De Blasio Squirrels Away Money Ahead of Contract Negotiations

Bill de Blasio presenting his first budget. (Photo: Poll/The New York Times)

Bill de Blasio presenting his first budget. (Photo: Pool/The New York Times)

Mayor Bill de Blasio today unveiled his $73.7 billion preliminary budget plan for the next fiscal year–squirreling away more than $1 billion in surplus money left by the previous administration as he prepares to enter negotiations with the city’s 150-plus municipal labor unions, which are all working under expired contracts and itching for pay hikes and retroactive raises.

Unlike most recent budgets, Mr. de Blasio’s opening salvo was a relatively rosy one, with no drastic cuts to services or personnel that have in past years sparked protests on the steps of City Hall. Indeed, he and his budget director could not name a single service reduction while unveiling a slew of new social programs that drew immediate praise from city council members and advocates.

Still, the new mayor, who seemed far more reserved that usual as he ran through the city’s finances with the aid of a PowerPoint presentation, warned the city was facing “murky waters.” He blamed the perilous situation squarely on the “unprecedented failure” of his predecessor, Michael Bloomberg, to settle the long list of open labor contracts, which he displayed by name in tiny type on his screen for effect.

“You know, I have to say this, and this will probably grate .. some people’s ears, because I think the previous administration was given an artificially high level of credit for management,” declared Mr. de Blasio to the room full of reporters and high-level staffers at City Hall. “You cannot ignore open labor contracts for years on end.”

A particular sore point, he said, was the former mayor’s decision to drain the Retiree Health Benefits Trust Fund–a so-called “rainy day fund,” which the Bloomberg administration had invested in before the fiscal crash. The fund, which was depleted over the ensuing years, was widely credited with preventing more dramatic cuts.

“In some of the reserve areas, there was a spending down, and I have not made a secret of the fact that in the final year or two of the Bloomberg administration, there was a particular interest in burnishing the mayor’s legacy,” charged Mr. de Blasio. “And I don’t think those reserves should have been tampered with. So we are restoring reserves that we think are necessary.”

The position, however, raised eyebrows among who pointed back to 2008, when, as a councilman, Mr. de Blasio was quoted attacking the Bloomberg administration for putting away the cash, which he argued would be better spent bolstering city services. “I am disappointed that with a $4.5 billion surplus, the mayor forced the Council to cut funding for essential services, including homeless prevention, legal and mental health services, and workforce development,” he said then, according to the New York Times.

Asked about the comments today, Mr. de Blasio said he couldn’t recall the specifics, but that the circumstances had changed. “I think the bottom line is now, at the end of five years or more of a very troubled economy and with these kind of extraordinary, unforeseen circumstances–you know, in 2008 we didn’t have 150 open labor contracts, in 2008 Sandy hadn’t happened–a lot of things were different then. But now there’s no question in my mind, we have to take a very responsible and careful path,” he said.

Today, the mayor announced that he will be returning $1 billion to that health fund, as well as doubling the amount stored in a second general reserve account from $300 to $600 million. Many speculated that the money is being eyed by the administration to settle the expired labor contracts. But pressed by reporters, the mayor repeatedly skirted questions about the reserves and whether he had any other cash to cover the raises, which some estimate could cost the city as much as $7 billion.

“We’ve said throughout this process that we’re in the great unknown here. We’ve never had this many open contracts. The very process of negotiating is difficult and complex and time-consuming,” said the mayor, who would only say that any retroactive raises would have to come with other savings.

“I respect your job is to ask us tough questions–my job is not to infect the negotiation process. So if you find cost savings, there’s lots of creative, interesting things you can do in this world, on any part of this process. But I’m not going to answer any specific question about will we do this if we got that and all. That’s what the negotiation process is for,” he later said.

Next year’s budget is balanced with a $1.8 million surplus rolled over from the current year, but the city still faces a $1.1 billion deficit in 2016.

Still, Mr. de Blasio also took the opportunity to announce several new initiatives, including plans to forgive $52.5 million owed by the New York City Housing Authority to the NYPD for policing its buildings so that NYCHA can use the money to whittle down its long list of outstanding work orders. (The police department will be compensated for the lost revenues.)

The mayor also announced new funding for shelter beds for homeless and runaway youth, a new agreement with Gov. Andrew Cuomo to fund HIV/AIDS housing, as well as a $1.3 million  in new cash to improve the Auburn and Catherine Street homeless shelters. (The former is where Dasani, the 11-year-old girl profiled by the New York Times in a widely-read series on homelessness, lived for years.)

It also includes the tax on high-income earners he hopes Albany will pass to fund universal pre-K and after-school programs, as well as new money to establish the NYPD Inspector General’s office and enforce the planned expansion of a paid sick leave law.

In a final swipe at the old administration, Mr. de Blasio also vowed to end the annual “budget dance”–in which proposed cuts are negated at the final hour after months of protests on the steps of the City Hall–by restoring funding to 20 oft-threatened fire companies and adding $59 million to the budgets of the public advocate and borough presidents’ offices.

“We would like budgeting to be honest, we’d like it to be transparent, so we’d not like to waste the time of hardworking New Yorkers on the Kabuki theater that made up the budget dance,” he said. “We’re not playing that game anymore.