5/30/13

The Elephant in the Room:

As a result of the Bloomberg administration's "cold war" with the city's workforce, all of the city's unions are working without collective bargaining agreements, and no mayoral candidate who would succeed Michael Bloomberg has a plan to deal with the expired contracts.

The mayoral candidates either blame each other, Bloomberg or the system for the problem. Former Comptroller Bill Thompson blames Christine Quinn and Mayor Michael Bloomberg for avoiding the unions for over four years. Public Advocate Bill deBlasio wants concessions from unions on pensions and health care costs. Comptroller John Liu sees pension reform as essential to the city's future solvency. And Joe Lhota has hinted at a hard-line negotiating stance.

But the even harder reality is that there is almost no money in the preliminary budget out of which the city could pay increases. Around the time it settled some labor contracts in 2008, the city's finances were thrown into disarray by the Wall Street collapse. The city had roughly $1 billion in its labor reserve account in 2008. There is now only $107 million left in that account. 

What happened? Over the past five years, the Bloomberg administration has transferred funds from the labor reserve to the general fund to help close budget deficits. 

Although Bloomberg has budgeted money through fiscal 2017 to replenish the labor reserve account back to its 2008 level, even when topped off, the balance won't be enough to cover the city's collective bargaining commitments.  The projected cost of settling teacher and school administrator contracts alone is $2.4 billion, with a projected $3.1 billion needed to settle other municipal contracts.

The mayor’s current preliminary budget includes funding for wage increases of 1.25%, way below inflation, for unions whose wages have been stagnant for years.

Another threat to collective bargaining:  the cost of health insurance for municipal employees is expected to grow by almost 40% by 2016, and will amount to $1.5 billion of the $1.9 billion budget deficit projected for that year.

Labor is going to be an enormous challenge for the city's next major.

The article from City and State.

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