Gone Rogue
DiNapoli lets politics drive state pension fund
TOM DiNapoli, a Nassau County boy who went to Albany and made good, has been New York’s chief fiscal officer since 2007. It’s a job he has done well and without excessive drama — precisely what one wants in a public accountant. But the man just went rogue. DiNapoli Wednesday waved his stylus and politicized the state’s $226 billion public-employee pension system, probably irretrievably, with far-reaching, unhappy implications for New York’s already critically overburdened tax base.
DiNapoli said he will direct the massive investment power of New York’s Common Retirement Fund away from fossil fuels. Disinvestment is a move he has wisely resisted for 13 years, but there is an election on the horizon, and New York is moving sharply to the left — so what better time to go woke than now, right?
Actually, on the merits, there is no good time to involve the fund in partisan politics. It underwrites pension benefits for most state and local employees outside the Big Apple, save for teachers and court workers, and when it moves, the markets notice.
Which is why DiNapoli has been under pressure to go green for years. He is the fund’s sole trustee — a rare circumstance among major pension funds — and while this means he needn’t deal with pesky boards, it also means that he is solely responsible for preserving the gargantuan endowment’s integrity.
That is, it’s his job to resist the passions of the moment, and while the comptroller says that’s what he is doing, it isn’t at all clear that he is.
“New York state’s pension fund is at the leading edge of investors addressing climate risk,” said DiNapoli, “because investing for the low-carbon future is essential to protect the fund’s long-term value.”
But while that’s received writ in some precincts, it is also at the core of an extremely contentious global political and social debate, one whose outcome is far from clear.
It may in fact be true that a “low-carbon future” is in the offing. But countries like China, India and Russia aren’t acting that way. And in any event, DiNapoli’s job is in the here and now, representing the best interests of one of the most cossetted and fiscally burdensome public workforces in America. New York’s workforce has it lush on virtually every level — highly competitive salaries, generous paid time off and comprehensive healthcare benefits for sure, but also a defined-benefit pension scheme with retirement eligibility beginning at age 55 and the lowest levels of employee pension contributions of any state in the union, save Utah.
Which goes to the heart of the problem: Tax dollars sustain the system, and when investment income slips, as it almost certainly will in a politicized system, those dollars must be made up from tax revenues.
And make no mistake: Now that DiNapoli has genuflected to one special-interest pleader, others will be lining up. This is hyper-woke New York, after all, with a veto-proof hard-left-leaning Legislature and a weathervane for a governor.
Really, why wouldn’t the gender-driven alphabet-soup folks demand disinvestment from firms that don’t meet their evershifting standards? Of course they will.
Next up? How about racebased “reparations investments” from the fund? A special fund for women? Ethnic enclave development grants?
Hey, when you have $226 billion, a dangerously pliant pension fund administrator and a keenly honed instinct for spending other people’s money, just about anything is possible.
Frankly, it’s much better not to start down that road in the first place. DiNapoli, a solid citizen sadly gone astray, would do well to reconsider.
Plus, there’s this: New York, particularly during the Andrew Cuomo years, but also well before then, has presumed to do everything it can to avoid sharing the social costs of producing the energy needed to fuel its economy.
The state consumes enormous amounts of natural gas, for one example, but it won’t permit any to be extracted from its own vast reserves in the Southern Tier, simply because it considers itself to be above all that.
What Tom DiNapoli proposes is a kissing cousin to this approach: We will be pure, but we will pay no price, because others will — be it gas-producing communities in Pennsylvania or, in the comptroller’s case, future taxpayers.
This is an ugly, arrogant attitude, and it’s one reason why so many Americans hate New York. DiNapoli, in his own unassuming way, is making matters worse. He should quit it.