May 3, 2012 / 8:10 PM / in 6 years

UPDATE 2-NYC mayor's $68.7 bln budget freezes wages

NEW YORK, May 3 (Reuters) - New York City Mayor Michael Bloomberg on Thursday presented an updated $68.7 billion budget plan that includes funds to hire about 2,500 new teachers but freezes wages for public workers.

The new hires will make up for an equal number of teaching jobs expected to be lost by attrition.

“I think at the moment we do not have monies to give raises, that is clear,” the mayor, a political independent, said at a news conference. “I think it’s clear down the road that no administration is going to have the money to give pay in the past,” he said, referring to retroactive pay.

New York City is required by law to balance its budgets. It faces future structural deficits, as expenses are expected to exceed revenue.

The city faces potential budget gaps of $3 billion in fiscal 2014 and $3.7 billion in 2015, said Bloomberg, whose final term ends in December 2013. A nearly $3.2 billion shortfall was forecast for 2016. He predicted that closing those deficits could require further deep spending cuts.

“2014 will really be a challenge for us; it’s hard to see where a big change will come without cutting expenses,” he said, adding that the budget plan does not impose new taxes.

Despite a surge of new employers - from film to biosciences - New York City’s economy still depends on Wall Street. Bloomberg expects this sector’s profits to rise to $10 billion in calendar year 2012 from $7.7 billion in 2011. The latest forecast is one-sixth of the $61.4 billion of profits securities firms earned in 2009.

The risks in the new budget plan include whether the city comptroller and two lawsuits will block a $1 billion sale of taxi medallions planned for July, and whether the city will lose $300 million of state education aid. Winning that aid requires the mayor and the teachers union to negotiate a deal on teachers’ evaluations by January 2013.

The mayor is also relying on a $466 million restitution payment from SAIC to nearly plug a $495 million budget gap in the current budget and the new one that starts on July 1.

The Democratic-led City Council has been expected to propose other ways of spending that settlement.

“It is not available for other purposes as some other people would have liked,” said the mayor.

Bloomberg is breaking a string of 11 rounds of orders to agencies to cut spending, which began in 2007 and ended in November 2011. Still, 40,000 school daycare slots will be cut, along with 20 fire companies - unless the city council restores them.

Bloomberg is not setting money aside, as has been done in the past, for retroactive pay hikes for contracts being negotiated with public workers unions.

Harry Nespoli, who chairs the Municipal Labor Committee, a coalition of more than 90 unions, blasted Bloomberg for failing to resolve contracts that have been open since fiscal 2008.

“The hard-working city employees, who help make New York City prosper, cannot continue to be victims of projected fiscal difficulties which are always resolved,” said Nespoli.

The five-year capital program will rise by nearly $800 million to $39.5 billion, under the mayor’s plan.

Since Bloomberg took office in 2002 he has cut the city’s workforce by 18,198 positions, or 5.8 percent, to 293,606.

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