Austerity for Agencies

New York City Mayor Michael Bloomberg imposed a hiring freeze and directed city agencies to slash spending by $800 million in fiscal 2011 and $1.2 billion in fiscal 2012. Agencies have until Oct. 8 to submit savings plans and generally cannot hire new employees until those plans have been approved by the Office of Management and Budget.

“Although the city’s unemployment rate has declined seven months in a row, and job growth in the city has outpaced growth nationally and statewide, we are not immune from the impacts of the recession,” Bloomberg wrote in a letter to agency heads. “Our economically sensitive tax revenues in FY2011 remain more than $4 billion below the peak levels reached before the recession began. Meanwhile, the costs of the services the city provides — particularly pension costs — continue to rise.”

Bloomberg has repeatedly warned that rising pension costs are a threat to the city’s fiscal health. Though the city’s debt-service costs are rising more quickly than pension costs, Bloomberg this year bristled when asked about the size of the city’s capital plan.

In the past three and a half years, the mayor’s office has told agencies they had to slash spending to close deficits. The city projects a $3.3 billion budget gap for fiscal 2012. 

“We are seeking city budget proposals which will best preserve necessary city services and quality of life while enabling us to live within our resources,” budget director Mark Page said in a separate letter. “The difficulty of our financial position means that we need as much time as possible to accumulate the value of whatever actions we take against the deficit we face in the period through June 30, 2012.”

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