New York legislature ducks Cuomo's pension-cut plan for now

(Reuters) - New York State Governor Andrew Cuomo's plan to reduce pension benefits for new hires was left out of separate budget plans presented by both houses of the legislature on Monday, a temporary victory for public unions opposing Cuomo's cuts.

Public workers unions have attacked the Democratic Governor's plan to reduce how much municipalities spend on pensions by $79 billion over 30 years. Unions also oppose his plans to raise retirement ages, increase employee contributions and exclude overtime from benefit calculations.

Michael Whyland, a spokesman for Democratic Assembly Speaker Sheldon Silver, said by telephone that discussions were being held with the Democratic governor on his pension cuts.

Since 2001, pension contributions by the state, local governments and schools increased to $6.6 billion from $368 million. New York City's pension fund contribution has shot up from $1.5 billion to over $8 billion in that period.

Cuomo says cutting pension costs is an imperative for both the state and municipalities, some of which are spending almost their entire sales tax collections on pension benefits.

Should the legislature fail to negotiate a deal on the pension cuts, it might be left with the choice of approving Cuomo's proposal for the pension cuts or shutting the government down if the state misses its April 1 fiscal deadline.

A spokesman for Republican Senate Majority Leader Dean Skelos had no immediate comment. Nor did a Cuomo spokesman.

The Assembly budget plan, which would spend $150 million more than Cuomo's $132.5 billion budget proposal, would abolish income taxes for married couples with less than $25,000 in yearly income. The Democratic majority would also give impoverished schools an extra $178 million and offer community colleges a $57 million increase.

While accepting the governor's $1.6 billion plan for the New York Works Fund for infrastructure projects, the Assembly would also raise capital spending by $150 million.

The Senate's budget plan, which would spend slightly less than the governor's proposal, would boost school funding by $200 million. It also would offer businesses various kinds of tax relief, including a $5,000 tax credit for each new job -- and up to $10,000 for hiring a veteran or someone on unemployment.

The corporate tax rate for small businesses would fall to 5.2 percent from 6.5 percent under the senate plan.

State spending increases would be topped at 2 percent a year, and it would require a super majority in the legislature to increase taxes.

(Reporting By Joan Gralla; Editing by Bob Burgdorfer)