NY City labor settlement cost to reach $19.6 bln by 2021-report
NEW YORK, June 4
NEW YORK, June 4 (Reuters) - The cost of settling a contract dispute with New York City unions will exceed city estimates, reaching $19.6 billion by 2021, although higher-than-forecast revenues will ease budget shortfalls in the years ahead, the city's top financial watchdog said on Wednesday.
In a review of Mayor Bill de Blasio's budget, Comptroller Scott Stringer said the costs of last month's settlement would be over $2 billion more than city estimates, which did not include certain costs beyond the life of the contract, such as pensions.
De Blasio reached a deal in May with city teachers over a long running pay dispute that affected all of the city's 350,000 public workers. At the time city officials said the cost could reach around $17.4 billion when applied to the entire workforce.
The Comptroller's review adds another layer of complication to the labor settlement, which includes lump sump payments, a ratification bonus, and pay rises from 2008 to 2021, that will likely extend to 152 public sector bargaining units with different contract periods.
"The independent projection that we added are the salary and wage costs for the unions whose seven year contract period extends beyond FY18," said a spokesperson for Comptroller Scott Stringer. "In addition to that, some of the pension costs that extend into FY19, FY20 and FY21 because of the two-year lag of pension expenses are included."
City officials say that because Stringer's estimates run longer than the life of the contract his projected savings are also higher, meaning that the net costs are similar to the city's. The Comptroller's report estimates the end cost to the city will be $7.3 billion by 2021, when savings in areas such as healthcare are taken into account.
"Taken together, as the comptroller indicated, those figures result in a net cost of the agreement that is similar to the city's estimate," said Amy Spitalnick, a spokesperson for the city's Office of Management and Budget.
The Comptroller's office also contains $6 billion in higher revenue estimates for the city through 2018. If realized, that would significantly lower out year budget gaps that had grown due to costs from the labor deal.
The Comptroller's Office estimates that the gaps would be $1.77 billion in 2016, $406 million in 2017, and $914 million in 2018. The mayor's current financial plan sees gaps of $2.57 billion in 2016, $1.88 billion in 2017 and $3.10 billion in 2018. (Reporting by Edward Krudy; Editing by Chizu Nomiyama)