Bloomberg’s Final NYC Budget Limited by Revenue Disputes

New York Mayor Michael Bloomberg will present his final budget after 11 years in office with spending choices limited by billions of dollars tied up in disputes over state aid, taxi revenue and labor contracts.

He may have to reduce through attrition 1,800 of the city’s 75,000 teachers, he told state lawmakers yesterday. That’s because the city may lose about $1 billion in state and federal aid after Bloomberg failed to agree with teachers on an evaluation plan. Another $790 million in expected revenue from the sale of 2,000 taxi medallions has been blocked by taxi industry lawsuits.

The mayor today will submit to the City Council his preliminary budget for fiscal 2014. His November update of a four-year financial plan assumed no raises in labor contracts that expired after 2010, including for teachers who missed two years of 4 percent increases other unions got in 2008 through 2010. That may leave his successor with a deficit of more than $5 billion, including back pay, according to the Independent Budget Office, a nonpartisan publicly funded fiscal monitor.

“He has made significant strides,” the IBO said last month in an analysis of the mayor’s handling of city finances. Yet Bloomberg’s disputes with labor and the taxi industry create uncertainties that “have major implications for the city’s fiscal outlook,” it said.

Spending Cuts

Since 2007, the mayor has ordered 10 rounds of across-the- board spending cuts amounting to more than $5 billion in recurring savings. Those efforts and increased revenue in an improving economy have eased Bloomberg’s task of balancing his $70 billion budget in accordance with state law.

The IBO predicted Bloomberg needed “a relatively modest” $810 million, equal to 1.6 percent of city revenue, to close the budget gap it forecast for 2014

The prospect of lost state school aid -- and the continuing disputes over a plan to raise revenue by adding 2,000 yellow cabs to the existing 13,000-vehicle fleet -- probably mean there will be battles over spending cuts the mayor will propose to close the gap.

Council members must approve the budget before it can take effect July 1, a task further complicated by this being a mayoral election year.

Quinn’s Plans

Speaker Christine Quinn, 46, a Manhattan Democrat who has said she plans to run for mayor, said yesterday she intends to fight any proposed teacher reductions. Bloomberg, 70, an independent who has been elected to three four-year terms, is legally barred from seeking re-election.

“This council has a clear record of preventing layoffs and preventing excessive attrition of front-line education staff, and this year is going to be no different,” Quinn said yesterday during a City Hall news briefing.

Council member Domenic Recchia, a Brooklyn Democrat and leader of the Finance Committee, said it was imperative to get the mayor and the teachers union back to the negotiating table.

“Most unions are just waiting for the next mayor to come in,” Recchia said. “The big looming issue is back pay on the expired contracts.”

The mayor has blamed the United Federation of Teachers for the failure to obtain an evaluation system for the city’s educators by insisting on a two-year expiration date for the program. The union says the mayor torpedoed negotiations after it had a deal with the Education Department.

Mission ‘Impossible’

“I should have used the word ‘impossible’ for a union to agree to something that’s going to let their members be measured,” Bloomberg told lawmakers in Albany yesterday as he requested more edcuation funds.

Other school districts that agreed to expiration dates on their evaluation programs “are committing fraud” because the deals would lapse before a failing teacher could be removed, Bloomberg said.

“Losing hundreds of millions in school aid due to a failure to establish a teacher-evaluation system would be a tragedy,” said Charles Brecher, director of research for the Citizens Budget Commission, a business-funded fiscal watchdog group.

The group supports a pay freeze during the past three years of expired contracts and opposes any back pay, or retroactive raises, should a wage increase be negotiated in a future contract, Brecher said by e-mail.

Giuliani’s Deficit

When Bloomberg took office in 2002, he inherited a $4.8 billion deficit in a $42.3 billion budget from former Mayor Rudolph Giuliani, forcing him to adopt a $1.5 billion emergency borrowing plan to help pay operating expenses and to increase property taxes by more than 18 percent. The experience led Bloomberg to salt away funds when the city’s rebounding economy produced revenue surpluses in 2005 through 2007.

“I’m determined that when I leave the city, we won’t have, my successor, the first year in office, won’t have enormous deficits to deal with,” Bloomberg said during a weekly radio appearance in 2007.

As he prepares his final budget, that goal may prove to be more elusive than it appeared when the city had the benefit of multibillion dollar surpluses.

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: Stephen Merelman at smerelman@bloomberg.net.

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