May 6 (Bloomberg) -- New York City Mayor Michael Bloomberg proposed a $65.7 billion fiscal 2012 budget to the City Council that contains no new taxes and would cut more than 6,000 teaching positions.
Reductions in state and federal funding will mean fewer jobs and services, the mayor said. Although 10 rounds of agency cost-controls since 2008 have trimmed spending by $5.4 billion a year, that hasn’t overcome increasing fixed and state-mandated expenses, including pensions rising to $8.4 billion in 2012 from $1.5 billion in 2002, he said.
“We are in better shape than most cities,” Bloomberg said in a City Hall news conference. “But we are not an island. We are not immune to the realities in Albany and Washington. And the reality is, both places are keeping more of our tax dollars to close their own budget deficits.”
The teacher cutbacks -- the most since the 1970s fiscal crisis, mayoral aides say -- became necessary after Governor Andrew Cuomo and the Legislature enacted a $132 billion budget in March, closing a $9.8 billion deficit in part by cutting $4.6 billion that the city had received for schools, Medicaid and social services, Bloomberg said. The Medicaid cuts cost the city another $2.2 billion in federal matching funds, he said.
Federal Aid Loss
Another $1 billion drop in federal aid will mean less spending on libraries, cultural amenities, senior-citizens’ centers, AIDS patient housing and child-care programs, he said. The mayor also seeks fire department personnel reassignment that would eliminate 20 fire companies at a savings of $55 million on the grounds that fire fatalities are at a record low.
The mayor used $3.2 billion in surpluses saved in past years to prepay 2012 expenses and to make up for $3 billion less in state and federal aid. The reserves weren’t enough to stave off the 8 percent reduction in city’s 75,000 teachers, including about 4,000 who face dismissal, Bloomberg said.
While the surplus helped avert deeper service cuts this year, such reserves won’t be available when the city faces budget deficits of approximately $4.8 billion in fiscal 2013, $5.1 billion in 2014 and $5.3 billion in 2015, Bloomberg said.
He called on the Legislature to enact new pension laws that would permit the city to negotiate benefit terms directly with unions, without state approval. New employees should be required to contribute to their retirement benefits, and to work until 65 before receiving a full pension, the mayor said.
The changes would save the city $1 billion by 2019, the mayor said. Total tax revenue should rise to $42 billion in 2012 from $40 billion this year, officials said.
Real Estate Taxes
As the economy improves, business-tax revenue will reach $5.75 billion in the next fiscal year, exceeding the $5.41 billion collected during the 2008 financial crisis, the mayor said. The financial plan predicts real estate tax revenue to total $17.7 billion in 2012, up from $16.8 billion this year. Income-tax collections will rise to $8.2 billion next year from $7.6 billion, the plan states.
Increased revenue won’t keep up with higher costs of operations and fringe benefits, the mayor said.
Michael Mulgrew, president of the United Federation of Teachers, which represents the city’s public-school educators, said the mayor’s view was an “attempt to blame others for his decision to lay off thousands of teachers, despite increased state aid, hundreds of millions of dollars in new revenues and a surplus that has grown to more than $3.2 billion.”
Bloomberg said the state should let him choose which teachers to let go based on performance not seniority.
Council members, who must approve a balanced budget by the June 30 end of the fiscal year, pledged to restore some of the proposed teacher and social-service cuts. They said they would seek cost savings in the city’s contracts with outside consultants and through union concessions.
“This is going to be a very difficult negotiation,” said Councilman Dominic Recchia, a Brooklyn Democrat who heads the finance committee. “We won’t allow the mayor to hurt the core services.”
Comptroller John Liu said he would “scrutinize and restructure when necessary” each administration contract to find savings.
“It should be noted that throughout the economic crisis, city agencies have spent billions of dollars on high-priced outside consultants resulting in runaway spending on technology-related contracts,” Liu said in an e-mailed response to the mayor’s presentation.
The city hires consultants when it seeks expertise that agencies lack or to fill temporary gaps in staffing, Bloomberg said. “It’s an easy target” for critics, he said.
Council opposition to $80 million in child-care subsidy cuts persuaded the mayor to restore half the funding, enough to ensure that children now enrolled in programs would continue to receive them. This would leave no money available for new enrollees as older children age out of the programs, said Councilman Lewis Fidler, a Brooklyn Democrat who reacted to the added funding saying, “half a loaf is better than none.”
The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.
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