New York City tweaks budget with $4 bln union settlement

NEW YORK Thu May 8, 2014 2:58pm EDT

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NEW YORK May 8 (Reuters) - New York City's mayor Bill de Blasio presented an updated 2015 budget on Thursday, and revised the city's spending plan through 2018 to include a $4 billion pay deal with the city's public school teachers.

De Blasio, who took over the running of the city this year, presented a $74 billion budget for the 2014-2015 financial year in February, but an outstanding labor dispute left a question mark over the plan. That has now been partly resolved in time for the start of the city financial year on July 1.

The mayor said the budget addressed "serious fiscal and management issues that previously went ignored," a reference to the years-old battle with labor unions that was a legacy of his predecessor Michael Bloomberg. That dispute left all of the city's 300,000 public workers without current contracts.

The new spending plan does not include settlements with other unions, but based on the settlement with teachers that provided 10 percent raises over seven years, other employee salaries could grow by $400 million in 2015, rising to $1.5 billion in 2018, according to Maria Doulis, director of city studies at the Citizens Budget Commission.

As part of the settlement with teachers, the city secured $1 billion savings in healthcare costs that could reach $3.4 billion when expanded to cover all city workers, a move that is now likely after the reforms were backed by the Municipal Labor Council, a labor umbrella group which negotiates healthcare.

While the budget remains balanced in the coming financial year into 2015, the city predicts a deficit of $2.2 billion in 2016, $2 billion in 2017 and $3.2 billion in 2018. Those numbers remain below historical averages, according to the mayor's office, but represent significant longer-term challenges. (Reporting by Edward Krudy; Editing by Nick Zieminski)

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