It is my hope that readers were appalled to learn that Long Island taxpayers will have to shell out at least $2.1 billion in severance pay to government employees when they retire.
Newsday’s exposé, “Island’s Enormous Severance Pay Burden,” revealed that Nassau and Suffolk counties, its towns, villages and cities, are collectively on the hook for $1.4 billion. Sadly, that number “is nearly 12 times the statewide average for governments outside Long Island.”
Nassau County is liable for $501 million. The townships: North Hempstead will have to lay out $48.4 million; Oyster Bay, $26.5 million; and Long Beach, $31.1 million.
As for Long Island school districts, taxpayers are on the hook for $747 million.
Individual severance payouts at retirement, which include accumulated unused vacation time, sick days and holidays, often top $200,000.
While I was horrified by Newsday’s findings, I was not surprised.
Why?
When serving on the NIFA board of directors, I learned that Nassau and its local governments and school districts were giving away the store because they feared municipal unions.
Vying for union leadership endorsements and the votes of their members and their families, elected officials would bury various payout perks in labor contracts.
They did not care that they were sticking future generations of taxpayers with the cost of the political swag they doled out.
And let me remind you that these outrageous severance payments do not include the ever-growing costs of retired employee pensions and health care benefits.
Since it is getting very difficult to earn the investment returns necessary to meet the unfunded liability of the public employee and teacher pensions, local municipalities and school districts are often required to ante up more dollars.
These contributions are necessary to help fund the Constitutionally guaranteed-for-life huge pensions—that often top $100,000 annually—to police, schoolteachers and other municipal employees.
The paid “Cadillac” health-care coverage retirees enjoy for life are on a pay-as-you-go basis, which means costs must be included in the yearly operating budgets of a given public entity.
Another reason I was not surprised by the findings: The Empire Center for New York State Policy has been blowing the whistle on these hidden costs for years.
Ten years ago, E.J. McMahon of the Empire Center authored a revealing report called “Iceberg Ahead,” in which he described the “Other Post-Employment Benefits.”
In September 2010, McMahon estimated that the total unfunded liabilities Nassau had built up were approximately $3.5 billion while Suffolk’s totaled $4.2 billion.
These OPEB burdens, he concluded, were the largest “amongst counties in both absolute and per-capita terms.”
The severance, pension, and health care payouts help explain why taxes and fees have been going up—particularly in school districts—and why services are being reduced.
To get a handle on the school tax burden, I went back and analyzed 15 years of my tax bills.
My average tax increase between 2005 and 2016 was 5.3 percent annually while the average rate of inflation during that same period was 1.8 percent. In other words, my taxes increased almost three times the inflation rate.
In 2017, I wised up and challenged my property assessment and my annual school taxes did go down 10 percent. But since then they have gone up 7.4 percent while inflation was up about 4 percent.
The moral of the story: My school taxes, like yours, have grown by leaps and bounds thanks to all the union perks, and I suspect it is only going to get worse.
Recently, Assemblyman Michael Fitzpatrick, a Republican-Conservative from St. James, had the guts to introduce various bills in Albany “aiming at the costs of state pensions, arbitration and step raises that he thinks works in tandem with limiting severance payments.”
But Fitzpatrick is not optimistic about passage. “The reason we don’t deal with it,” he said, “is no one wants to have the fight with unions….”
The only way the marriage of convenience between elected officials and politicians and unions will be dissolved is if there is a genuine tax revolt.
And in the post-coronavirus-era, when county, municipal and school taxes are expected to be pushed even higher due to the state government-induced economic shutdown that is destroying small businesses and commercial real estate values, the time may be ripe for Nassau citizens to stand up and shout they have had enough and are not going to take it anymore!
The outrageous perks will be tackled only when the politicians fear the electorate more than the unions.
Tax revolution anyone?
