Nearly 2,300 additional city workers can expect to lose their jobs and all city residents could soon pay .5 percent more in sales taxes. These were just two of the elements released on Friday, May 1, in Mayor Michael Bloomberg’s updated executive budget.
Speaking from the Blue Room in City Hall, Bloomberg outlined a plan that includes $3.4 billion in gap-closing measures for city agencies; the use of $5 billion in surplus funds; a minimum of $1.4 billion in projected savings and revenues from Albany, and union restructuring, in order to balance the fiscal year 2010 budget.
“Because we were on the alert more than a year ago and because we’ve continued to take prudent steps ever since, we are able to keep our budget in balance, while still delivering the services our city needs,” Bloomberg said.
During the briefing, Bloomberg spoke about how the economic downturn has affected the city’s budget. The city projects that economically sensitive tax revenue, which includes personal income, sales, business and real estate transfer taxes will fall $7.4 billion, or 30 percent from last year.
“The city’s economy continues to struggle along with the economy of our country and of our world,” Bloomberg said.
However, he maintained that the city is continuing to provide the essential services to keep the neighborhoods clean, safe and attractive to live in. He also said the city is working on a number of ways to create jobs and provides services to people who may need assistance doing so.
“We are in a situation that is trying, but not dire,” Bloomberg said on Friday.
Of the 2,268 additional job cuts, 1,153 will be by attrition and the other 1,115 will be layoffs. However, none of those layoffs will come from the ranks of teachers.
“We will be able to avoid teacher layoffs, I’m happy to say,” Bloomberg said.
In total, the city has reduced its employees by 13,541 for fiscal year 2010 with 9,782 coming through attrition.
Bloomberg believes the sales tax increase of .5 percent in the 2010 executive budget – double the .25 percent he had previously called for – and a repeal of sales tax clothing exemption, could raise an additional $1 billion in revenue for the city this year.
However, some groups, including key members of the City Council, are raising objections to this budget element.
“It was good for small businesses and good for the economy,” said City Council Finance Chair David Weprin, who emphasized that the City Council fought hard for that change, and he believes that shoppers might take their business outside of the five boroughs again if the change is enacted.
Another controversial point of the budget is the $1.4 billion in savings and revenue from Albany and union actions. Bloomberg’s administration wants to create a new Tier 5 pension plan for city employees, which would only apply to new employees, and is expected to save $200 million in fiscal year 2010 and $7 bullion cumulatively by fiscal year 2030.
In addition, the administration wants unionized labor to agree to $200 million in a health care cost containment program and wants city employees to start contributing 10 percent to the health care coverage beginning in 2011. They project the latter would save $350 million that year.
Bloomberg said that his officials have begun negotiations with the unions, but no deal is imminent. He also cautioned that he was concerned about the state being able to get its portion accomplished and that next year would be even tougher during an election year.
While fiscal year 2010 is difficult, projections for 2011 and beyond are worse. In fiscal year 2011, the city is forecasting a $4.6 billion gap, 2012 a $5.2 gap and 2013 a $5.4 billion gap.
Bloomberg’s executive budget now goes to the City Council, who will negotiate with Bloomberg in the hope of coming to an agreement.
“We are going to be looking at different potential revenue options,” Weprin said, beginning with the first committee hearing scheduled for May 11.
