by Harris Lirtzman, former deputy New York State comptroller from 2003 to 2007 and also a New York City special education teacher who was fired for blowing the whistle in 2011.
Last fall, soon-to-be ex-mayor Bloomberg issued his “Financial Plan, FY 2013-2017” as required by State law but also as a parting gift for the new mayor, hoping to lock him or her into a set of budget parameters for upcoming labor negotiations that would continue Bloomberg’s war on teachers. But his plan may have backfired because when it’s closely reviewed, together with other budget reports issued last month by former City Comptroller John Liu and the City’s Independent Budget Office, it looks like there may be room for mayor-elect de Blasio to negotiate a contract with the UFT in good faith.
Despite Bloomberg’s repeated assertions of doom-and-gloom about the City’s financial situation after he leaves, his own plan indicates that there are likely to be more revenues over the next few years for labor contracts than Bloomberg would like to admit:
- Wall Street profits were $23.9 billion in FY 2013 and are projected to be $13.4 billion in FY 2014 and stocks are at record levels.
- New York City private sector employment has increased by 350,000 jobs since the bottom of the recession in 2009 and is projected to grow slowly through 2017.
- Office vacancy rates are projected to have declined by 25% during the same period and “asking rents” are projected to increase by 37%.
- The City’s Gross Domestic Product is projected to grow by 3% in 2014.
Are you still awake?
Why is this so important for the teacher’s contract negotiations next year? All that increasing economic activity leads to higher tax payments, causing City revenues to increase over the period from 2014 to 2017. Property tax revenues are projected to increase by 12%. Corporate and personal income taxes and sale taxes are projected to increase by 14%. Increasing revenues means lower deficits. In fact, even the mayor projects a balanced budget for FYs 2014 and 2015 and relatively small deficits of $1.4 billion and $951 million in FY 2016 and 2017, respectively. The City’s Independent Budget Office (IBO) is more optimistic than the mayor’s office. IBO believes that City revenues are likely to be higher across the board: it projects that the City will end FY 2014 with a $581 million surplus compared to a balanced budget by the mayor and with a $1.9 billion and $294 million surplus in FY 2015 and FY 2016, respectively, compared to the deficits projected by the mayor.
As any good teacher (and Charlotte Danielson) knows, context is important.
First, how did Mayor Bloomberg accomplish this amazing feat? He has been mayor for the last four years without bothering to negotiate a single labor contract since FY 2010 and hands to Bill de Blasio the unnegotiated UFT contract for the last TWO rounds of contracts (since FY2008). The City’s Four Year Financial Plan assumes that despite all the new revenues the City’s unions will agree even worse terms than five year contract that Andrew Cuomo negotiated with State workers last year: three 0% and two 2% annual raises and that the City will not pay any retroactive raises.
The City Comptroller estimates that if all unions, including the UFT, agree only to an annual increase of 1% for the contract from FY 2010 to FY 2014 (linked to inflation), the cost to the City—including retroactive payments—will be $3.8 billion and that if “pattern bargaining” holds for the FY 2008-FY 2010 UFT contract (two years of 4% raises that the other City unions received) a comprehensive labor settlement would cost approximately $8 billion. Using another set of assumptions, the City’s IBO projects that a comprehensive labor settlement with an increase of 2% for the FY 2010 to FY 2014 contract and a pattern-bargaining contract for the UFT contract would cost only $6.3 billion. Even with this wide range of estimates for labor costs to settle outstanding contract rounds, the City’s long-range budget situation should be able to absorb a comprehensive settlement without the much-ballyhooed “fiscal crisis.”
Second, even if these additional contract-related expenses had been included in the Four Year Financial Plan the “deficits” that would result are of a magnitude that the City has closed during many previous fiscal years. For example, the mayor’s Preliminary Budget for FY 2003 included projected budget gaps of over $4 billion a year for the following four years. By the time the Adopted Budget was in place for July 1, 2003 the current year gap had been entirely closed and the forecasted gaps had been significantly reduced. The Municipal Labor Council, however, will need to make an affirmative political case for a comprehensive settlement with retroactive raises. It will need to make a persuasive case to the public that the City’s workers do important jobs that merit reasonable raises, that the City’s cost of living has increased over the period that workers have been without contracts and that the contacts can be funded by projected increases in City revenues and not by cutting other important City programs and services.
This is the important point for everyone to keep in mind during the next six months: the “financial crisis” that the good people who have been running the City for the last 20 years claim will occur in New York City if municipal unions receive reasonable raises for the “current” contracts and retroactive raises for past contracts is an entirely artificial one. The City’s most recent Four Year Financial Plan has a “balanced” budget for the next two years and relatively small deficits for the last two years, without accounting for any raises for city workers, because Mayor Bloomberg wants it to look that way. He wants to leave office with a “legacy” as a responsible financial manager but has left behind him a “bill” of billions of dollars for Mayor-elect de Blasio to “pay.” Michael Bloomberg wants to wrap a tire around the next mayor’s neck that will force him to take political heat for “caving into the unions.” He wants the people of New York City to believe that they are being asked to “choose” between fairly compensating “greedy” public employees or cutting services and raising taxes. But the revenues are there. The City has closed large budget gaps before and will again. Keep in mind that the budget and the municipal labor negotiations are political processes—they are designed to be political processes because making budgets is necessarily about making choices to spend money in certain ways.
If you don’t get a raise next year or don’t get paid retroactively for the last two rounds of contracts it won’t be because of “the economics.” It will be because of “the politics.” And the politics connected with the next round of contract negotiations will be the fiercest in a generation. Michael Bloomberg and the people who have run this City are still coming for us and we need to be ready for them.
These views are Mr. Lirtzman’s and may or may not represent the official position of the MORE caucus