Elmont Online

ALBANY -- The state's new 2 percent property tax cap could be exceeded in hundreds of communities next year after a double-digit rise in public employee pension costs, which are exempted from the limit.

Taxpayer-financed pension charges overall will increase an average of 16 percent for non-uniformed employees and 19 percent for police and firefighters in figures announced Wednesday by Comptroller Tom DiNapoli.

"My initial reaction is, 'Well, there goes the tax cap,' " said Peter Baynes, executive director of the state Conference of Mayors.

The increase should fall especially hard on cities and towns that have their own police and fire departments, which typically make up a large chunk of total payroll.

In the Capital Region, that includes Albany, Schenectady and Troy as well as suburban towns like Colonie, Guilderland and Bethlehem.

The city of Albany will need an additional $2.7 million next year for pension increases alone, Treasurer Kathy Sheehan estimated.

DiNapoli said municipalities on average will have to increase their annual pension contribution rates from 16.3 percent to 18.9 percent of payroll for the 2013 payment. For police and firefighters, who have a more generous pension system, the payment will go from 21.6 percent to 25.8 percent of payroll.

Instituting a cap on how much a municipality's tax levy could rise each year was a priority for Gov. Andrew Cuomo during this year's legislative session. He successfully pushed through a cap of 2 percent or the rate of inflation, whichever is lower.

A levy that exceeds the cap requires a 60 percent or greater vote by citizens in the taxing district.

And an exemption was granted for public sector pension costs, which are rising sharply and are constitutionally guaranteed. Critics said the exemption amounts to a loophole.

But the Cuomo administration argued the exemption balances out the damage done by the 2008 financial crisis, which made less pension fund money available. With less money from the fund, localities are forced to fill the gap.

Administration budget planners contend as the $146.5 billion state pension fund recovers from the 2008 crash, localities should see cuts in payment rates.

Still, some critics wonder how much costs will drop given ever-rising pension expenses.

"They've got money going out faster than it's coming in," said E.J. McMahon, executive director of the fiscally conservative Empire Center for New York State Policy.

He believes the increases municipalities face should peak in 2015, but said it's unclear if they'll fall substantially later.

DiNapoli acknowledged the 2008 crash is still being felt. "The Common Retirement Fund has had two consecutive years of strong investment returns," DiNapoli said in a prepared statement. "However, we are still incorporating the market loss of 2008-09 into our employer contribution rates."

"While rates will continue to increase, the size of that increase is less than it has been for the past two years," he added.

Cost estimates have traditionally been released in September but DiNapoli wanted to give localities more time for planning by releasing the numbers this week. While technically due in February 2013, municipalities calculate the increases into their 2012 budgets, and usually pay them in December.

Certainly, the higher costs were no surprise to local officials, including budget experts.

"Our costs are increasing well above the 2 percent cap," said Mark Lavigne, spokesman for the state Association of Counties.

A straight 2 percent cap means county tax increases statewide should be limited in the aggregate to $90 million next year. But the higher pension costs mean the actual increase should be more like $120 million.

Add in the rise in Medicaid costs, which counties also shoulder, and the 2 percent cap looks increasingly hard to adhere to, Lavigne said.

So far, he added, at least five counties -- St. Lawrence, Montgomery, Chautauqua, Tompkins and Rockland -- are already contemplating budgets that would require override votes.

DiNapoli's estimates came days after the separate Teachers' Retirement System said school districts will have to pay a 29 percent increase in their pension costs due next year.

Their costs are going from 8.62 percent of payrolls to 11.11 percent, which means that taxpayers may once again be shouldering increases well above 2 percent for their schools.

Reach Karlin at 454-5758 or This e-mail address is being protected from spambots. You need JavaScript enabled to view it .