New York City May Need $600 Million in Additional Budget Cuts, Page Says

New York City may need to cut spending by $600 million more because the state Legislature is unlikely to approve aid and other measures anticipated in a preliminary financial plan, Budget Director Mark Page said.

Page said Mayor Michael Bloomberg, whose $65.6 billion budget eliminated a $2.4 billion deficit partly by cutting 6,166 of 75,000 teacher positions, may have to slash another 2 percent from schools and uniformed services, and 4 percent from other agencies. The budget also calls for closing 20 firefighting companies.

The budget director, who traveled to Albany, the state capital, last week to lobby for more aid, told the City Council Finance Committee today that he “didn’t come back feeling good” about the meeting.

New York’s revenue, like that of other U.S. cities this year, has run below 2008 levels while costs of pensions, health care and operations continue to rise, making 2011 “the toughest year yet for local governments,” Moody’s Investors Service said March 16 in a report.

Although Bloomberg opposes extending an income tax surcharge on the state’s highest earners that’s scheduled to expire Dec. 31, Page said the mayor would still support a budget that retained it.

Albany Three

Democratic Governor Andrew Cuomo and state Senate Majority Leader Dean Skelos, a Republican from Rockville Centre, reject the tax, while Democratic Assembly Speaker Sheldon Silver of Manhattan has favored it.

The state must close a $10 billion gap in its $132.5 billion budget, for which Cuomo has proposed spending reductions for Medicaid and local school aid, and firing 9,800 state workers unless they agree to $450 million in savings.

“The mayor’s position is that if a millionaire’s tax was part of an overall budget deal in Albany, he wouldn’t oppose it,” Page said.

Bloomberg last week said keeping the tax would “drive business out” of the state and “not be a good strategy right now.” Marc LaVorgna, the mayor’s spokesman, said Bloomberg hasn’t changed his position on the issue and that Page misspoke.

Bloomberg’s budget relied on $400 million in unrestricted aid and a law abolishing $200 million in supplemental annual payments to retired police and firefighters. State lawmakers have shown little interest in the proposal to end those benefits or increase funding to the city, Page said.

“It doesn’t seem to be moving,” he said.

Opposed to Teacher Cuts

Council members opposed the mayor’s reductions to the teachers, 4,666 of whom would be fired. Councilman Robert Jackson, chairman of the Education Committee, called the plan “unacceptable.” It would cost about $300 million to retain more than 4,000 teachers, Page said.

Several council members told Page they would prefer that the administration take money from a $2.5 billion trust fund Bloomberg created in 2006 to pay future health benefits. Others called upon the administration to reduce its contracts with private consultants to fund the teaching jobs.

The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.

To contact the reporter on this story: Henry Goldman in New York at hgoldman@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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