Facing a $ 118.2 billion deficit late last fiscal year, New York State was unprepared for the economic woes caused by COVID-19, according to a new report.
Truth in Accounting, a Chicago-based nonprofit government spending organization, has released its annual report on the state of the United States. Prior to the emergence of the new coronavirus, New York City was ranked 41st in the nation for its financial health and received a “D.”
The rating and related assessment was based on the assumption that at the end of last fiscal year New York had $ 142.5 billion to pay off $ 260.7 billion in liabilities. The tax burden per taxpayer, according to Truth in Accounting, to cover the deficit is $ 17,200.
In a report, analysts at Truth in Accounting identified the main sources of the deficit.
“New York’s financial troubles arise mainly from the unsecured pension liabilities that have accumulated over the years,” the report says. “Of the promised retirement benefits of $ 241.2 billion, the state has not funded $ 12.5 billion in pensions and $ 88.5 billion in medical benefits for retirees.”
Sheila Weinberg, CEO and Founder of Truth in Accounting, said deficits are a wake-up call for New York and all other states about the importance of tackling debt sooner rather than later.
“Nobody paid attention to it, but now that things are going badly, these governments are forced to turn to the federal government,” Weinberg told The Center Square. “They are asking all taxpayers across the country to help them out. Everyone needs to pay attention to this. “
Faced with a higher proportion of COVID-19 deaths and stricter isolation wards than some other areas of the country, New York State could also be hit hard in its income stream this year. Preliminary figures, according to Truth in Accounting, hover around $ 32 billion.
“The uncertainty surrounding this crisis makes it difficult to determine how much it will take to maintain public services and benefits, but New York’s total debt is likely to rise,” the report said.
Permanently unfunded pension and health care costs in New York State – often referred to as “other employee benefits,” or OPEB, have been discussed frequently over the past decade.
In last year’s blog post, EJ McMahon of the Empire Center civic political organization pointed to recent proposals from lawmakers to preserve OPEB’s financial contributions. But this plan, McMahon wrote, without any reforms, is akin to hitting the “iceberg.”
“Since most government employees retire before the Medicare eligible age of 65… and since retirement premiums are separate from pensions, the value of the OPEB promise is like a huge iceberg, with only annual current premiums changed. reflected in annual budgets, ”McMahon said.
He continued, “Lurking beneath the surface is unsecured long-term liabilities estimated at $ 91 billion for the state government, $ 99 billion for New York, and more than $ 250 billion for all levels of government.”
Last year, Senator Andrew Lanza, R-Staten Island, introduced Senate Act 3854, which is currently in the hands of the Public Service and Pensions Committee.
Lanza received bipartisan co-sponsorship support in SB 3854 from State Senator Fred Akshar, R-Binghamton, and State Senator John Brooks, D.-Seaford.
In the legislative note, Lanza justified his proposal by saying that he would provide pensioners with equal insurance.
“Given the rising costs of health care, health insurance is essential for retirees and their dependents,” Lanza wrote.