Under a reform proposal from Governor Andrew Cuomo, employees hired by New York State in the future would receive pensions that are much smaller than those brought home by current state retirees.
The idea's been endorsed by pro-business groups, but labor leaders are decrying it.
To recap: The row is over the retirement benefits of people who haven't been hired yet - and it's shaping up to be quite a fight.
One of the groups backing the governor's proposal is the Committee to Save New York (CSNY). It's trying to sway public opinion to support legislation that could help the private sector, mostly by targeting taxes. This legislative session the organization's cross hairs are set on pensions that they claim are crippling state and local governments, and by extension, taxpayers.
"There is no one who doesn't understand that we pay too many taxes in the State of New York. We have still virtually the highest combined state and local tax burden of any place in the galaxy," says Andrew Rudnick, a member of CSNY.
Formed in 2011, CSNY lobbies for lower taxes, and relief from public mandates, like the pensions that the state and localities pay to retired public workers.
The group has found a champion for their cause in Cuomo, who has declared the pension issue a top legislative priority in 2012.
Line in the sand
Known as Tier VI, the legislation could save more than $100 billion over the next 30 years, the governor and CSNY claim. New public employees could choose between a less generous pension plan or enrolling in a traditional 401(k)-type retirement plan.
"No one has to give up anything. It's only for new employees. And most of the benefits that new employees would get are what people in the private sector have been getting forever," says Rudnick.
Buffalo is ground zero for the issue, according to Rudnick.
"Labor costs of current employees are less than the labor costs of retirees in the city and school district. So more resources are going to pay for retiree expenses than they are for current employee expenses," Rudnick says. "What the governor proposed won't stop that dynamic tomorrow but for future generations will control that dynamic."
And a new report from the state comptroller's office may give their argument a boost. This "fiscal note," consisting of analysis from state actuaries issued Thursday, found Tier VI would cost local governments millions to implement and could not be ready by the governor's envisioned effectiveness date of April 1, 2012.
But that's where CSNY is drawing a line in the sand, saying the state's attempt to become more business friendly must start with Cuomo's plan to reduce pensions.
"This is the kind of tip of the iceberg issue. [The governor is] fearful that if you don't deal with this issue those other mandate relief issues won't be dealt with," he says.
Both parties have signaled some support for the bill. The real conflict is likely to ignite between union and labor interests and Cuomo who, as a Democrat, will likely be portrayed as acting against a powerful base of his party's support.