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CityTime Scandal Settlement Will Help Plug Budget Hole, Mayor Says

By Jill Colvin | May 3, 2012 8:38am
Mayor Bloomberg will present his 2013 Executive Budget on May 3.
Mayor Bloomberg will present his 2013 Executive Budget on May 3.
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Mayor's Office/Edward Reed

CITY HALL — Mayor Michael Bloomberg is banking on a scandal.

This year’s budget ax will cut significantly less deep thanks to the massive settlement payout from the CityTime scandal, the mayor’s office announced Wednesday, a day ahead of his annual Executive Budget address.

The $466 million settlement — touted as the largest-ever in a state or municipal contract fraud case — is expected to trickle in over the coming months, helping to plug a $495 million budget hole, the administration said.

Thanks to the extra cash, the mayor is expected to paint a rosier-than-usual economic picture. But questions remain about the fate of many contentious cuts, including the elimination of thousands of after-school slots and the shuttering of 20 fire companies — both of which were proposed in the mayor’s preliminary budget plan earlier this year.

CityTime in action at the City Comptroller's office.
CityTime in action at the City Comptroller's office.
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DNAinfo/Jill Colvin

Activists have already planned a rally on City Hall steps immediately following the mayor’s address to protest the expected cuts.

City schools, however, may be in for an unexpected boost.

While no teachers had been pegged for pink slips in 2013, cuts proposed in the February budget would have resulted in the loss of more than 2,500 teachers through attrition, City Council Speaker Christine Quinn said.

But Thursday’s budget will reverse course, providing funding to maintain current staffing levels, council sources said.

Council members had warned during budget hearings that further cuts in the classroom, combined with the loss of after-school programs, would lead to "lower graduation rates, a higher incidence of youth violence, and diminished prospects in the future."

"We simply cannot afford to shortchange the next generation," they had said.

Quinn said Wednesday that the council was especially concerned about the issue given the loss of 1,800 teachers through attrition last year.

"I hope we see action in that area," she said.

The mayor is also expected to announce that the city’s financial firms have continued to suffer, leaving the city with $352 million less in tax revenue than had been expected in fiscal years 2012 and 2013.

But higher-than-expected growth in several industries has helped to soften the blow, the administration said, pointing to technology, film and television production, and tourism.

"The mayor has spent the last decade diversifying the city’s economy because the financial markets will always have ups and downs. Our efforts have paid off, with growth and job creation in non-finance sectors like tourism, tech and TV production, which softens the blow from the drastic drop in Wall Street profits," Bloomberg spokesman Stu Loeser said.

The city also saw its spending increase faster than expected, thanks to higher costs in areas like homeless services, adding $143 million to the budget gap, administration officials said.

The mayor and City Council have until the end of June to reach a final budget deal.