The budget outlook is becoming bleaker, according to Michael Musuraca of the DC 37 Research and Negotiations Dept. at the Sept. 17 Council-wide Bargaining Caucus meeting.

The city received permission of fiscal monitors to borrow $2 billion to help close a budget gap in the current fiscal year. But it won't have that option next year, Mr. Musuraca said, when it faces a protected deficit of $5 billion.

Tax cuts instituted by former Mayor Rudolph W. Giuliani created 75 percent of the anticipated budget gap, Mr. Musuraca said. The city's revenue base is also hurt by the recession, rising unemployment and job losses related to 9/11, Mr. Musuraca said.

Besides being hit with falling revenue, the city must also cope with rising Medicaid costs, greater debt service and higher pension expenditures, said Mr. Musuraca. "We are probably entering a period of slow economic growth, which means the city is not going to be able to grow itself out of its budget problem," Mr. Musuraca said.

Associate Director Evelyn Seinfeld of the DC 37 Research and Negotiations Dept. said the average annual wage increase negotiated this year was 3.1 percent in New York and 4 percent in the United States.

The pay of DC 37 members rose by 37.75 percent-or 1.75 percent above inflation-over the course of the last four economic agreements (from Oct. 1, 1990 to June 30, 2002). With welfare fund increases, the total compensation rose 39 percent, or 3 percent above inflation, said Mr. Musuraca.

Tens of thousands of members received an extra 3 percent take-home pay because the union won legislation that allowed people with 10 years in pension tiers 3 and 4 to stop contributing to their pensions.

Significantly, union members continue to enjoy a defined benefit (guaranteed) pension and fully covered basic individual and family health insurance, and the workweek hasn't increased, Mr. Musuraca pointed out as he reviewed the economic picture for coming negotiations.

By contrast, in the private sector, employers are increasingly refusing to provide health coverage. Less than half of all private sector workers are covered by traditional pensions, and more middle- and low-income families are now depending on two incomes to get by.

—G.N.H.