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The next mayor is facing a daunting multibillion-dollar bill for retroactive pay hikes because the entire city-labor force has been working for more than two years under expired contracts, the Independent Budget Office warned yesterday.
The IBO estimated that by June 2013, the tab will hit $3.8 billion — and that assumes most unions accept retroactive raises of just 2 percent, about the rate of inflation. If the city has to cough up 4 percent settlements, the IBO said taxpayers would have to fork over more than $5.4 billion.
Mike Mulgrew, president of the United Federation of Teachers, called the situation unprecedented.
“This would be the first time ever [that] all the unions are without a contract when the mayor changes over,” he said.
The UFT’s contract expired in October 2009, making it one of the last unions to miss the 4 percent annual raises in the 2008-2010 round of bargaining.
Contract talks with all the unions are at a standstill since Mayor Bloomberg has insisted there’s no money in the budget for retroactive pay hikes. He has set aside enough cash to cover pay hikes of 1.25 percent in both 2013 and 2014.
Union leaders appear ready to wait out Bloomberg, hoping that the next mayor will be more sympathetic.
Former Comptroller Bill Thompson, one of the four leading Democrats running for City Hall, accused Bloomberg of “pushing all of the hard decisions off to the next administration.”
Thompson included City Council Speaker Christine Quinn, a mayoral rival, in his criticism by describing her as Bloomberg’s “partner in the budget.” She has no direct role in contract talks.
At the same time, Thompson wouldn’t commit to paying the retroactive bill.
Another mayoral contender, Comptroller John Liu, said it appears retroactive pay is in the cards.
“Some form of retroactive increase is likely given the pattern of negotiating set under the Bloomberg administration,” Liu said.
“The mayor’s current position of absolute zeroes is an irresponsible abdication of responsibility that kicks the can down the road for taxpayers.”
On the plus side, the IBO estimated that budget gaps over the next two years would be smaller than the administration has projected.
In fiscal 2015, the first full budget year for the new mayor, the deficit was put at $1.7 billion, or 3.1 percent of expected city revenues of $72 billion.
When Bloomberg came to office in 2002, the city was reeling from the aftershocks of 9/11, and he faced a staggering fiscal hole of nearly $5 billion in a budget of $42.3 billion.
For most of his tenure, the mayor grappled with spiraling pension costs.
Thanks to a new pension tier enacted in Albany, the city’s pension contribution is expected to decline, from $8.1 billion in 2014 to $8 billion in 2015.
The next mayor will face a different type of runaway cost: health-care insurance. The benefits bill for city workers is expected to go from $3.8 billion this year to $5.9 billion in 2016.