New York City plans 13,500 job cuts: officials

NEW YORK (Reuters) - New York City's workforce will shrink by 13,500 people and their unions will be asked to accept higher health care costs and lower pension benefits for new hires, under Mayor Michael Bloomberg's new budget plan, administration officials said on Thursday.

Bloomberg, who will unveil his plan on Friday, wants to increase the city's 4 percent sales tax at least a quarter of a percentage point, to raise $900 million. New York state and the city levy a combined sales tax of over 8 percent.

Democratic Speaker Christine Quinn instead proposed hiking the city's personal income tax. The state has already raised its income tax and analysts said the mayor, now running for a third term, does not want another income tax hike.

While the city would lay off 3,750 workers, with the rest of the jobs lost through attrition, for example, teachers and uniformed workers, including police officers and fire fighters, will be spared, said the officials, who requested anonymity.

That is a big drop from the 23,000 of job cuts -- including 1,000 police officers, 451 firefighters and 14,000 teachers -- in the mayor's $58 billion January preliminary budget plan.

The city has about 311,000 workers and pays for about 280,000 of them; the state and federal government pick up the tab for the rest.

Deputy Mayor for Operations Edward Skyler said in a statement the new budget for fiscal 2010 "will help New York City recover from the economic crisis by protecting our quality of life," and sparing public safety, education and health care.

The near-demise of the city's hometown financial sector slashed tax revenues, and personal income taxes fell sharply in April.

Skyler urged city labor unions help the city save $400 million, down from the earlier $750 million request. But unions so far have resisted the cuts Bloomberg wants and the state must approve lower pension benefits and a sales tax hike.

Next year's budget gap was forecast at $4 billion and Bloomberg has cut it to $3.4 billion, the officials said.

The five-year $50 billion capital plan will be cut slightly less than the 30 percent envisioned in January, and school construction is largely spared. About $11.3 billion will be spent on 25,000 new or improved classroom seats.