PLATTSBURGH — Payments to the state pension fund have been a drain on local governments for the past decade — and will be at least for another year.
But the picture should improve a bit after that, says State Comptroller Thomas P. DiNapoli.
“We understand that for municipalities it has been a real challenge,” he told the Press-Republican Editorial Board in a recent meeting.
The $150 billion pension fund is tied to the stock market, and the meltdown of 2008 and 2009, when the fund lost about 26 percent, is still having an impact, DiNapoli explained.
Because there is about a two-year lag on when the impact of investments, whether they be highs or lows, become a reality, the state operates on a five-year average. There will be an increase this year and next year as the five-year cycle winds down.
But after that, DiNapoli said, the situation should improve.
“We expect the trends to come down, but we are still feeling the effects of 2008,” he said.
‘THE OTHER EXTREME’
The City of Plattsburgh has been hit hard by pension-fund-payment increases in recent years. For 2013, the cost will be about $3.4 million. In 2009, the payment was about $1.3 million, and in 2000, it was only $17,700.
DiNapoli said the low payments of 12 years ago were not reality.
“It was a mistake to think that was real and that was the way it was going to stay,” he said.
“Now we are at the other end of the extreme, and the concern is not to overreact.”
To help municipalities deal with the high payments, DiNapoli’s office has offered an option to amortize payments. But some, among them Plattsburgh Mayor Donald Kasprzak, believe that is a “credit-card mentality” that will not help in the long run.
“That’s what got the state in trouble in the first place,” he said.