New York City should at least have a blueprint for resolving its "Achilles heel," its expired contracts with 152 unions, by the end of the fiscal year, city Comptroller Scott
"For the city to maintain its strong fiscal tradition, it is critical that there be resolution of the contracts, or a template for resolution, that includes clarity as to the extent of the retroactive pay obligations by June 30," Stringer said, referring to the budget deadline.
Since taking office in January, Stringer has said that budget uncertainty could risk backlash from bond rating companies. Moody's Investors Service rates the city's general obligation bonds Aa2, while Fitch Ratings and Standard & Poor's rate them AA.
The council is debating new Mayor Bill de Blasio's preliminary $74 billion budget for fiscal 2015 and four-year financial plan through 2018.
"As I said when the preliminary budget was first released, the Achilles heel of our city's budget is the insufficient funds to support the necessary collective bargaining agreements for all of the City's municipal labor unions," said Stringer. "Currently all of the city's bargaining units are working under expired contracts. The cost of settling these contracts is a significant outstanding risk to the city's budget."
The city faces two additional budget risks beyond settling the contacts, according to Stringer.
Uniformed overtime spending will exceed the projected amount by $128 million in fiscal 2014, $122 million in 2015 and $100 million annually beginning in 2016, he said. Also, lower-than-estimated Medicaid reimbursements in the Department of Education could mean a $30 million liability in 2014, followed by $110 million and $140 million annually in fiscal 2015 and 2016, respectively.
Stringer praised de Blasio for adding $300 million to the general reserve and $1 billion to the retiree health benefit trust. "The only monies currently reserved explicitly for outstanding labor contracts are the few hundred million that were allocated by the prior administration to support a 1.25% increase," he said.
He suggested several potential revenue sources and savings, including refunding of debt. At a press conference two weeks ago, he said his office would try to generate additional savings in fiscal 2015 debt service through aggressive refinancing, although he said rising interest rates could challenge city goals.
"You can't make the assumptions about savings, though we still have time now," he said.
Answering questions from Councilman Mark Levine, Stringer repeated his call to increase the minimum wage. "You know what really I think, Mark? Being progressive and being fiscally responsible are not mutually exclusive," said Stringer. "This is the perfect intersection of business and people in our community."
Stringer, a former Manhattan borough president and state lawmaker, also repeated his call or the state to restore revenue sharing. "New York City is the only city in the state that does not receive this funding and we have lost nearly $1 billion over the last three years," he said.
The Independent Budget Office watchdog
IBO estimated a $500 million to $7.1 billion effect of contract settlements on the budget in 2014.
According to IBO director Ronnie Lowenstein, red flags extend beyond the expired labor contracts. They include continued weakness in the securities industry, federal aid cutbacks and costs of protecting the city from further storms such as Hurricane Sandy.
"Taking a longer-term view, the costs of protecting the city from future Sandy-like storms are likely to require considerable capital investment," she said.
One big variable is funding for de Blasio's plan for universal pre-kindergarten. The mayor needs approval from the state legislature to raise the income tax on the wealthiest New Yorkers.
De Blasio and Gov. Andrew Cuomo have been at odds over universal pre-K, which Cuomo wants to fund statewide, and de Blasio's proposed cutbacks in funding for charter schools.
