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Counties, towns aren’t convinced Cuomo’s pension proposal is a good deal

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North country officials are taking a wait-and-see approach to Gov. Andrew M. Cuomo’s proposal to smooth out public pension costs over time because of suspicions that any money saved in the short term would not be worth higher costs down the line.

At first blush, the plan offered a ray of hope for those struggling to stabilize a fluctuating expense that has ballooned in recent years.

“It’s really the one proposal that would have the most impact for local governments,” St. Lawrence County Administrator Karen M. St. Hilaire said. “It’s the first time I’ve seen a scaling back of some costs that have been going up every year. It’s small but it’s going in the right direction.”

However, details of the “stable contribution option” remain scant other than it would require locking in for 25 years in exchange for a fixed contribution rate.

“We’re doing some analysis to see what that means,” Ms. St. Hilaire said.

In broad strokes, the locked-in rate would even out annual contributions to the pension system, taking away some of the sting of recent increases brought on by the financial crisis and making it easier to budget from year-to-year.

In St. Lawrence’s case, the county was paying 8 percent of salaries as its contribution in 2007. Since the market slump in 2008, contributions have skyrocketed so that pensions continue to have funding. The most recent percentage contribution was 21 percent, St. Lawrence County Treasurer Kevin M. Felt said.

If that percentage were brought down to 12 percent — as called for in Gov. Cuomo’s initial plan — the county would save $3 million to $3.5 million in the first year.

Over the long term, shortfalls in the pension fund not paid for in the early years of the program would be covered as lower-cost Tier VI pension obligations kicked in.

However, critics of the plan believe lower pension contributions are just a few years away as the stock market continues to recover. Those who locked in to a stable rate could pay more than their actual costs later.

“In two to three years, if the market stays strong, that 21 percent is going to drastically go down,” Mr. Felt said. “This is a short-term fix but at what cost? There’s a lot of questions without a lot of answers.”

Scott A. Gray, chairman of the Jefferson County Board of Legislators Finance and Rules Committee, was not impressed after his initial review of the proposal.

Mr. Gray said that while the stabilization effect of the proposal may benefit cash-strapped municipalities, Jefferson County, being fiscally conservative and bullish on the economy, would most likely stick with variable contributions in order to take advantage of future savings.

“Trailing bad times, you’re going to have substantial contributions,” he said. “At this point, our contributions are going to come down.”

Town officials are also casting a critical eye on the proposal.

For example, the town of LeRay has 23 employees enrolled in the state pension program. Under Tier VI, the annual contribution required by employers for newly hired employees is 9.9 percent this year and 11.3 percent in 2014. The percentage could dip to 6.5 percent in the next 25 years, so locking in at 12 percent would not pay off, said Steven T. Harter, administrative clerk.

“Either way, it’s a crap shoot,” he said. “But nine of our full-time people here are going to retire in the next 10 years, which means all of their replacements will enroll in the Tier VI program. And I don’t see the rate for that plan being above 12 percent.”

Clayton Supervisor Justin A. Taylor said he will evaluate the potential long-term benefits of enrolling in the plan based on his guess of who will retire according to their age and years worked.

“Employers will need to take into consideration whether these employees will be replaced,” he said. “I think I still need to understand more about what the governor is proposing.”

The plan could save Lewis County and Lewis County General Hospital about $3 million in the first year, county Treasurer Patricia L. O’Brien said. Lewis County and its municipal hospital made a combined $6.9 million pension payment in December, but that figure is projected to increase to $8.4 million next year.

However, given the difficulty of projecting pension costs so far into the future, it would be a gamble to buy into the proposed program, she said.

“Twenty-five years is a long time to lock into a rate,” Mrs. O’Brien said.

The city of Watertown could save about $1 million under the governor’s plan, said Mayor Jeffrey E. Graham, who talked to Lt. Gov. Robert Duffy about it during a visit to City Hall on Thursday.

The city will spend about $3.1 million in the coming year on pension expenses. While the mayor generally liked the proposal, he also had doubts.

“I’m not sure it’s sustainable for 25 years with the continuing annual excess in the system,” he said. “I’m not sure anything lasts for 25 years.”

The state comptroller’s office has yet to issue an opinion.

“This is the governor’s proposal and the comptroller is the sole trustee,” Mr. Felt said. “It’s up to him whether he puts a plan in place. I haven’t seen any reaction from him.”

Unions and the state Teachers Retirement System will also want to have their say as pension contributions are for their members’ retirement.

“Obviously, they’re going to weigh in on it,” said St. Lawrence-Lewis Board of Cooperative Educational Services Superintendent Thomas R. Burns. “We have zero details on this.”

Times staff writers Ted Booker, Daniel Flatley, Craig Fox and Steve Virkler contributed to this report.

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