With the city budget deadline rapidly approaching at the end of the month, Mayor Michael Bloomberg recently announced two agreements – an increase in the sales tax and a change in the city health benefits program – that he hopes will help balance the 2010 fiscal year (FY) budget.
Bloomberg and Municipal Labor Committee Chair Harry Nespoli announced a tentative agreement on Tuesday, June 2, which will save the city $200 million in FY 2010 and $1 billion over the next six years that affects 550,000 covered employees and retirees. Under the plan, savings will come from co-payments for certain services; the implementation of hospital and ambulatory surgery networks; the realignment of the funding of hospital claims and other administrative measures
“Working together, we’ve confronted the city’s budgetary challenge head on and come up with a plan that will continue to serve the long-term interests of our hard-working municipal employees while containing the cost of health care benefits,” Bloomberg said.
Meanwhile, one day earlier, Bloomberg and City Council Speaker Christine Quinn announced an agreement highlighted by a .5 percent increase in the city sales tax and a repeal of the clothing tax exemption for clothing items priced at more than $110. Those items coupled with applying the full city sales tax to customers who purchase electricity from non-utility companies and closing loopholes in the city tax policy, are expected to generate nearly $887 million in FY 2010.
“Today’s revenue package will both ensure that we can balance the budget in the short-term while making our city more competitive in the long-term,” Quinn said in a statement.
The agreement between Bloomberg and the City Council keeps the tax exemption on clothing and footwear under $110 – a change from the Mayor’s Executive Budget and something many of the City Councilmember said was crucial for their support.
In addition, the new plan also scrapped the Mayor’s original proposal of a 5-cent charge on plastic bags.
“If it was done as an environmental issue 5 cents won’t discourage people,” said Queens City Councilmember and Finance Chair David Weprin, saying that it would take a 50 cent or upwards charge to have an effect. “It would have really just be a regressive, nuisance tax.”
