School borrowing
The state Legislature last week snuck through a massive borrowing bill that will push the pension tab for school employees onto future taxpayers at higher costs.
While attention was diverted to gay marriage, the Senate Thursday night and the Assembly Friday afternoon approved a bill that had lingered for months to let school districts borrow as much as $1 billion statewide over the next two years to meet pension and operating costs.
The legislation is supposed to provide relief to cash-strapped school districts reeling from state aid cuts. But it will add hundreds of thousands of dollars a year in interest to pension costs and become another debt to be paid by taxpayers 15 years into the future. School districts should not be borrowing to meet current operating costs. It will provide only temporary relief to a long-term problem.
Columnist E.J. McMahon wrote in the New York Post: "Permitting schools to bond out pension costs would also amount to a classic New York fiscal abuse — converting an operating expense into debt, compounding future financial risks for the same already overburdened taxpayers the governor has sworn to help."
Mr. McMahon, a senior fellow at the Manhattan Institute's Empire Center for New York State Policy, sees the move as a gamble against future pension costs going down.
The legislation will also relieve pressure on public employee unions and state lawmakers to confront the burgeoning cost of public employee pensions through reforms.
Lawmakers also exempted the borrowing from public approval and from the just-approved 2 percent tax cap. Lawmakers boast about restricting the ability of school districts and municipalities to raise property taxes to fund school programs, but then they just as quickly exclude the pension borrowing costs from the calculations of the tax cap. The borrowing becomes an end run around the tax cap in addition to the exceptions already allowed by the law. It would also be exempt from voter approval of borrowing.
Gov. Andrew M. Cuomo should veto this bill.
