To avoid Detroit's fate, Bloomberg warns of labor costs

Mayor Michael Bloomberg Tuesday warned that his successor needs to control pensions and healthcare costs for city workers or risk pushing the Big Apple toward insolvency like Detroit.

Bloomberg, in a speech at a Brooklyn business incubator where drug giant Pfizer had operated, said these costs threaten how much the city can spend on services that attract new residents and keep current ones from fleeing.

"The less it invests in things that benefit all residents, the less attractive a place it is to live and visit," Bloomberg said, adding that the gains the city has made could unravel. "In New York City, that risk is still very real."

City workers -- from teachers to civilian employees to cops -- have been working under expired contracts for several years. The next mayor will have to negotiate with unions on issues like raises, retroactive pay, and contributions to health care and pension benefits.

The city would have to pay $8 billion in 2014 to cover the pay raises for all city workers since their last contract expired, the mayor's office said. To sustain the raises, the city would pay $3 billion a year, according to the Citizens Budget Commission, a financial watchdog group. Health insurance will cost $6.3 billion ; 95% of the city's workforce contributes nothing to premiums, Bloomberg said. The mayor also said pension costs have risen to $8 billion a year, from $1.4 billion early in his first term."The question is, will the next mayor continue to hold the line or capitulate?" he said.

Carol Kellermann, president of the CBC, said the next mayor would have to convince union leadership that retroactive raises are unaffordable and that city workers should contribute more to health care like government and private employees elsewhere.

"There has to be a team effort on part of the mayor and management in the city and leadership of the major labor unions to find ways to make the workforce more productive, to save money that could be used for city services, and some reasonable but not unduly generous wage increases going forward," she said.

Democratic contenders Council Speaker Christine Quinn, former city Comptroller Bill Thompson and Public Advocate Bill de Blasio have taken an everything-on-the-table approach and have refused to lay down specifics on future contract negotiations in public. De Blasio, though, differed with Bloomberg on the risk to the city's progress.

"The mayor has failed to acknowledge the single greatest threat to New York's economic future: deep inequality," de Blasio said in a statement.

Former Rep. Anthony Weiner has proposed that city workers pay a "small portion" of their health premiums and ask those who smoke to contribute in even more.

City Comptroller John Liu slammed Bloomberg's inability to negotiate new contracts as a "dine-and-dash."

"Outstanding contracts for a 300,000-member workforce and failing to deliver on promised retroactive pay raises -- which Mayor Bloomberg himself set a precedent of delivering on during his first two terms -- is simply negligent," Liu said in a statement.

Democratic Candidate Sal Albanese, a former city councilman, proposed exchanging retroactive pay for an agreement to "modernize" city workers' pension and health care plans.

Republicans Joe Lhota, a former MTA chief, and Doe Fund founder George McDonald oppose retroactive pay and would require more contributions from city workers. A spokesman for Gristedes magnate John Catsimatidis said the candidate would not negotiate in public.

"The city's employees must share in the cost, just like everyone else," Lhota said in a statement.

Meanwhile, Michael Mulgrew, president of the United Federation of Teachers, which is backing Thompson, panned Bloomberg's remarks as "self-congratulatory speech-making." DC37, the city's largest public employee union, which endorsed Liu, did not respond to request for comment.