Failure by the Federal Government to provide financial assistance for the state amid its multi-billion-dollar drop-off in tax revenues caused by the coronavirus pandemic could result in an even deeper economic decline nationally, according to State Comptroller Tom DiNapoli.
In his job, he oversees local, county and state finances as well as the state's public-retirement systems, which were valued at $210.5 billion prior to the pandemic.
Layoffs' Ripple Effect
In a wide-ranging interview, Mr. DiNapoli predicted that without Federal support to states hit hard by COVID-19, public-employee layoffs at the state, municipal and county levels would exacerbate the national unemployment crisis.
"Sometimes people have a more-negative view of what government is about and will say this is the time to downsize, because we have bloated payrolls," he said. "Yet, we are responding to a pandemic. Even beyond those declared essential, all government functions become essential as we not only respond to a public health crisis but we want to reopen the economy."
He continued, "And certainly, at a time when nationally we have historic levels of unemployment and job loss, to add to that by laying off public workers—how would that help the overall unemployment picture when we need more people working and more people able to pay their taxes?"
Mr. DiNapoli said, "The issue here is that now New York State has to balance its budget by cutting state spending, and it has been indicated that could mean as much as $8.2 billion in local assistance being cut," he said. "That translates into money [being cut] for New York City, for our cities, our counties, our villages and school districts."
Job Freeze, Raise Deferral
In the short term, the Comptroller said, the Cuomo administration had bought some time with a statewide hiring freeze and the "deferral of salary increases for most state workers that were due but are now delayed for a while into the future."
But he added that he was already seeing "a scattering of municipalities and school districts where they have started furloughs and sending out layoffs."
Mr. DiNapoli said it was still too soon to calculate how big an impact the stock market's decline had on the state's pension portfolio, but "there's no doubt we went down, but not as bad as we did 10 years ago when we had the last collapse of the markets."
"Long term, there is going to be an impact on the contribution we will charge our government employers," he said. "But the good news is we went into the downturn as one of the best-funded state plans in the country, so I am confident we can not only continue to provide retirement security to our current retirees and those who hope to retire in the near feature but we are well-positioned to bounce back just as we have before."
Still Socially Conscious
Throughout the economic tumult, the Comptroller said his office continued to use the state pension funds' position as a major institutional investor to advocate for environmental issues, transparent corporate governance and worker rights.
He is keeping an eye on some of the workplace-safety issues raised by the pandemic.
"If anything, we have new areas where we have been participating with a group of investors expressing concern about how workers at Amazon are being treated in the midst of this pandemic," he said. "Whether it be with the major [meat] producers [in the Midwest] or in the delivery industry like Amazon, we have been working with our allies in labor to identify these issues and use our voice as a shareholder and investor to make sure there is an appropriate level of responsibility."
Mr. DiNapoli said that as businesses and governments worked to reopen, managers in both the private and public sectors would need to collaborate with their workforces.
Discussions With Unions
He is working with the two-largest state-employee unions, the Civil Service Employees' Association and the Public Employees' Federation, which between them represent most of his office's 2,800 employees.
"We are talking about what the workplace will look like," he said. "How do we reopen to bring people back in a safe and secure way? We have to reconfigure work spaces. We have to look at different shifts and timing as to when a certain number of people come in."
He continued, "These are the kinds of basic questions we really want the input from our employees, our workers and the unions representing them so we come up with an intelligent plan."
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