Jessica Gould covers politics and public finance for WNYC.
To Solve Union Woes, Retirement Fund is Tempting
Friday, February 14, 2014
Mayor Bill de Blasio set aside a billion dollars in a trust fund for retiree health benefits for city employees as part of his preliminary budget. Analysts say the money could be used for new union contracts. But many say de Blasio should keep the money right where it is.
When de Blasio released his budget this week, the hunt was on for clues about how much he's willing to give city workers. They've been without union contracts for years and are seeking some $7 billion in back pay.
But Charles Brecher of the Citizens Budget Commission says using the trust fund money puts the health care of future retirees at risk.
"It's inappropriate to use this as a rainy day fund. It's supposed to be used to cover the growing future cost of retiree health insurance," he said. "And to the extent we draw it down, we're just pushing the problem of paying for future retiree health insurance down the road."
Those costs are estimated to be more than $90 billion. Without setting aside funds like de Blasio is proposing, more of the city's budget in future years will go to those rising costs, and workers may have to bear more of the burden.