, Orangetown and Stony Point will analyze the potential benefits and cost savings from the consolidation of services of the municipal police departments.
Village of Harriman - $317,250 The Village of Harriman with the Town of Monroe and the Village of Monroe will create a consolidated Fire District in the Town of Monroe and a portion of the Town of Woodbury.
Village of Hudson Falls - $45,000 The Village of Hudson Falls will detail options for developing sustainable reductions in the cost of police services.
County of Jefferson - $405,000 Jefferson County will align fragmented and unsustainable pre-hospital emergency medical resources under a single, high-functioning county-wide cooperative system that eliminates unnecessary and duplicative services.
County of Oneida - $600,000 Oneida County will consolidate the existing three Public Service Answering Points (PSAP) in the City of Utica, Town of New Hartford and Oneida County 911 Call Center into a single PSAP within the County.
Village of Whitesboro - $50,000 The Town of Whitestown and the Villages of New York Mills, Oriskany, Whitesboro and Yorkville will develp and an implementation plan for the consolidation of police forces.
Sanitation Projects
Great Neck Water Pollution Control District - $400,000 The Great Neck Water Pollution Control District and the Village of Great Neck will functionally consolidate their sewage collection and treatment systems allowing residents of both the District and Village to realize substantial operating savings due to the economies of scale and reduction of duplicative services.
Transportation Projects
Chemung County - $200,000 Chemung County will implement service-sharing measures to increase efficiency and reduce costs associated with highway maintenance services throughout Chemung County.
Montgomery County - $35,000 Montgomery County will conduct an efficiency analysis to develop options to reduce county and local municipal expenditures on highway maintenance and repair.
Water Projects
City of Lockport - $640,000 The Cities of Lockport and North Tonawanda will consolidate public water treatment and supply.
Orange County Water Authority - $450,000 The Orange County Water Authority will implement the recommendation of the 2010 NE Orange County Water Supply Feasibility Study to develop a regional water supply.
Village of Skaneateles - $400,000 The Village of Skaneateles is consolidating their drinking water services with the Town of Skaneateles.
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
The number of states borrowing and how much those states are borrowing is actually on a downward trend – down from 32 states borrowing $45.7 billion in March 2011. That’s likely because states are fast-approaching a dreaded deadline. Next month, states will have to begin making interest payments on their loans, something that was stalled until now by a provision in the American Recovery and Reinvestment Act.
For California, that means hundreds of millions of dollars going to an interest payment even as the state struggles to find the money just to pay for basic services.
Loree Levy with the California Employment Development Department told KPBS that the state’s fund is chronically imbalanced and the deficit keeps growing. “[We will borrow] $11.1 billion by the end of 2011. We forecast a deficit of $12.7 billion by the end of 2012 if we still have no solution.” The state’s first payment due in September will be about $320 million.
In July, letters from the New York Unemployment Insurance Division of the state Department of Labor went out to employers, alerting them that they are being assessed up to $21.25 per employee to cover interest payments on the money the state has borrowed. New York borrowed from the federal government to make up for state’s own insolvent
New York will have to pay $95 million in interest by the end of September.
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