Mayor: Bigger PBA Arbitration Award Could Bust Budget; Union Responds Angrily To His Linking Contract To Property Tax Break

By RICHARD STEIER

Mayor Bloomberg explicitly linked his ability to continue a 7-percent reduction in the property tax rate to the pending Patrolmen's Benevolent Association arbitration during a May 1 press conference unveiling his $59-billion proposed city budget.

MAYOR BLOOMBERG: Trouble on the way.

Discussing how he plans to keep the budget in balance despite the effects of a national recession on the city and ominous fiscal storm clouds in Albany, Mr. Bloomberg said, "We are cutting the amount of money that we will have to spend without having to raise taxes."

'Break Pattern, All Bets Off'

He quickly noted, however, that the city is awaiting an arbitration panel's award in the wage dispute with the PBA and said, "If that were to break the [bargaining] pattern, all bets are off. It would be a very serious blow."

A few minutes later, he elaborated further after saying that continuation of the 7-percent reduction in the property tax was included in his executive budget for the fiscal year that begins July 1 but was "unsustainable" beyond that. Should the arbitrators in the PBA case go beyond the increases of 3 and 3.15 percent that other uniformed unions agreed to for a comparable period, the Mayor said, " ... we would have to revisit whether we could wait until after next year, 'til [fiscal] 2010, for a tax increase" on property.

SKIMPING ON SAFETY?: Patrolmen's Benevolent Association President Pat Lynch took exception to Mayor Bloomberg's threat to rescind a property-tax reduction if the union got too-generous an arbitration award, saying that the city's economic health 'depends first and foremost on people feeling safe on our streets.' That feeling is ebbing, he contended, as low salaries make it increasingly difficult to recruit and retain cops.

Mr. Bloomberg had barely completed his question-and-answer session with reporters at the hour-long press conference when PBA President Patrick J. Lynch fired off a response questioning his budget priorities.

"What would truly be devastating to this city's economy would be to continue to ignore the staffing crisis in the NYPD, to ignore the fact that crime is on the rise and that the city's fiscal health depends first and foremost on people feeling safe on our streets," Mr. Lynch said in a statement. "Ignoring these facts while the city has the largest surplus in its history would truly be criminal. Trying to fix tomorrow's problems and ignoring today's is fiscally irresponsible and unconscionable."

Neglecting Present Crisis?

A PBA spokesman pointed out that nearly $2 billion of a projected $2.3-billion surplus in the current budget has been earmarked by the Mayor to prepay debt for fiscal 2010, which does not begin for another 14 months. He suggested that while fiscally prudent in the long term, that move was coming at the expense of an ongoing crisis in NYPD staffing.

Mr. Bloomberg's budget tacitly acknowledges that problem by reducing uniformed headcount for the NYPD by 1,000 officers for the coming year, which represents the reality of its hiring problems rather than a true cut in staffing. Police Commissioner Raymond W. Kelly has repeatedly cited as the reasons for the recruitment problems the low starting salary of $25,100 and a sharply reduced pay scale for the first five years of new officers' careers that resulted from a June 2005 arbitration award that was signed off on by both the PBA and the Bloomberg administration.

Bad blood between the two sides has led to another prolonged arbitration process that has taken nearly two years. Two recent meetings between the panel's chairwoman and its representatives on behalf of the city and the union have given rise to speculation that an award may be near, but there is no way to know how soon it will be delivered.

PBA: Need More at Both Ends

While the administration prior to filing for arbitration made two proposals to significantly increase starting pay - but with a reduction in other benefits for new officers to offset the cost - Mr. Lynch has insisted that maximum salary must also be raised well in excess of the uniformed bargaining pattern to stem the defection of seasoned officers to neighboring departments that pay far better and offer less-stressful job conditions.

A 2002 arbitration ruling somewhat disrupted an established uniformed union wage pattern, even though it gave the PBA the same two 5-percent raises as other groups, by granting those hikes over a 24-month period, six months shorter than the other uniformed union contracts. Asked whether a similar disruption would be enough to threaten the property tax rate or whether there would have to be a higher "tipping point" to produce that effect, Mr. Bloomberg replied, "If it costs us a dollar more, we don't have a problem. If it costs us half a billion dollars, we've got very big problems."

Potential Ripple Effects

The uniformed unions which have settled their contracts for that period - which in the case of the PBA arbitration would cover from Aug. 1, 2004 through July 31, 2006 - all have re-opener clauses in their deals, entitling them to resume bargaining with the city if the panel gives the PBA more-generous terms. Any additional money eventually won as the result of the arbitration would have continuing reverberations, since it would require recalculation of raises already negotiated for subsequent years - in some uniformed unions' cases, up through 2012.

In other respects, Mr. Bloomberg said, the city is in better financial shape than the state and Federal governments, and it will stay that way by keeping municipal spending under his proposed budget "virtually flat." At a time when the inflation rate is projected to be 2.7-percent, the fiscal 2009 plan would boost spending by just a tenth of a percent, the Mayor said.

Tax revenues are "running somewhat higher than we had anticipated," he told reporters, but are likely to fall off in the coming year as the impact of the national economy takes deeper root. The city may be equipped to cope with it, Mr. Bloomberg said, but "we're not going to be immune from it."

Impact of Wall Street Woes

The city's continued dependence upon Wall Street for tax revenues will hurt it in a couple of ways. The most obvious one is the tremors being felt by the financial services industry. In addition, Mr. Bloomberg said, many firms had been pre-paying the city taxes based on their anticipation of a continuation of profits that have evaporated, "and they won't be doing that very much longer."

The tax the city collects on real-estate transactions fell by nearly half, from $27.1 billion in fiscal 2007 to a projected $13.7 billion in the current fiscal year, and is expected to plummet to less than one-third that amount - $4.5 billion - in fiscal 2009, the Mayor said.

Those are among the reasons the Mayor is prepared to phase out the property tax reduction and has stretched out the city's spending on capital improvements from four years to five, marking a 20-percent reduction in what will be done through fiscal 2012.

All city agencies have been asked to cut their budgets by 3 percent since he released his preliminary budget in January. State aid will allow for a total increase of $200 million in education spending, but as Mr. Bloomberg noted, that is "$400-million-odd less than we could have spent."

He was speaking prior to Governor Paterson's announcement that afternoon that the state faces a projected $5-billion budget gap for its next fiscal year, which begins April 1, 2009, and so he was moving to reduce spending by $6.1 billion. News stories that morning had already hinted at the extent of the problem, however, and Mr. Bloomberg said if the state's fears came to pass, "They could be in very big trouble and we will certainly feel that."

The Mayor's planned cutbacks, which are subject to negotiation with the City Council before a final budget is produced sometime next month, include some significant job cuts accomplished by not filling positions as they become vacant - in some cases eliminating them from agencies even if the financial picture improves.

The one conspicuous exception to the negative personnel headcounts is the Department of Education, which with the help of the added state aid is projected to have 1,869 more positions than Mr. Bloomberg had planned under his preliminary budget.

Aside from the addition of 20 staffers at the Department of Environmental Protection to improve environmental health and safety programs in its Bureau of Wastewater Treatment - an effort that will be supplemented by the transfer of 42 existing staffers from other units - most of the personnel shifts involve the uniformed services.

NYPD Civilian Cuts, TEA Delay

The NYPD, as was also planned under the January budget, is making sizable cuts in its civilian workforce in addition to lowering uniformed headcount. It plans to eliminate 573 civilian jobs, with 68 Custodial Assistant positions to be permanently lopped; in some but not all cases, uniformed officers will assume the duties previously handled by civilians before they left the payroll. The NYPD is also postponing by two years the hiring of an additional 117 Traffic Enforcement Agents.

The Correction Department is going in the opposite direction, civilianizing 158 positions. It is also going forward with several key capital projects, including the renovation of the James A. Thomas Center on Rikers Island, the expansion of another facility there, and the redevelopment of the old Brooklyn House of Detention and construction of a new, 1,500-bed facility in The Bronx.

The Fire Department is civilianizing 42 positions that had been performed by uniformed staff, and will add 26 ambulance tours to fill a void left when private hospitals cut their ambulance service within the five boroughs. The agency is also modernizing its Critical Information Dispatch System.

Sanit Cutbacks

The Sanitation Department plans to cut 122 civilian posts. It would also reduce by attrition 137 cleaning and collection posts, something made possible by greater efficiency in that area. Higher-than-expected attrition among uniformed staff is expected to save the department $16 million.

The proposed budget would also provide another $400 million to the city's Retiree Health Benefits Trust Fund, which was created two years ago by Mr. Bloomberg and has received $2.5 billion in funding since.