CIVIC CENTER — Mayor Michael Bloomberg claimed to give his successor Bill de Blasio what amounted to a political gift on Thursday: a balanced budget.
But his ledger left out the fate of 300,000 city workers who are currently operating with contracts that expired years ago, critics said.
Their retroactive pay demands could cost the city as much as $3.5 billion, according to outgoing Comptroller John Liu. De Blasio will have to either cut services or raise taxes if he plans to accomodate labor unions, Bloomberg said.
"[He would have to] find a very big revenue source that is not apparent on the horizon," said the Mayor.
With slightly more than a month before De Blasio was set to inherit a projected $2 billion shortfall, Bloomberg said Thursday the gap had been completely eliminated through a combination of higher-than-expected tax revenue, healthcare cost savings for city workers, the refinancing of city debt and other positive financial developments.
“For the first time in modern memory, and perhaps the first time in New York City history, the budget for an incoming fiscal year has been balanced for an incoming mayor, well before he or she stepped into office,” Bloomberg said at City Hall Thursday.
Bloomberg was praised by the city’s business community and some fiscal watchdogs for shoring up the city’s finances before leaving office.
“It's very good news for the next administration,” said Maria Doulis, the director of city studies for the nonpartisan good government group Citizen’s Budget Commission.
“It's a huge relief to not have to come into office and be forced right off the bat to raise revenue and cut services before you get to any of your priorities.”
Critics, however, pointed to major issues still not resolved in Bloomberg's budget — including how the city plans to deal with retroactive pay demands from the 152 labor units currently operating without contracts.
“The picture painted of the current budget situation only looks as rosy as it does because there's no provision for addressing the teachers and the principals who haven't had a contract in five years,” said James Parrott, the chief economist at the left-leaning Fiscal Policy Institute.
Bloomberg said, “This historic accomplishment results from New York’s continued economic growth, from our administration’s fiscal discipline, and from significant savings we’ve achieved in recent months,” noting that the new fiscal situation was reached without raising taxes or cutting services.
The city’s outstanding labor situation was addressed by Bloomberg, who said contracts could be settled today and would still keep the budget balanced if labor leaders agreed to a deal the administration has left on the table since 2010.
The deal would give no increases for three years for many employees, with raises of 1.25 percent for two consecutive years after that, and would mandate city employees contribute up to 20 percent of their healthcare premiums.
Labor leaders were quick to attack Bloomberg’s budget news, saying his labor pay projections were completely unrealistic. Liu also castigated Bloomberg’s budget math for not “adding up.”
“The facts are clear, not only will the next administration not inherit a balanced budget but it will also be greeted on Day 1 with a fiscal mess of historic proportions — 300,000 employees working with expired contracts,” Liu wrote in a statement.
His office noted that, since the unions have rejected Bloomberg’s offer already, any additional benefits beyond what’s been proposed by the current mayor will require new revenue or decreased services.
Additionally, Liu’s office said its research suggested that the retroactive raises some labor unions are pushing for could cost the city as much as an additional $3.5 billion.
Lis Smith, a spokeswoman for Mayor-elect de Blasio, said in a statement that the transition team would “review this new budget information closely in the coming days and weeks."
“We’re reviewing the budget modification released by the mayor today, and remain concerned about the continued impact of sequestration, high uncertainty around the flow of Sandy recovery aid, and the liabilities from unresolved labor contracts,” Smith said.
