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UPDATE 1-Mayor Bloomberg hands off balanced New York budget
* Bloomberg eliminates forecasted FY 2015 $2.2 bln budget gap
* Union contracts still a risk
* Next mayor to submit budget proposal in January
By Edward Krudy
NEW YORK, Nov 21 (Reuters) - New York City's outgoing mayor, Michael Bloomberg, said he will hand a balanced budget to his successor in the next financial year, closing a forecasted $ 2.2 billion budget hole through a mixture of one-off gains, higher revenues, and cost savings.
Thursday's announcement from the Bloomberg administration shows the mayor is keen to close his three-term stewardship of the city's finances on a high note as mayor-elect Bill de Blasio prepares to take the city's reins in January.
"For the first time in my memory and perhaps for the first time in New York City's history the budget for an incoming fiscal year has been balanced for an incoming mayor," Bloomberg said at a press conference in City Hall.
As Bloomberg's term draws to an end attention has focused on the risk posed to the city's budget from an unresolved pay dispute that has left city workers without contracts, some for as long as four years. Unions are demanding retroactive pay increases that could cost the city up to $8 billion.
John Liu, the city's Comptroller who is leaving office at the end of the year after a failed bid for the mayor's job, slammed the new budget plan as cosmetic and an attempt to paper over risks on the city's horizon, including labor negotiations.
"The Mayor's math doesn't add up," said Liu. "The facts are clear, not only will the next administration not inherit a balanced budget but it will also be greeted on day one with a fiscal mess of historic proportions - 300,000 employees working with expired contracts."
De Blasio's transition team, who were briefed on the mayor's new forecast earlier, gave the announcement a cool reception.
"We're reviewing the budget modification released by the Mayor today, and remain concerned about the continued impact of sequestration, high uncertainty around the flow of Sandy recovery aid, and the liabilities from unresolved labor contracts," a spokeswoman for de Blasio said in a statement.
New York's fiscal year starts on July 1. De Blasio needs to submit a budget proposal to the city council by January 16.
The 2015 forecast includes a 1.25 percent pay rise for city workers. The proposal, on the table since 2010, also requires mandatory contributions towards healthcare plans. Most city workers currently do not pay anything towards health coverage.
However, that is unlikely to fly with labor unions who have been holding out for a more sympathetic negotiating partner in de Blasio, the first Democratic mayor to run the city in two decades.
"Mayor Bloomberg's financial plan released today is being touted as extraordinary," said Harry Nespoli, chairperson of the Municipal Labor Committee, an association of New York City municipal labor organizations. The problem is that it sets aside essentially no money for wage increases."
Kathryn Wylde, president & chief executive of the Partnership for New York City, an umbrella group for more than 200 companies doing business in the city, was also cautious.
"Thanks to a good economy and strong fiscal management, Mayor Bloomberg leaves the city budget in balance," said Wylde. "But no one should underestimate the challenges facing the next administration with a $2.4 billion budget deficit projected by 2015 and hundreds of open contracts with municipal unions."
The biggest saving to the budget was $364 million that came as a result of the city's healthcare provider foregoing a premium rate increase, debt refinancing saved $150 million, and strong stock market returns reduced pension costs by $86 million. Tax revenues are $520 million higher than forecast in June due to higher income and property tax receipts.
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