Public Employee Press

New year, new budget cuts
Mayor plans deep reductions in spending

By GREGORY N. HEIRES

Mayor Michael R. Bloomberg will unveil his preliminary budget later this month, and fiscal experts expect the spending plan to call for deep cuts to address a projected shortfall of more than $4 billion in the year beginning July 1.

In December, agency heads submitted suggestions for $1.75 billion in spending cuts for the remainder of the current 2010 fiscal year, which ends June 30, and next year. OMB Director Mark Page asked for the suggestions, which haven’t yet been released publicly, to help the administration plan its budget cuts.

“We anticipate that this year’s budget negotiations will be very tough,” DC 37 Executive Director Lillian Roberts said. “But we will be fighting aggressively against cuts that threaten the jobs of our members and the crucial services they provide.”

The proposed spending cuts requested by the administration call for a 1.5 percent reduction this year and another 4 percent next year at the Dept. of Education. Other agencies with nonuniformed employees were asked for a 4 percent cut this year and 8 percent next year.

In addition to the spending cuts, many budget analysts expect Bloomberg to revive his demand that city workers assume a substantial part of their health insurance premiums. The creation of a new pension tier that increases the retirement age and contributions of future state employees may lead the mayor to push for a similar plan in the city.

The state’s budget crisis — the Legislature approved a midyear $2.8 billion cut in November while a gap approaching $500 million remained — added significant uncertainty to the city’s fiscal picture. On Dec. 14, Paterson announced that he would withhold $750 million in scheduled payments to local schools and governments.

“Sizable cutbacks in state spending, particularly in the state’s two biggest spending areas, education and Medicaid, could result in layoffs in the city’s public schools and hospitals,” warned a December report by the Independent Budget Office. Last year, the city laid off about 1,000 provisional workers and a similar number of permanent employees from the Administration for Children’s Services and the Dept. of Education.

The IBO report also indicates that the budget outlook has improved. Adjusting its projections from a few months earlier, the study predicts fewer job losses, higher revenues and higher profits on Wall Street. Added revenue from Wall Street and new taxes will bring $649 million in additional revenue in 2010, according to the IBO report.

During the budget warfare in upcoming months, new city Comptroller John Liu could prove to be a constructive fiscal watchdog. In an interview in December, he told Forbes magazine that he would look for savings by curbing irresponsible spending on outside contracts.

“The Department of Education has had free rein with its contractors and has taken out a number of questionable no-bid contracts,” Liu said.