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PR- 047-10
January 28, 2010


Outlines Plan to Close $4.9 Billion Deficit

Controllable City Expenses Reduced from FY 2010 to FY 2011

Mayor Michael R. Bloomberg today presented a Fiscal Year (FY) 2011 Preliminary Budget and an updated four-year financial plan. The Mayor outlined a plan to close a $4.9 billion deficit for FY 2011 with no tax increases for New Yorkers. The plan is centered on $1.6 billion in new agency gap closing actions, which amounts to a reduction in controllable City expenses compared to the prior year and reducing the growth in teacher and City employee salary costs. The plan also seeks employee productivity increases, pension reform and mandatory health care premium contributions in exchange for future salary increases. The plan for a balanced budget, which also includes tax revenues above original forecasts, will require assistance from the City's partners in organized labor.

"New Yorkers continue to feel the harsh impact of the deepest national recession in more than 60 years, and as many businesses and families continue cutting back on their budgets, so too must City government," said Mayor Bloomberg.  "Because of the early steps we took to diversify our economy and keep our fiscal house in order, we've avoided the very worst-case scenario, but we still face a very large deficit that will require very difficult decisions.  We will confront the challenge head-on by taking the same approach we have used to successfully overcome past fiscal crises: doing more with less by finding new efficiencies and developing innovative new ways to attack old problems.  Through this approach, we've proven that the city's quality of life doesn't have to plummet when the economy does - and in fact, the city is safer and cleaner today than ever before.  To continue making progress and balance our budget, we are going to need cooperation from our partners in labor.  That is only right, because economic recovery is still a future hope, not yet a current reality, so we all have to pull together to keep our City moving forward."

Agency Gap Closing Actions

The new round of agency gap closing actions detailed today, which were ordered by the Mayor in November, will save the City $1.6 billion - $484 million in FY 2010 and $1.1 billion in FY 2011.

This is the seventh round of agency gap closing actions the Mayor has ordered and implemented since early 2007.

The cumulative gap closing actions taken by City agencies are the prime cause for the surplus generated in FY 2010, and the surplus - $2.9 billion - is being used to achieve a balanced budget in FY 2011.

Controllable expenses in FY 2011 have been reduced by 1.8 percent compared to FY 2010 - the result of the cumulative cost-cutting and agency actions taken by the Administration.

Examples of the new agency gap closing actions include:

    FY 2010 Savings FY 2011 Savings
Libraries: Reduce Subsides to
Library Systems
$12.9 million $22.1 million
Parks: Close Four Pools and Shorten
Outdoor Pool Season by Two Weeks
  $1.4 million
Police: Uniform Attrition of 892
  $55.4 million
Police: Reduction in Overtime
Spending via Improved
OT Management Strategies
$25.0 million $50.0 million
Fire: Eliminate Staffing of Four
Additional Engine Companies
  $5.6 million
Fire: Eliminate Fifth Firefighter on 60 Engine Companies   $7.9 million
DOT: Increase Commercial Parking
Rates from $2 to $2.50 Pe r
Hour in Midtown Manhattan
  $4.1 million
Finance: Hire 29 Additional Tax
Auditors to Increase
Audit Revenue
$6.2 million $13.1 million
ACS: Eliminate 32 Units in Protective
Services Increasing Caseload
Average to 10.6 from 9.5
  $5.9 million
HRA: Reduce by 248 Direct City
Case Management Staff at
HIV/AIDS Services Administration
  $4.2 million
Homeless: Close a 24 Hour Drop-In
Center in Manhattan
$1.0 million $2.4 million
Health: Eliminate Nurse Coverage for
Elementary Schools with
Less than 300 Students
  $3.1 million
Correction: Reduction of 291
Uniformed Positions
through Increased Staffing
$8.1 million $26.9 million
Juvenile: Reduce Utilization
of Detention Capacity
  $5.0 million

Headcount Reduction

The gap closing actions used to help balance the budget will require a reduction in City headcount of 4,286 employees - 834 through layoffs and 3,452 through attrition.  There will be no layoffs at uniform agencies.

The City's full-time and full-time equivalent headcount currently stands at 305,000. This does not include the headcount reduction of 4,286 employees detailed in the preliminary budget.  The City's December 31, 2001 full-time and full-time equivalent headcount was 311,804.

Cooperation of Organized Labor

Achieving a balanced budget in FY 2011 will require the cooperation of the City's partners in organized labor.

Previous budgets included a placeholder for four percent salary increases in each of the following two years for teachers and principles and in the City school system, the established bargaining pattern. The FY 2011 Preliminary Budget includes a two percent salary increase on the first $70,000 of salary for the next two years for those employees, which is consistent with raises that managers at the Department of Education are receiving. If the labor representatives of those employees agree to this salary structure in the bargaining process, it would generate $160 million in savings in FY 2010 and $357 million in FY 2011.  This would eliminate the need for a headcount reduction of 2,500 teachers, which would otherwise be required for the Department of Education to meet its gap closing program savings target. This potential reduction would be in addition to the aforementioned headcount reduction for other City employees outlined in the plan.

Previous budgets included a placeholder for a 1.25 percent salary increase for the next round of collective bargaining with all other City labor unions. The FY 2011 Preliminary Budget includes no salary increases for employees represented by any other City union and proposes that any raises be based on savings negotiated with the unions, achieved through increased productivity requirements, pension reform savings and health care savings.

Slowing the Growth of Pension and Health Care Costs

The Administration again has proposed the creation of a new Tier V pension plan for new City employees, which would result in savings of $200 million in FY 2011 and in each of the following three years.  The new tier would save $7 billion cumulatively by FY 2030 and requires passage of a new State law. New York City's annual contributions to the pensions systems have grown exponentially, rising by 357 percent since FY 1996, from $1.4 billion to $6.8 billion in FY 2010.

The Administration will work with organized labor to secure mandatory health care premium contributions from all City employees. A 10 percent employee contribution would generate more than $350 million in savings in FY 2011, with increased savings in subsequent years.

The FY 2011 Preliminary Budget does not rely on savings generated from pension reform or from new health care contributions from employees.

Economic Update

City tax revenues are expected to grow from $41.8 billion in FY 2010 to $43.6 billion in FY 2011, but remain below pre-recession levels established in FY 2008 - $43.9 billion.

Economically sensitive tax revenues, which include personal income, sales, business, and real estate taxes, have begun to rebound, but remain below pre-recession levels. Economically sensitive tax revenues are projected to be $22.1 billion in FY 2011, an increase of 5.5 percent from the FY 2010 projection, but remain 14 percent below FY 2008, when $25.7 billion in economically sensitive taxes were generated.

New York City is expected to lose approximately 100,000 fewer private sector jobs amongst City residents than projected in June and the City has outperformed the nation in retaining jobs in most private sectors through the recession.  From mid-2008 into the second half of 2010, the City is expected to lose approximately 203,000 private sector jobs.

State Budget Impacts

If the New York State Legislature were to adopt the Executive Budget Proposed by Governor David A. Paterson earlier this month, which would reduce State funding to New York City by $1.3 billion, the City would be forced to take the following measures in addition to the aforementioned budget reduction measures outlined in the Preliminary Budget:

Education: Reduction of 8,500 teachers - $493 million.
Police: Layoff 3,150 police officers, reducing operational strength to 1985 levels. This reduction is also equal to the total cost of the NYPD Transit Bureau - $182.3 million.
Fire: Eliminate staffing for 42 engine companies, resulting in 1,050 uniform firefighter layoffs - $63.9 million.
Sanitation: In districts outside of high-rise residential areas, refuse collection will be reduced by one pick-up per week - $8.6 million.
Sanitation: Recycling pick-up will be reduced from weekly to every other week - $15.6 million.
Sanitation: Street cleaning and street litter basket collection will be eliminated - $32.2 million.
Parks: Eliminate 484 positions - 19 percent of total headcount. This reduction is also equal to the total cost of all pools, beach lifeguards and recreation centers Citywide - $24.4 million.
Correction: Eliminate 978 Correction Officer positions - this would require a daily census reduction of 15.5 percent or 2,063 inmates. A 38 percent reduction in Court Processing time by 60 days - from 157 to 97 - also would reduce the daily census by this amount. This would require a major initiative in the State managed judiciary system - $44.1 million.
ACS: Preventive slots will be reduced by approximately 30 percent or 2,584 slots at the Administration for Children's Services - $9.2 million.
ACS: Reduce day care vouchers at the Administration for Children's Services for low-income households by more than 25 percent or 6,000 vouchers - $35.6 million.
HRA: Eliminate funding to 500 soup kitchens and food pantries Citywide - $10.2 million.
Aging: Close 15 less utilized senior centers - $3.5 million.
Health: Reduce school nurse coverage to one nurse per 500 students - $5.5 million.

Out-Year Gaps

The Mayor also announced today that if the measures outlined in the preliminary FY 2011 budget are adopted, pre-existing out-year budget gaps will be reduced, but New York City will still face budget gaps of approximately $3.2 billion in FY 2012, $3.7 billion in FY 2013 and $3.9 billion FY 2014.                        


Stu Loeser / Marc LaVorgna  

(212) 788-2958

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