ALBANY, N.Y. - State Comptroller H. Carl McCall and representatives of retired state employees sued Gov. George Pataki last week, claiming a new law using $230 million in pension money to balance the budget was unconstitutional.
The plaintiffs also seek a preliminary injunction against a section of the law that would deny pension increases to retirees for one year if a successful suit were filed.
A hearing on the preliminary injunction is scheduled for July 18, said Cynthia Munk, a spokesman for Mr. McCall, the sole trustee of the $60 billion pension fund.
"The pension raid is a one-shot gimmick," Mr. McCall said in a published statement. "It's another example of New York State not facing up to fiscal responsibility.
"Taxpayers can't take someone else's money to pay their own bills," Mr. McCall said. "The state shouldn't be allowed to, either."
A spokesman for Mr. Pataki said the use of the money is consistent with the purpose of the reserve fund. Mr. Pataki earlier this month signed a bill that made the payment of $130 million in cost-of-living adjustments contingent upon the use of $230 million to balance the state budget. The money came from the $360 million Supplemental Reserve fund, which is used to pay retiree COLAs.
There is no provision in the law for COLAs, so public employees rely solely on the Legislature and the governor to grant increases to their pensions. Earlier this year, Mr. Pataki vetoed a pension supplementation bill that would have granted COLAs.
"Now he has finally signed a supplementation bill, but there's a catch," said a prepared statement by Sidney Smerznak, president of the Retired Public Employees Association, and a plaintiff in the suit. "It's 30% less than the bill he vetoed, he's raiding the pension fund to balance the budget, and if anyone complains about him using retirees' money to balance the budget, he'll take pension supplementation away from hundreds of thousands of retired public servants.
"We can't and won't let him get away with this."
According to figures supplied by Mr. McCall, a COLA for state employees would run out in less than two years if used in part, as Mr. Pataki proposes, to balance the budget; the COLA for state police and firefighters would be depleted immediately.
If the entire supplemental reserve fund went to retirees, state employees would receive COLAs for 10 years; state police and firefighters would receive them for three years, according to Mr. McCall.
Other plaintiffs in the suit include Edward Curran, president of the Retired Police Association; Charles Peritore, president of the Retiree Executive Committee of the Civil Service Employees Association; and Dorothy Faragher, a clerical employees who retired in 1971.
Edward V. Regan, Mr. McCall's predecessor, successfully backed a 1990 lawsuit that overturned former New York Gov. Mario Cuomo's raid on the pension fund. Mr. Cuomo changed the funding method of the pension fund that pushed back state contributions to the pension fund to later years.
A New York Court of Appeals judge ruled Mr. Cuomo's action was unconstitutional because the comptroller, as sole trustee of the retirement systems, has authority over the fund, and he opposed the change in the funding method.