Bull stock market helping state pension plans, local taxes
In the midst of a pandemic that has strained all levels of government, the stock markets are doing really, really well — and that's helping the state's various pension plans.
The state has a series of pension plans for public employees. Each plan may differ depending on the job or the pension tier that controls how much a worker contributes to a future pension.
On July 1, the pension plans totaled $268 billion. It's made up of employer contributions, some employee contributions and very large stock market investments. The public employer contributions vary widely, usually because of the stock market.
Speaking recently to WBFO, state Comptroller Tom DiNapoli said income is rising while pension costs are rising.
"We had a record year, over 33% positive return. We've never had that kind of a return for the pension fund," he said. "But I try to remind everyone our goal is to keep the plan well-funded and our payouts are growing, because more people are retiring with higher pensions. People are living a lot longer, too. People living into their 90s. So there's a lot to balance."
For the 3,000 local governments in the plan, they will see a decrease in pension costs in the bills that arrive in the mail next year, which will show up in budgets and potentially in taxes. DiNapoli said the pension funds are more than 99% funded, above many other states.
Hamburg Supervisor Jim Shaw said around 9% of his town's budget goes for pension costs, from a general fund budget this year of $14 million. Shaw said cutting that cost is important in holding taxes down.
"The biggest challenge we have is to try and maintain a property tax rate on town taxes that people can afford," Shaw said. "The fact of the matter is we're undergoing some inflationary pressures. We're still coming off the most serious consequences associated with the pandemic."