Minority Leader Jim Maisano Speech at Westchester County Association Breakfast in Tarrytown on March 2, 2011

(You may have read about the Westchester County Association breakfast on March 2, where the leadership of the Westchester Board of Legislators spoke.  See Phil Reisman’s column:

http://www.lohud.com/article/20110303/COLUMNIST08/103030378/1010/Politics-Never-Twain-shall-meet

Here are the notes from my presentation.  I did modify this speech as I spoke at the breakfast, but this is most of my speech.)

Good morning.  Thanks for inviting us to join you this morning and thanks to the Westchester County Association for the important work you do in our county.

Peggy Noonan (the former Reagan speechwriter) wrote a column this past weekend wondering if elected officials are still capable of taking the word “crisis” seriously – or have they been so bombarded by events labeled “crisis” over prior decades, that our leaders are now just jaded and avoid genuinely confronting a real “crisis.”

We must wonder about this as we watch the New York State government deal with a $10 billion deficit for this year’s budget after years of excessive spending.  In prior years, many analysts were calling for fiscal restraint to avoid the pending budget crisis, but they did nothing to address it.  And remarkably, it did not matter in the 2010 election, when the very legislators that ran up this incredible deficit were mostly re-elected.

Well, I am here today to tell you that the Westchester County government is still facing a fiscal crisis, and I am here to advocate that my colleagues on the Board of Legislators need to be more aggressive in reforming the county government and reducing spending in the county budget.

And I also believe that Westchester’s local governments and schools districts are facing the same crisis.

Yes, much of this problem is forced upon our county by unfunded mandates from New York State.

But, much is also our own fault for spending too much money over the past decade.

I have served on the Board of Legislators for 14 years and in every budget in my first 13 years, we raised spending.  Yes, we raised spending every year until this past December, when we reduced taxes and spending in a bipartisan manner.  I voted against many of these prior budgets because they were fiscally irresponsible, but unfortunately, they were passed by the majority.  (Note, I believe I have the record for the longest serving Westchester county legislator in history to never have served in the majority!)

We know pension and health care benefits are a problem for all municipal budgets – just watch the battle in Wisconsin and other states on TV or listen to speeches by our new Governor Cuomo or County Executive Astorino.

Let me point out that I don’t wish to blame all the budgetary problems on our government workers, police, firefighters and teachers.  We know how hard they work for all of us each day, and we have a terrific work force in the county government, but we cannot deny the exploding numbers we face for pension and health benefits.  The exploding costs in our budget must be addressed, and unfortunately our government workers must take part in the shared sacrifice.

For example, the average cost of a county worker in 2010 with all the benefits included was $110,000, and this year in 2011 it is now up to $117,000.  We cannot possibly handle such $7,000 increases every year.

So let’s look at some hard numbers (I promise not to bombard you with too many statistics).  You should all look at a report on internet called “New York’s Exploding Pension Costs” by the Empire Center for New York State Policy – you can easily find it on Google.

This report shows that:

— State and local employer contributions to New York State and Local Retirement Systems (covering most of our county workers) will more than double over the next five years.

— Taxpayer contributions to New York State Teachers Retirement System could more than quadruple by 2016.  Yes, I said quadruple in about 5 years. The projected increase is equivalent to 18 percent in school property tax increases.

Of course, the taxpayers will need to make up the resulting pension shortfalls in the various budgets – since the existing funds in the pension system cannot possible pay for these increases.

What does this mean for the Westchester County government:

The pension cost in 2011 budget – $46 million

The pension cost in 2012 budget – $57 million

The pension cost in 2015 budget – $105 million

Based on those numbers, we already have an $11 million deficit for next year’s budget, and in 2015 the pension cost is more than double 2011 – pretty powerful numbers.

And here is the kicker – there is nothing we can do about these exploding pension numbers for existing workers.  All the current government workers in New York State have guaranteed pension plans pursuant to New York State law.  We have to pay for them and we cannot modify them.  We can make changes for future workers, but we need state legislation for that (and better reforms than the creation of the recent Tier 5).

So upon any objective review, these pension numbers are pretty scary.

Now let’s look at cost of health benefits in Westchester’s budget:

2010 – $111 million

2011 – $117 million

In 2011, we had to pay $6 million more than prior year – that is quite an increase.

Yet unlike pensions, we can do something about health care benefit costs, and they certainly cannot keep increasing $7 million per year.

How do we do this?  Well, collective bargaining is coming up.  About 5000 county workers under are under contracts that have expired or will expire soon.

How much do they now contribute for health benefits???  Nothing – they do not contribute anything!

What is national average for local and state governmental workers for contributions to health benefits – it is 25%.  And in Westchester they pay zero.

Only non-unionized county workers contribute to heath benefits right now based on a law proposed by the County Executive and passed last year by our Board – with these 400 workers contributing between 10% to 20% on a sliding scale based in income.

County Executive Astorino will no doubt present a strong front in these collective bargaining negotiations and demand that our unionized workers contribute to heath benefits.

We must stand with him.  Everyone in this room.  And every taxpayer.

And especially the members of the Board of Legislators.

The days of free health benefits must be ended in the Westchester County government.

And I do not want to see my fellow legislators standing in the picket line looking to curry favors with the unions when this battle is waged.

I want my colleagues to take their fiduciary duty to the taxpayers seriously and avoid politics in the epic battle coming soon during Westchester’s collective bargaining process with our unions.  Stay tuned for that battle.

Once again, as I said at the start of my comments, we are in a crisis that is getting much worse based on the numbers I have presented to you.  And I only have time to discuss the pension and health care exploding costs and could also get into declining funding from state and federal governments, which is also a major concern.

So it is without question – we have no choice but to continue cutting and reforming our county budget and services to deal with the crisis.

Now let my turn to a battle going on in our county legislature right now – that is a test for our legislature.  We will see which legislators are taking the crisis seriously.

You probably have read about the CSEA lawsuit.  Here is a quick summary:

County Executive Astorino closed our Section 8 office, since it was not a mandated service – it was optional and could be run by a non-profit.  And New York State is now doing just that – reviewing proposals for a non-profit to run this program.

The Democratic legislators fought the closure of Section 8 office.  My Republican caucus supported the County Executive.

The Astorino 2011 budget eliminated the 38 workers in this office since the contract was ended and there was nothing for them to do.  My friends on the other side of the aisle, strangely, restored the jobs in the budget.  County Executive Astorino vetoed it, and the Democratic legislators did an override of the veto.

I must say that this was a bizarre override, since we then had 38 county workers showing up for jobs on January 1 that no longer existed – the contract was over.

Now the 38 workers have brought a lawsuit against the county and County Executive, and also named the Board of Legislators as a necessary party.

This a remarkable lawsuit by the way, because if the judge orders that the jobs are restored, these workers still have nothing to do when they come back because the contract is still over and not coming back.  A non-profit will be running this program very soon – it is a done deal.

My friend Chairman Jenkins, who you just heard from, wants to enter the action on the side of the union.  I am totally opposed to this, and we’ve had quite a debate on this issue in prior weeks.

To me, that would be a violation of our fiduciary duty as county legislators.  When the county is sued, our first duty is to protect the county and our taxpayers in the litigation.

I am urging my colleagues to order our attorney to oppose this lawsuit and seek to dismiss it.  Chairman Jenkins disagrees.

We will be voting on how we will defend this lawsuit in the coming weeks.

I respectfully submit that those legislators that vote to support the union workers against the taxpayers of Westchester County are not taking their fiduciary duty to the taxpayers very seriously.

But more importantly, those legislators are not taking the fiscal crisis facing our county very seriously.

So folks, watch the media on this issue in the coming weeks, and it will tell you a lot about where the Board of Legislators is heading in 2011, and whether we are ready to really tackle the fiscal and budgetary crisis we face in the coming years.

Lastly, what can we be doing better in the county government – communication.  The communication between the County Executive and Chairman Jenkins has not been good.  Sometimes, as minority leader, I feel like a mediator.  The two branches of government need to communicate better in 2011 – if we are to properly face the crisis I have been talking about this morning.

And communication includes everyone in this room.  We don’t hear enough from the business community.  If you have a question or comment about any issue, please call me and the other legislators.  Everyone in this room can be a check and balance on the county legislators.

Thank you for your time and for inviting me to speak today.

County Legislator
Jim Maisano

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About Jim Maisano

County Legislator for New Rochelle and Pelham and attorney for litigation, real estate, wills/probate. If you need my help with legal or legislative matters, call me at 914-636-1621 or email me at: CtyLegJimMaisano@gmail.com.
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3 Responses to Minority Leader Jim Maisano Speech at Westchester County Association Breakfast in Tarrytown on March 2, 2011

  1. Pingback: County Leg Maisano speech to WCA on March 2 | Warning … Bazzo at Work!

  2. UFFA Local 273 says:

    Jim I know that you know the hard-work that we do for our community, however I read your recent blog post and respectfully disagree with your assessment of the NY State Pension Fund on several levels. First your numbers don’t include future interest earned on investments that would ultimately reduce a municipalities contribution amount. I would hope that representatives aren’t planning for the recession to be around forever, let’s not forget that “not long ago” municipalities contributed next to nothing for a long time. What’s even more disturbing is that day after day many of us see articles written about the pension fund and that it’s in dire shape and States can no longer afford to meet their future obligations. Unfortunately what most journalists fail to report is how we got to this point, so if you would, allow me to clear up a few things for you and your constituency.

    Yes, the tax payers contribute to the pension fund, but most wonder why now it’s so expensive to fund when just a couple of years ago, municipalities barely contributed anything. First of all, pension funds were flourishing because investments were doing well, but what most didn’t know is what was about to unfold. So, what did happen? The eight trillion dollar housing bubble burst, but why? Well it started with derivatives; the 2000 decision to shield over-the-counter derivatives from regulation made during the last year of President Bill Clinton’s term is called “a key turning point in the march toward the financial crisis. However, deregulation, Allen Greenspan coupled with allowing reckless mortgage practices (home ownership for those that couldn’t afford it), and lack of transparency and a “severe lack” in oversight in critical sectors of our economy are in “large part” responsible parties of the economic downturn, certainly not the hard-working civil servant.

    Recently, through well-organized spin maneuvers, the private-sector elitist have been able to scapegoat civil-service workers for their failure. Let it be known that it was the decisions made by the private-sector including Wall Street, investment bankers and ratings companies that have placed us in the worst recession since the great depression resulting in more than 10 % unemployment, but that’s not all.

    A recent report was released by The Financial Crisis Inquiry Commission (FCIC). The FCIC was created by Congress as a bipartisan panel in charge of investigating the causes of the country’s financial meltdown. Its findings were no surprise, the majority of the panel concluded that the financial crisis was an “avoidable” disaster caused by widespread failures in government regulation, corporate mismanagement and heedless risk-taking by Wall Street. (New York Times, 1/30/11) The report also indicates that the outside influence of Wall Street, it says that regulators “lacked the political will” to scrutinize and hold accountable the institutions that they were supposed to oversee. The financial sector spent $2.7 billion on lobbying from 1999 to 2008, while individuals and committees affiliated with the industry made more than $1 billion in campaign contributions. (New York Times, 1/30/11) What else most fail to mention is that many municipalities decided to take pension-fund vacations and simply failed to contribute their part, despite what actuaries recommended. There’s more.

    To add insult to injury, just recently Governor Cuomo exposed the “sham” NY State budget process and its deceptive practices and ridiculous formulas leading the public into believing that the State continues to operate at a deficit. What surfaced were Permanent Law and its deceptive 13% automatic budgetary increases that fuels salivating lobbyist groups, special interests and political friends ready and willing to manipulate and take advantage our tax supported system. In the Governors own words “The budget process is a metaphor of Albany dysfunction.” But It doesn’t end there.

    Even more disturbing is the fraud that runs ramped within the NY State Pension Fund. Since 2007, New York State Attorney General Andrew M. Cuomo has been conducting an investigation into the state’s $122 billion pension fund. The sprawling investigation into New York’s pension investments exposed a much bigger problem. Mr. Cuomo says “favors were being exchanged for contracts to invest pension money”— has mushroomed into a broad look at more than 100 firms by attorneys general in at least 30 other states.” (NY Times, June 27th 2010) “What has developed is a corrupt system, where Wall Street, various fiduciaries, politicians and corporate managers are draining America’s savings,” (Frederick S. Rowe NY Times, Sept 2009). For example, on March 19, 2009, Hank Morris and David Loglisci, aides to Mr. Hevesi, were charged with 123 counts — including bribery, grand larceny, money laundering and fraud — in an indictment that said they had turned New York’s pension fund into a criminal enterprise. Investment firms regularly do business with public pension funds and in return donate large amounts of money to elected officials overseeing the same funds.

    What else people fail to remember are the other large contributors to the collapse in the economy, but I will remind them. American International Group (AIG) was the largest insurance company in the United States before it suddenly collapsed in September 2008 under the weight of bad bets it made insuring mortgage-backed securities. The company was bailed out by the Federal Reserve (TAX PAYERS) at a tune of $182 billion making it the biggest federal bailout in United States history, just for a numbers comparison, that’s 50 billion more than the entire NYS Pension! AIG GRACEFULLY ACCEPTED the bailout and then paid $165 million in bonuses, including some to members of the trading unit that had caused its collapse. Why? AIG said “it has to honor contracts established before its government bailout.” A real tax payer kick in the ass-ets.

    Many felt that the most controversial decision was awarding the banks that were AIG’s trading partners 100 cents on the dollar to unwind debt insurance they had bought from the firm. Critics have questioned why the government did not try to wring more concessions from the banks, which would have saved taxpayers billions of dollars. (Editorial: NY Times, March 2010). AIG and Goldman Sachs were involved in credit default swaps: They are financial instruments that serve to protect against a default by a particular bond or security. They were invented by Wall Street in the late 1990s as a form of insurance. Between 2000 and 2008, the market for such swaps ballooned from $900 billion to more than $30 trillion. In sharp contrast to traditional insurance, swaps are totally unregulated. Credit Default Swaps played a pivotal role in the global, financial meltdown in late 2008. What Goldman Sachs did was help sell bundles of mortgage-backed securities and then used swaps to bet that they would go belly up. (Editorial: NY Times, March 2010).

    In closing, it’s a shame that today many are using the public-sector as a scapegoat for economic downturn. It’s no secret that it was decisions made by Wall Street and others that ultimately placed us in the dire economy that we experiencing today, certainly not the hard-working, public-sector employee. We know that’s it’s easier to place blame on others rather than admitting the truth, moving forward and concentrating on repairing our economy, but many feel that this is an opportune time to further their agenda. Many in the public-sector have done their part by taking wage deferrals and decreases among other concessions, but we could only hope that others contribute and do their part. I feel that it’s a slap in the face to ask everyone (middle-class) to do their part when the State is considering removing a tax on the wealthy. It’s reprehensible that many report that the high taxes and failed economy is a result of earned pensions and benefits, but we know that this far from the truth.
    Peter Miley
    Lo 273 NRFD
    IAFF NY Rep

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