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ALBANY — Gov. Cuomo lobbed a political grenade at New York’s powerful public-employee unions yesterday, proposing a radical pension overhaul for future city and state workers as part of his $132.5 billion state budget plan.
Cuomo said the plan would save New York City $30 billion in pension costs over 30 years, while saving $83 billion for the state and local governments outside the city over the same period.
“We can no longer sustain the current pension system,” Cuomo said, citing a projected 185 percent treasury-busting increase in pension costs from 2009 to 2015 if nothing is done.
“This is devastating to the state and the local governments,” he said of the rising costs.
“We need pension reform. We need it desperately.”
Under the proposal, Cuomo would add a new pension tier for new employees that would raise the retirement age from 62 to 65 and increase worker contributions from the current 3 percent to 4 percent for lower wage earners and as much as 6 percent for higher wage earners.
The new pension tier would include an option for 401(k)-style “defined contribution plans.”
New employees would be able to vest after one year — rather than 10 for current state employees — under the defined contribution plan, which would be portable.
“All the private-sector companies are doing it, and the person has the option,” Cuomo said of the 401(k)-style option. “Why wouldn’t you want to give the person the option?”
The governor said the new pension tier would be 50 percent cheaper for government.
Mayor Bloomberg, who has long called on Albany for pension reform, said, “Pension costs are killing us.”
But, he added, “It’ll be a long time before you get any benefit out of this because we’re not hiring anybody new.”
Getting the reform through the Legislature will be a heavy lift, particularly the Democratic-controlled Assembly, where unions have close ties to leaders.
While Senate Majority Leader Dean Skelos (R-LI) predicted, “We’re going to get it done,” Assembly Speaker Sheldon Silver (D-Manhattan) said it remains to be seen “whether one-year vesting is an attraction.”
He acknowledged the option “saves a significant amount of money” and “is significant to some people who may not intend to be in government until they’re age 65.”
Unions gave every sign they plan to fight Cuomo tooth and nail.
Uniformed Firefighters Association President Steve Cassidy charged the new tier would “throw the widows and children of future firefighters killed in the line of duty under the bus.”
Patrolmen’s Benevolent Association President Patrick Lynch said pension reform “would jeopardize the effective delivery” of city police services.
Civil Service Employees Association President Danny Donohue, whose 66,000-member state-worker union swallowed an austerity contract last year with three years of basic wage freezes, called Cuomo’s proposal “an assault on the middle class and a cheap shot at public employees.”
The budget would gradually eliminate increases in the city’s and counties’ costly Medicaid bills — picking up $824 million in costs for New York City over five years.
But Cuomo is tying a promised 4 percent increase in school aid, $805 million statewide, to the approval of teacher-evaluation plans within a year, as first reported by The Post.
The spending increases for health care and schools are funded in large part by $2 billion in new revenue from last month’s hike in taxes on million-dollar earners.
Pension reform is aimed at long-term costs. But yesterday, Cuomo also made more immediate moves to control spending — his new plan is $225 million less than the current budget.
But Cuomo also made good on promises he made last year to boost school aid and health-care spending.
In other cost-cutting moves, Cuomo wants to merge the Lottery Division and Racing and Wagering Board into a new state gaming oversight agency while consolidating and streamlining other agencies and eliminating 25 “inactive” boards and commissions.
Cuomo’s budget proposal also calls for:
* $15 billion in infrastructure projects through $1.3 billion in new and existing state funds, $9 billion in public-authority money — including $5 billion for a new Tappan Zee Bridge — and $12.8 billion in federal aid to leverage $3 billion in private-sector investment.
* Suspending $15 million for a new New York City eviction- and homelessness-revention program until it is reviewed.
* Requiring commercial health insurers to cover early-intervention services.
* Replacing lost federal funds with state money to keep 19,000 child-care slots for working families.
* Creating a federally funded state Health Benefit Exchange to buy and sell health insurance the governor says would insure 1 million more people and cut small business premiums by 22 percent.