By caving in to public employee unions, the state’s leaders seem determined to follow the road to fiscal hell.
By caving in to public employee unions, the state’s leaders seem determined to follow the road to fiscal hell.
N ew York State officials made two decisions this month that condemn the state to long-term economic decline. The Empire State should now better be known as the Entitlement State, given how much it has surrendered to the demands of its public employee unions and progressive budget-busters.
Ever since the New Deal, New York’s leaders have convinced themselves that they can run their own mini welfare state and be all things to all claimants. But the bill is coming due, with the state consistently growing jobs and revenue too slowly to sustain its existing commitments. And that’s before any of the soaring promises of Zohran Mamdani, New York City’s new socialist mayor, such as free preschool and free public buses, are delivered.
Just how big is New York state’s budget compared with other states? Today, New York has 19.5 million people, up from 14.8 million at the height of its national influence in 1950. Florida has 22 million people, up from 2.7 million in 1950. But even though their populations are roughly comparable, New York’s budget is 2.3 times larger — $268 billion a year compared to Florida’s $115 billion. But does anyone think that New York’s infrastructure, public services, or quality of life is more than twice as desirable as Florida’s?
The answer, of course, is no — something I can testify to because I live in New York. I navigate the state’s endless potholes, wait in line to deal with its slothful bureaucrats, and endure the grime and decay of large portions of New York City.
Nor does the future look brighter. Just when you think New York State can’t possibly mismanage its finances more badly, this month it decided to double down on its decline. It’s about to accelerate the deficits in its public pension programs and deliberately steer them toward a fiscal train wreck.
Last week, the New York State Legislature and Governor Kathy Hochul reached a budget deal, which as Newsday reports will “sweeten retirement benefits for public workers hired after 2010, allowing teachers to retire at age 58 and other workers to contribute less toward the pension system.” The changes would affect over 830,000 state and local employees at an initial cost of $557 million a year.
The changes dramatically undermine pension reforms that were enacted in 2012 to stave off what everyone acknowledged at the time was a “pension debt bomb.” Now the timer on that bomb has been restarted. Public employee contributions to pension plans will be reduced, overtime caps in pension calculations for police and fire workers will be raised, and other reforms will be watered down.
At the same time, the $295.4 billion New York State Common Retirement Fund for state workers has been turned into a “woke” instrument for political crusades. Just this month, Comptroller Thomas DiNapoli used his control of pension funds to continue his pressure campaign on major corporations to promote “social justice” causes. Ignoring his fiduciary duty to prioritize investment returns, he told the French oil company TotalEnergies that the state may divest its holdings in the firm because it scrapped two offshore wind leases due to unfavorable economic trends.
Its threat is not an idle one. In 2024, New York’s pension fund began divesting from profit-making oil and gas companies while doubling its stake in money-losing trendy green energy firms. So of course, the state’s pension funds are losing money, too.
Making investment decisions based on politics is a risky way to gamble retirement funds and a surefire track to eventual taxpayer bailouts. Nationwide, the unfunded liabilities of state and local public pensions are now $1.59 trillion, the size of Italy’s economy. The median state pension plan is only 78 percent funded, while the median local plan is 70 percent funded. The average annual return on public pension investments has been well below what the plans have assumed.
Nor are pensions the only area where New York State officials have capitulated to the demands of their local public employee unions.
On May 16, 3,500 workers from five unions closed the Long Island Rail Road (LIRR) because the state’s Metropolitan Transportation Authority (MTA) would not cave in to their demands for a 14.5 percent raise over four years. They paralyzed America’s busiest commuter line for three straight days and revealed a complete lack of concern for the traveling public and the local economy. As expected, state officials threw in the towel after three days and agreed to the union’s demands.
MTA workers on the Long Island Rail Road already rake in an average of $150,000 a year in pay, with overtime routinely topping $100,000 for over 325 employees. Nearly a dozen Long Island Rail Road workers are hauling in more than $200,000 a year in overtime alone, putting them in the range of Governor Hochul’s annual salary.
These are not market wages earned in a free economy. They are a payoff from monopoly power, backroom sweetheart contracts, and the corrupt revolving door between unions and the Democratic politicians who cash their campaign contribution checks and sign the bloated deals.
The numbers and rules that make this possible are scandalous. LIRR employees earned an average of $121,646 in base pay plus $25,957 in overtime in 2024, according to data from the Empire Center of New York, while per capita personal income in Long Island’s Suffolk County is $92,113. The workers on the LIRR are the princes of Long Island, and their riders are the paupers.
LIRR contracts let workers collect double pay for operating both electric and diesel trains on the same shift or working a rail yard and a train in one day. A carpenter cannot change a light bulb without calling an electrician for four hours of premium time. Most New York public employees cannot strike under the Public Employees’ Fair Employment Act, but the LIRR falls under the federal Railway Labor Act and can. Either way the result is the same: Unions face no real market discipline, and when talks stall, the process funnels through panels stacked by the same governor elected with union money. There is no taxpayer seat at the table. This is not bargaining. It is legalized extortion dressed up as labor relations.
Elected officials have no business handing out pay, benefits, or work rules that exceed what the exact same skills command in the private sector. But New York has created a self-perpetuating influence machine that allows unions to keep looting the budget as commuters keep fleeing to states that still respect limited government and fiscal sanity.
I fear that in some distant future, visitors to the Empire State will despair at how America’s once-great engine of innovation and dynamism could have sunk into squalor and decay. There’s still time to avoid that fate, but for now, New York’s leaders seem determined to follow the road to fiscal hell.
But no one thinks they’re doing it with good intentions. It’s all about their self-preservation.