NYC mayor, government try different ways to trim workers

New York Mayor Michael Bloomberg waves to supporters during his re-election victory party at campaign headquarters in New York November 3, 2009.

NEW YORK (Reuters) - New York City and the state both want to cut expenses by trimming public employees but so far they are using different strategies.

Mayor Michael Bloomberg is encouraging agencies to prune workers by giving them credit for saving money on health care and pension benefits, although those costs come out of the city's overall spending plan, Doug Turetsky, a spokesman for the Independent Budget Office, said by telephone on Friday.

In contrast, Governor David Paterson is trying to entice workers to quit in exchange for $20,000 severance payments.

Both the city and state must close multibillion dollar deficits over the next few years as they face fallout from problems on Wall Street.

Paterson, a Democrat, on Thursday extended the state's severance program until January 20 because agencies had only let 1,089 people opt in by the time it ended on November 11.

About 137,000 workers are eligible for the buyouts, but agencies have a compelling reason to find other ways to cut the $500 million the governor has demanded.

"Positions that are targeted for severances may not be refilled for at least five years in order to ensure that savings are achieved," a budget spokesman said by email.

Paterson on Friday warned the state might have to lay off workers due to a December cash crunch.

A spokesman for Bloomberg, who previously tried to push agencies to prune workers by offering incentives, was not available to comment on one of his new ways of slicing $1.75 billion over two years.

As with any big employer, health and pension costs make up a large portion of city workers' compensation.

When Bloomberg won his first term in 2001, the city had about 316,000 full- and part-time workers, said Turetsky, whose agency is a fiscal monitor. The mayor had trimmed the city payroll but it bounced back up to almost 318,000 positions as of March 2009, he said.

(Reporting by Joan Gralla; Editing by Leslie Adler)