Bloomberg holds line on taxes in '13 budget

No tax increases, no teacher layoffs, no cuts to uniformed services.

At a time when other cities are struggling, that was the good news in Mayor Michael Bloomberg's preliminary fiscal year 2013 balanced budget of $68.7 billion.

But over the next 17 months New York City will have to come up with plans to plug a looming $3 billion budget gap and grapple with the "ticking time bomb" of public pension costs, Bloomberg said Thursday in announcing the budget.

"We just don't have much time left to fix the problem. Our pension costs are six times larger than they were 10 years ago," said Bloomberg, who spent a large part of his 40-minute speech on the pension issue and promised to work closely with Gov. Andrew M. Cuomo to overhaul the system.

Actuarial studies show that increases in fiscal years 2012 and 2013 will bring total city pension costs to $7.8 billion and $8 billion in those years respectively, Bloomberg said.

"Total costs for all pension and benefits for all city uniformed workers is expected for the first time ever to be greater than the total wages that they earn," Bloomberg said about the current fiscal year. The city's fiscal year runs from July 1 to June 30.

"We just cannot afford to pay such costs for future city workers," he stated. "We have an obligation to pay for those who are with us now . . . but we just cannot continue to pay [future] people those size benefits."

Though a $3 billion budget gap is projected for 2014, Bloomberg seemed confident that it could be closed. He noted that in the past five years city agencies had gone through 11 rounds of budget adjustments and reductions that created $6 billion in savings.

Because of belt tightening the city will spend less in every major area except education, the mayor noted. The current 2013 budget calls for reduction in the city head count to 291,326 jobs, compared to the 311,804 that existed in December 2001.

Making the impending budget gap more pressing is the fact that $6 billion in savings put away over the years in the city's rainy day fund is now depleted, Bloomberg said.

"There is nothing more in the bank," stressed Bloomberg, noting that future gaps in fiscal years 2015 and 2016 will run about $3.5 billion.

Child welfare advocates complained that the latest budget failed to include funding for child care and after-school programs for 40,000 children now enrolled. They called on Bloomberg to revise his plan.

"We just can't do everything," said Bloomberg when asked by reporters about such cuts.

On the brighter side, the city economy is rebounding gradually, regaining 65 percent of the private sector jobs lost in the recession, compared to 36 percent for the rest of the nation, according to Bloomberg. This recovery has increased tax revenue, city officials noted.

Highlights of New York City's Preliminary 2013 Budget

Source: Office of The Mayor