Cuomo Nixes N.Y. School Pension Bond Bill

Gov. Andrew Cuomo on Wednesday vetoed a bill that would have allowed school districts in New York State to issue new debt to cover pension payments.

Proponents of the bill said it would enable school districts to offset sharp increases in pension costs and reductions in state aid, but critics saw it as a move intended to circumvent the recently enacted 2% property tax cap.

“This veto sends a strong message that we will not put today’s tough decisions on tomorrow’s taxpayers,” Cuomo said in a statement.

The bill, sponsored by Republican Sen. Martin Golden and Democratic Rep. Peter Abbate, both from Brooklyn, would have allowed school districts, without voter approval, to borrow more than $1 billion through bonds to cover current pension costs.

The bonds plus interest would have been paid off over 15 years.

The value of pension funds throughout the United States plummeted during the recession, forcing public employers to make greater contributions.

Carol Kellermann, president of the Citizens Budget Commission, had urged Cuomo to veto the bill.

“The legislation contradicts the purpose of the property tax cap, which already took rapidly rising pension costs into account by partially exempting growth in pension contributions,” Kellermann said in a letter to the governor dated Monday. “Simply put, pension raiding should not be allowed to proliferate in any form.”

All three major rating agencies have assigned double-A ratings to the state’s general obligation bonds.

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