New York Taxpayers Find The Local Tax Cap And Balanced Budget Were Only To Fool The Suckers

Didn't Cuomo promise local taxes would be capped at 2%?
Did Cuomo insert a weasel clause in his tax cap?
What balanced budget?  Will more taxpayers flee? 

Weasel ~ n. 2. a treacherous or sneaky person. 
Weasel out ~v. to back out of a situation in a sneaky or cowardly manner

       The pension funding tax increases faced by schools due to Comptroller DiNapoli's decrees that were reported previously on this blog in Smoke And Mirrors As DiNapoli And Cuomo Hide Pension Costs While Schools Will Need Contribute 54% Of Salary To Pension Funds, are now being reported for municipalities.   New York State Comptroller Thomas DiNapoli decrees state and local governments will cough up more money for their workers' pensions.  The average contribution rate to the state pension fund for public workers will rise from 16.3 percent of salaries to 18.9 percent. The average for the police and fire retirement system will rise from 21.6 percent to 25.8 percent.  The Comptroller admitted that "the Common Retirement Fund has had two consecutive years of strong investment returns.  However, we are still incorporating the market loss of 2008-09 into our employer contribution rates."    The Comptroller continued with, "It's true the contribution rates are going up and that's a consequence of the severe market decline in 2008 and 2009, but the good news is that we're on the road to recovery, and if you look at the long history of the fund, we've always weathered difficult economic times — we'll get through this tough time as well,"

      Local taxpayers discover Cuomo inserted weasel clauses in his local property cap so that schools and "municipalities could pass some of the higher pension costs on to property taxpayers because the state's new property tax cap has an exclusion for part of the pension hikes."  And so Cuomo has an excuse which he forgot to mention when he was prancing about congratulating himself on not raising taxes.   "The Cuomo administration argued the exemption balances out the damage done by the 2008 financial crisis, which made less pension fund money available. With less money from the fund, localities are forced to fill the gap."

     Now, hold your wallet really tightly
   Cuomo forgot to include in his NY State budget increasing state worker pension contributions by 3.6%.  Now, add this to the judges' raises Cuomo's committee will add today at their final meeting.
[Link to judges' salary and Cuomo.]

       When will Comptroller DiNapoli and Cuomo tell us that NY State, its schools and local governments need to fund their retiree health benefits of $56.3 Billion In Presently Unfunded Liabilities.   Bye, bye, Cuomo's balanced New York State budget.
 
       If you think this local tax increase is bad, wait till you discover that these increases are based upon Comptroller DiNapoli's lowering the promised safe rate of return on pension investments from 8.0% to 7.5%.    Luckily, DiNapoli and Cuomo are running public pension plans where the federal law allows an assumption of an 8.0% or 7.5% return on investments without criminal penalties and joining Madoff in prison does not result.   A real safe yield rate for private pensions would be the US Treasury 10 year rate of 1.99% to 2.16%.  Such a safe rate would mean the increases in pension contributions required could be calculated from DiNapoli's present increase based upon a rate reduction from 8.0%-7.5%=0.5% to a true safe rate reduction of 8.0% -2.0% = 6.0%.     Since 6.0% is 12 times 0.5%, the required pension contributions should be 12 times DiNapoli's present increases.  Or, 59.5% of salary for public workers and 72.0% of salary for police and fire.

   The taxpayer wagon trains will be forming in your community soon.  Texas, Florida or Wisconsin or bust.   


See New York Exodus As Tax Payers Flee At The Highest Rate In USA

New York State Rating Downgrade: Who'll Repay The Bonds As Taxpayers Flee?

A Bankruptcy Chill Hits Cuomo Adding To Albany's Below Zero Freeze With NY Medicaid Excesses Unaddressed And 12,000 Jobs Lost

You know you're directly over the enemy, when the flack gets heavy.

   Bankruptcy has sent a chill up the spine of the true believers and media hacks for Andrew Cuomo and other Governors facing fiscal disaster.   The Business Insider's hacks have reported, "The Cheerleading For State Bankruptcies And Municipal Defaults Is Downright Ghoulish," and Business Insider offers the following 12 reasons why State finances won't go broke: (Reasons blue, comments red)

1. Outstanding muni debt remains within historical parameters.  What was the historical parameters before the mortgage collapse, or NYC before fiscal collapse, or stock market historical values before a crash or major devaluation?

2. Interest payments absorb less than 5 percent of current expenditures.   Not after interest rates triple or more and more borrowing is needed for pension contributions.   See example of Greece or Ireland.  Link

 3. Municipal bond default is extremely rare -- less than one-third of 1 percent.  European Counties were defaulting rarely, but now cash infusions and/or  the EU insuring their bonds is not extremely rare.   Link

4. There wasn't a bubble in muni bonds, nor any exotic derivatives.   There is insurance (a derivative) on some bonds.   Will a massive default also result in an insurance default?  Isn't the actuarial basis of the insurance based on very limited expected default?  Yes.   And, lots of litigation claiming deliberate unnecessary default as a reason not to pay said insurance will result and/or bankruptcy filing by such insurers.

5. Pensions were fully funded until they had to weather back-to-back recessions.   A big lie, check out California or NY. Link CA-1/2 trillion dollars pension shortfall    NY Link     Central NY Muni.

6. Anyone claiming there are $3 trillion in unfunded pension liabilities is ignore investment earnings -- which are the majority of returns.   Hey, dopey, check out NY's Madoff style promise of 7.5% Safe Return.    Link.http://cuomotarp.blogspot.com/2010/11/from-ponzi-to-madoff-to-hevesi-to.html   or this link to California's 1/2 trillion dollar unfunded liabilities

7. Pension funds average over 8 percent returns through a diversified portfolio. Why would they invest only in fixed income?  Get real, see NY's return for past 5 years was 01.1%.   Link.

8.  Municipalities devote only 3.8 percent of their budget to pension funding: A modest increase could solve most problems.  Is that due to the phony assumption of a 7.5% Safe Return on pension investments or the borrowing by workers to fund their pensions, so they don't realize the true amount they are contributing to their pensions? Link.

9. Pension plans are legally protected. Health benefits generally are not. 

 

Bye, bye, granny, it's for the good of the State.

10. In fact, most states WILL have to scale back health benefits -- but won't default on pensions or bonds.  But NY and Cuomo, if judged by his record of failures to prosecute Medicaid frauds as AG,  will make sure the massive overspending by NY on Medicare remains. Link 1 Link 2 Link 3.

What about that  $28 billion overspending on NY medicaid?  Link.

11. Municipalities have the next 30 years to remedy any pension shortfalls.  No, the money is missing now and present contributions must be many multiples of prior budgeted amounts.   Link
See #5, 6, 7 and 8 above.

12. Mass default doesn't seem likely, but austerity does.   This opinion uses word "mass" so as to leave some smaller number of States such 6 out of 50 states.   Link to Finance Bazaar.

     Andrew Cuomo must be waiting for a bankruptcy bailout because he isn't  cutting Medicaid to California levels and saving at least $28 Billion a year?  Oh, I forgot Cuomo recovered 0.6% of Medicaid fraud.

     Although the latest fraud is, "New York's seemingly endless cavalcade of corruption continues, with the Young Adult Institute National Institute for People with Disabilities Network and five of its current and former officers ordered to pay $18 million in civil damages under the False Claims Act," as usual the defendants aren't going to jail.   "The defendants will pay $7.2 million to the United States and the rest to New York - though YAI does not admit that it did anything wrong."
   Is this to be Cuomo's new ethical standard: Cheat, steal and if you get caught, you'll have to pay some of it back. Will this be equally applied to the ordinary criminal, not in a suit and without a fancy campaign contributing  lawyer?

    .Cuomo to cut 12,000 jobs.  Link 1 Link 2   But why must New York fund this Medicaid corruption with $28 Billion dollars and then face bankruptcy and 12,000 lost jobs?