The state’s municipalities face serious financial turmoil, if not right now, then soon. The dispiriting fact is that revenues are not keeping up with soaring costs. And the time to act is now.
New York City had to come to grips with a now-famous fiscal crisis in the 1970s, and the experience should have taught us all that we can’t necessarily afford in the future what we have taken for granted in the past.
As the Associated Press pointed out in the April 14 Press-Republican, the state’s cities and counties, without remedial action, are on the road to insolvency.
Municipalities spend more money on personnel than anything else. That is true of business, as well. But every government from federal on down has always been more generous with their employees than many taxpayers think they should.
Government retirements and government health insurance have traditionally been the best.
According to the AP, the New York State Association of Counties reports that pension costs for counties have risen from $47 million in 2000 to $1.1 billion now. That is as pure an example of an unsustainable expense as we can recall seeing. Revenues are not rising to keep up with that kind of explosive increase in costs.
State aid to localities is declining, local taxpayers are exhausted, and the state has imposed a cap to make sure taxes don’t increase more than about 2 percent a year. How, then, is any county, school district or municipality supposed to come up with ever-rising retirement and insurance costs?
Many in the world of business and industry have abandoned retirement plans. They are governed by the notion that spending must be confined to what revenue sources will actually provide. Company contributions to 401(k) programs have replaced retirement programs, and, in many cases, the companies have stopped even their low-percentage shares.
Governments are going to have to do the same. The plans simply can’t be afforded anymore.
Many cities, for example, allow their firefighters and police officers to retire after 20 years of employment. That means they will start receiving retirement payments beginning at about age 40. That’s half a lifetime, on the average.
All government retirees will be receiving payments longer and longer, as medical science continues to advance.
Unions fight tenaciously for better benefits each time a contract expires — as they should. But taxpayers can no longer support some benefit packages.
Retirement benefits already being collected must be respected, of course, and so must those offered employees currently on the payroll.
But new employees are going to have to be the beneficiaries of less generous packages. One day, few will receive employer-funded retirements and, perhaps, health insurance.
Governments are going to have to move toward the same frugalities as profit-making enterprises.