Mayor Michael Bloomberg warns that the city's spiraling pension and healthcare costs have put it on the edge of a dangerous fiscal crisis, while labor unions refuse to sign onto a contract that includes pension reforms.
"Here in New York City, over the past 12 years, our pension costs have gone from $1.5 billion to $8.2 billion," Bloomberg says in a New York Daily News
The city and nation are "in the early stages of a growing fiscal crisis that, if nothing is done, will extract a terrible toll on the next generation," Bloomberg said.
The mayor, who is in his final weeks in office, said that he made a commitment three years ago that he would not sign a contract with salary increases unless benefit packages were reformed.
"I have kept my commitment," Bloomberg said. "While labor leaders refused that deal, they cannot hold out forever — and they cannot afford to wait out another mayor. It would be at least four years."
He said he has no doubt that labor leaders will come to the negotiating table.
They are anxious for a new contract," said Bloomberg. "That puts the next administration in a powerful position of strength to negotiate historic reforms."
Meanwhile, the mayor denied that he is leaving incoming Mayor Bill de Blasio's administration with a hole in the city's budget because the new contracts are not signed.
"Just the opposite is true," he said. "We are leaving behind money to pay for the same type of contract Gov. [Andrew] Cuomo signed with labor unions in 2011, and which our unions have refused to sign."
Bloomberg has warned before that New York City is facing a situation much like Detroit's
, where pension woes have forced that city's finances into bankruptcy, and in Thursday's column, he warns that the extra pension costs are creating a dangerous spiral.
Bloomberg said the extra $7 billion taxpayers must spend on pensions is money New York City can't invest in schools, the mass transit system, affordable housing, or other costs involved in running the city.
"During our administration's time in office, we've spent $68 billion in taxpayer money on pensions, compared to $5.3 billion on affordable housing," said Bloomberg, who is finishing up his final term in office. "So taxpayers spent about 13 dollars on pensions for every one dollar that they invest in affordable housing."
And unless steps are taken now, the extra $7 billion in pension costs will just continue to grow, warns Bloomberg.
In addition, he said, around 90 percent of the city's municipal employees and retirees contribute nothing toward their healthcare premiums, meaning city taxpayers are picking up the entire tab.
"New York City has the best workforce in the world, and for that to continue, our employees must be competitively compensated," said Bloomberg. "But right now, we offer benefits that are over and above what the market offers, and what other governments offer. And those costs continue to grow, and as they do it limits our ability to increase base salaries."
Meanwhile, the outgoing mayor pointed out that 38 municipal governments around the country have declared bankruptcy because of pension costs, and even cities that escape bankruptcy must spend funds on pension bills and not invest the money in the future.
"[This can] set off a downward spiral that, as New York found out in the '70s, is deeply painful and takes decades to recover from," said Bloomberg.
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