New York City Mayor Michael Bloomberg repeated his cry for pension overhaul while introducing the city’s $68.7 preliminary budget and four-year financial plan for fiscal 2013.
“Right now, our pensions system is fairly described, I think, as a ticking time bomb,” he said at a City Hall news conference Thursday.
Bloomberg’s plan calls for closing a $2 billion budget gap without tax increases or layoffs of police officers, firefighters, teachers and sanitation workers. “We spent years planning ahead, made government more efficient. and saved for a rainy day,” the mayor said.
But Bloomberg repeated his cry for pension relief. City-funded pension costs have escalated to $8 billion for fiscal 2013. That’s up more than 500% from the $1.3 billion in fiscal 2012.
If the New York Legislature passes a bill to overhaul the management of the city’s five pension funds, which Bloomberg and Comptroller John Liu have proposed, the city will save $425 million.
Ironically, Bloomberg is closing the budget gap with some money earmarked for what he expected would be higher pension costs.
The city’s general obligation bonds are rated Aa2 by Moody’s Investors Service, and AA by Fitch Ratings and Standard & Poor’s.
Reaction to the mayor’s budget proposal was mixed. City Council Speaker Christine Quinn worried about the possible closure of 20 fire houses, as well as major cuts to public libraries, cultural institutions, after-school programs, and the chief medical examiner’s crime-fighting resources. “There remain a number of troubling elements,” she said.
“We are pleased that there are no new tax increases in the mayor’s proposals,” said the council’s finance chairman, Domenic Recchia Jr. “It is imperative that we keep the quality of life for New Yorkers at the forefront as we face tough fiscal decisions.”
“We commend the mayor on a balanced budget that avoids layoffs in this difficult environment,” Liu said. “However, the use of short-term financial maneuvers doesn’t reduce real cost but simply defers costs to future administrations.” He said his office will issue a full analysis in a few weeks.
The preliminary budget reduces the city’s expenditures by $437 million, roughly a 2% drop from fiscal 2012. Expenses the city doesn’t fully control — primarily pensions, health care, Medicaid and debt service — rise by $2 billion, up 7.5%.
The city’s five-year capital construction program is $39.4 billion, up nearly $700 million. Bloomberg also said that while the preliminary budget is balanced, the city will still face budget gaps of $3 billion in fiscal 2014, and $3.5 billion and $3.4 billion in the following two years.
The proposed final budget will come in April. The City Council must pass a budget by July 1.