Cuomo’s pension plan rejected by New York Assembly Democrats

New York Assembly Democrats rejected Gov. Andrew Cuomo’s proposal to raise the retirement age and offer a 401(k)-type option to future workers in their version of the budget, according to a legislative memo released Sunday.

The Assembly is expected to vote on its budget plan as early as Monday, said Ron Canestrari, Assembly Democratic majority leader. Democrats hold the majority in the Assembly. Senate Republicans released their budget resolution Monday and are planning to vote on it, said Scott Reif, a spokesman for Majority Leader Dean Skelos.

Mr. Cuomo has said his overhaul of the pension system will save local governments and the state $113 billion over the next 30 years as it raises the retirement age to 65 from 62 for most workers. The proposal has drawn the governor into a battle with the state’s public-worker unions and Comptroller Thomas DiNapoli, the sole trustee of the $140.3 billion pension fund.

“It’s not part of our budget and will be handled separately,” Mr. Canestrari said in a telephone interview on March 9, when the Assembly finished its budget plans. “Negotiations are under way, and they’re pretty intensive.”

The Senate Republicans didn’t include Mr. Cuomo’s pension overhaul in their budget proposal either, though they did include a statement supporting it.

“We are committed to pension reform to ease the skyrocketing costs facing local governments and school districts,” Mr. Reif wrote in an e-mail. “The governor’s plan continues to be the subject of ongoing negotiations.”

Assembly Speaker Sheldon Silver said last week the governor must work out an agreement over Mr. Cuomo’s pension overhaul with the unions before the house will vote on the measure. Mr. Cuomo met with union leaders March 6 to discuss pension changes and other items in the budget, he said during a March 8 press conference in Albany, the capital.

“Discussions continue, and we’ve made it clear that a 40% cut in retirement benefits for new employees isn’t acceptable,” said Carl Korn, a spokesman for New York State United Teachers, the state’s largest education-worker union, in a telephone interview Sunday. “We continue to fight to protect retirement security.”

Mr. Cuomo has said pension costs will consume 35% of local-government budgets by 2015, up from 3% in 2001. New York’s retirement fund, the third-largest U.S. public pension, had 101.5% of the money needed to pay its obligations in 2010, better than any other state, according to an annual study by Bloomberg Rankings.

The governor put the pension changes into his $132.5 billion budget proposal for the fiscal year that begins April 1. He has said that if lawmakers send him a spending plan without the measure, he’ll force the Legislature to choose between shutting the government or passing his plan by using a so-called budget extender. The process is used to keep the government operating when there’s no agreement on the budget.