Monroe County wants to borrow to pay portion of its rising pension costs
Posted at: 01/07/2013 5:26 PM
| Updated at: 01/07/2013 5:42 PM
By: Ray Levato | WHEC.com
Monroe County wants to borrow to pay a portion of its rising pension. A spokesman for County Executive Maggie Brooks confirmed to News10NBC that the county wants to borrow more than $17 million to help pay its pension costs. The total pension bill this year is $49 million. The county wants to borrow from the state pension fund itself.
No one from Brooks's administration was available to speak on camera Monday. In Albany, a spokesman for New York State Comptroller Tom DiNapoli says this is not borrowing. It's really amortizing, which is what happens when you pay your mortgage. But some people don't see a difference.
Mike Francis is a financial adviser and vice president with Brighton Securities.
Mike Francis, Brighton Securities, said, “He is making a distinction that we are not borrowing from an outside entity, but borrowing from our existing assets. But let's look at the numbers, and here is where it starts to crumble, this story. We know we are looking at pension costs increasing by 59% next year. If that is the case, and assuming tax receipts don't change and we don't increase taxes, we don't cut spending somewhere else, we are going to be borrowing a lot more from the pension fund.”
Paul Haney is a Democratic county legislator and former Rochester City Council finance committee chairman.
Paul Haney, (D) County Legislator, said, “I personally think it's a mistake. Governments are using all kinds of fiscal shenanigans to push the bills down the road. They're going to have to be paid someday. And they're going to have to be paid with interest.”
News10NBC asked people downtown Monday would they rather see the county borrow to help pay its pension costs or find other ways like perhaps even raising taxes.
Rochelle Watson said, “It's a catch 22. I guess if it's legal and there's no concern that during better times they could repay the fund, I'd rather see them borrow than pass on any more expense to taxpayers.”
Tom Lucas said, “I'd rather see them find other ways. I'm not sure what that would be but I'm sure there's got to be another way to do it. Other than borrow.”
Monroe County has done this twice before. In 2011, the county amortized $6,138,933 at 5%. If the county pays it back over ten years, taxpayers will pay interest in the amount of $1,811,266 for a total of $7,950,199.
In 2012, Monroe County amortized $8,000,000 at 3.75%. If they pay over ten years, they will pay interest in the amount of $1,740,907 for a total of $9,740,907. So just for these two years, Monroe County will have paid more than $3.5 million in interest.
The City of Rochester will again this year face a deficit of $10 million. A principal contributor is the annual rapid escalation in pension costs that have grown from $24 million to $48 million in the most recent five years.
However, Rochester City Hall says it has resisted borrowing to pay these costs because it only postpones and makes it more expensive in the long run, a current operating cost.