IN his State of the City Address yesterday, Mayor Bloomberg made a small, long-overdue overture toward addressing the biggest threat to the city’s future: its out-of-control benefits costs for municipal workers.
But the mayor didn’t make the basic point needed to build strong public demand for labor-cost cuts.
That point is: It’s only when we rein in these unsustainable labor costs that we’ll be able to do the other things that the city badly needs done, like investing in its aging subway infrastructure and, as the mayor proposed, cutting taxes for small businesses.
In his speech, the mayor said that the city’s first priority – to get itself out of the Wall Street quicksand it’s in right now – was to “continue investing in new infrastructure,” including extending the No. 7 subway out to the far West Side.
Let’s be clear: It’s absolutely a good thing that the mayor mentioned infrastructure first. But it’s telling that he’s been mentioning the city’s commitment to just this one subway project – one that, in truth, is now in danger of not getting done – year after year after year.
This, after the unprecedented Wall Street bubble that ended two years ago left New York with billions upon billions more in tax revenue than it had ever expected – and the city spent much of that time piling up fresh debt at a rate to match Wall Street’s wildest profits
So today, New York shouldn’t be waiting for a No. 7 extension – it should be enjoying the fruits of a boom-era plan driven by Bloomberg, to, say, use modern technology to start cutting outer-borough commutes down to half an hour or less.
But that plan never was.
As it stands, the lack of investment in huge upgrades is unacceptable – commutes are New Yorkers’ biggest quality-of-life issue after crime.
How important are commutes to New Yorkers? Well, the night before Bloomberg’s speech, nearly 700 regular people came out for a marathon seven-hour hearing at a Manhattan hotel to voice their fears over proposed subway and bus-service cuts.
Why didn’t the city use its boom-era dollars as leverage to insist on these upgrades to our most important assets (at a time when emerging cities around the world were investing heavily in their infrastructure)?
For one thing, advocates always like it when mayors invest “infrastructure” time and money on things like affordable housing – another big project that the mayor lauded in his speech.
But publicly planned housing can only help a few people – whereas shorter commute times makes the city’s outer-borough housing stock much more valuable.
And the main reason those vast boom-year tax revenues couldn’t go toward better infrastructure is that they went toward supporting ever-higher salaries and benefits for public-sector workers instead. As the Citizens Budget Commission pointed out last week, the average city worker costs more than $100,000 a year once you include their generous benefits, including mostly free health care.
These same benefits costs for public workers, of course, are what imperils the rest of what the mayor talked about yesterday, too.
To wit: Bloomberg rightly lauded the NYPD for cutting crime even further – and he proposed some tax relief for small businesses. But it’s impossible to maintain quality of life or cut taxes when the costs of public-employee benefits keep on growing and growing. They’ve doubled to $13 billion dollars a year, or one-third of the tax revenues, since the mayor took office. These costs are set to rise by another $2 billion in just 2 1/2 years.
Then there’s the MTA – which deeply affects the mayor’s constituents, though he’s never spoken up for them loudly here – where similar unsustainable benefits are already crowding out actual service.
How badly? Those service cuts that the public came out in force to complain about will save the authority $130 million a year. Meanwhile, the cost of benefits for subway and bus workers will rise by the same amount within two years – crowding out all the savings from reduced service, and making bigger cuts necessary.
So, it’s good that the mayor said yesterday, “It’s become painfully clear that the time has come to bring our municipal pension system in line with reality. . . People are living longer and longer, yet we’re still offering full retirement benefits after only 20 years of service. It’s costing taxpayers a fortune.”
But it’s too bad that the very same mayor lavished the municipal workforce with huge raises into 2011 just a few months ago – because that generosity removed a huge incentive for that workforce to support any reform.
Plus, the reforms the mayor has proposed are not only a day late but also a dollar short.
While Bloomberg has supported some (very) modest changes from Albany to future pension benefits, he’s said very little about expecting workers to pay a little something for their own health benefits – which could save hundreds of millions a year, every year, almost immediately.
Earlier this week, one of the mayor’s rivals for his job, Rep. Anthony Weiner, went much farther than Bloomberg has – saying that workers must pay for some health benefits and that “whether it’s five years down the road or 10 years down the road, the days of having a guaranteed . . . pension are probably not going to be around much longer.”
The mayor would’ve been better off using his time yesterday to announce one new initiative for the year. He should have pledged to use his political capital to explain to the public clearly why the state, the city and all-important public authorities like the MTA must work relentlessly to cut public employees’ benefits to a competitive level, starting with those health benefits.
The mayor and the governor have to set the bar here – nobody else will. And the public should understand the true cost of the mayor so far not having done that job.
Nicole Gelinas is a Chartered Financial Analyst and contributing editor to City Journal.