OPINION: Cuomo and de Blasio should not force unions to divest from fossil fuel companies
Working men and women, public employees and taxpayers across are deeply concerned about calls from elected officials, including Gov. Andrew Cuomo and New York City Mayor Bill de Blasio, to divest the state and city’s pension funds from fossil fuels.
With the Trump administration’s new tax cuts, which are aimed at economically crippled states like New York, those divestment proposals are playing politics with our retirees’ savings at a time when they can least afford it. They place a priority of politics over performance and contradict the progressive values Cuomo and de Blasio hold dear. In fact, they are regressive.
Some 1.2 million state workers and 730,000 active and retired city workers rely on modest, yet steady pension returns to support themselves and their families after a career of public service.
Our members and their families care deeply about the health of the environment and the future of our planet. However, we must find productive ways to deal with it to ensure a healthy planet for our children and grandchildren, while not punishing working families at the same time.
Public pensions are a right earned by state and municipal workers and retirees who have devoted much of their lives to protecting and serving the public. They are protected under the New York state constitution and should not be used as policy experiments or part of some broad political agenda.
Unfortunately, that’s precisely what these proposals would do.
The Common Retirement Fund of the New York State and Local Retirement System holds $192.4 billion in assets. A recent report by Global Analytics Services commissioned by the Suffolk County Association of Municipal Employees found that the fund would lose $188 million to $302 million over five years if forced to divest from fossil fuels — which earn at or above the mandated 8 percent annual return — and replace them with “green” investments that return 3 percent to 5 percent on average.
Bradley Heinrichs, an actuary who analyzed the report for Global, noted that divesting nearly $1 billion in fossil fuel investments in the state fund into lower-earning securities could force state and local governments to raise taxes or cut vital services to cover these costs. This should sound the alarm for working families across New York.
In New York City, taxpayers’ contributions to the pension funds have climbed steeply from $1.4 billion in fiscal year 2002 to $9.3 billion in fiscal year 2017 as politically motivated investment decisions and poor management have required more taxpayer funding to cover shortfalls … Divesting $5 billion in fossil fuel investments in the city’s pension fund over the next five years will only leave New York’s taxpayers with a greater financial burden and far less social services that New Yorkers rely upon daily.
New York State Comptroller Tom DiNapoli has wisely resisted politically motivated investment decisions over the years, which is why the Common Retirement Fund has yielded a 10.17 percent average five-year return and a 7.12 percent average 10-year return. He has argued that shareholder engagement, rather than divestment is a much more effective way to influence the behavior of fossil fuel corporations. We agree.
Working families in New York deserve better and we are demanding that our elected leaders demonstrate the same commitment to protecting our pensions as they have in the past.
Labor always has — and always will — fight for progressive change in this country, even when that means bucking the political tailwinds of the day. We will marshal our collective resources in the coming months to educate our members about these risky divestment proposals and the economic threats they pose to all working families and taxpayers in New York.
Michael Carrube is president of the Brooklyn-based Subway Surface Supervisors Association. Daniel C. Levler is president of the Suffolk County Association of Municipal Employees.
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