| NEW YORK
NEW YORK Dec 17 New York City outgoing Mayor
Michael Bloomberg is leaving a legacy of pay disputes with
public sector workers that poses a huge risk to the city's
budget, New York's top financial watchdog said on Tuesday.
Comptroller John Liu used his final speech in office to
highlight the $3.5 billion risk to the city's budget from
expired public school teachers' contracts, an unresolved legacy
of the Bloomberg administration.
Pronouncements by the city's elected officials are losing
their potency as they prepare to hand over office to a newly
elected cadre come January 1. But Liu's comments were a timely
reminder of the fiscal challenges faced by incoming Mayor-elect
Bill de Blasio.
"Mayor Bloomberg's last financial plan is fraught with risks
which, if realized, could blow a hole in this so-called balanced
budget," Liu said during his state of the city address that
doubled as a festive farewell and photo-op after his four years
Liu has been one of Bloomberg's fiercest critics. He made a
bid to succeed him as mayor earlier this year but failed to
secure the Democratic nomination.
"The enormity of this risk to the city's budget depends on
the timing and magnitude of wage increases and retroactive pay,"
The city's public school teachers are demanding two
retroactive raises of 4 percent each that other public sector
unions got during a round of bargaining from 2008 to 2010. That
could cost the city $3.5 billion, according to multiple
estimates, a large chunk of its $70 billion budget.
On top of that, the city's other public sector unions are
demanding pay raises for years when Bloomberg froze wages for
their workers in the aftermath of the financial crises of
2008-2009. Those increases could push the bill up to $7 billion
to $8 billion, according to the city.
All of the city's 300,000 public sector workers are
currently working without contracts after choosing not to agree
to Bloomberg's terms. Renewing them will likely be de Blasio's
biggest challenge next year.
The risks are large enough that some investors, who hold the
city's $40 billion debt, have been holding off buying more debt
or even selling some of their exiting holdings.
A state fact-finding panel held a final hearing between the
teachers' union and the city last week. The Bloomberg
administration is arguing that accounting rules mean it cannot
pay retroactive wages as a bonus in future years and any
retroactive raises paid out in a single year would be too big a
burden for the budget.
Bloomberg, who is keen to cement his image as fiscally
prudent steward of the city's finances as he prepares to leave
office after 12 years, announced in November that he is handing
de Blasio a balanced budget next year, eliminating a previously
projected deficit of $2.2 billion.
Liu, however, says the budget cannot be called balanced
while the risk from contract negotiations looms over the city.
He believes the unions' stance is legitimate given the city's
commonly accepted practice of pattern bargaining, under which an
agreement with one union serves as a pattern for the rest.
"The unions have a strong case; this city has seen pattern
bargaining for decades and it was always the case under the
previous eight years of this administration," Liu told
A spokesman for Bloomberg was not available to comment on
De Blasio, the city's first Democratic mayor in two decades,
has said the city cannot afford to meet all the unions' demands
but has not closed the door to retroactive pay raises
altogether. A spokeswoman for de Blasio did not comment.