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TheStreet Open House

NYC Mayor-elect Will Face Immediate Fiscal Crisis

By JONATHAN LEMIRE

NEW YORK (AP) a¿¿ New York City Mayor-elect Bill de Blasio will sweep into office in January with a powerful mandate for progressive change, but a looming fiscal crisis threatens to derail his agenda before it begins.

De Blasio, a Democrat, faces a multifaceted dilemma years in the making that he'll be forced to confront within weeks of taking office. He will contend with soaring worker health care costs, a still-fragile recovery from the recession and potentially a dramatic reduction in the vital aid supplied to New York by the state and federal governments.

But de Blasio's most immediate crisis is presented by some of his staunchest allies: the city's unions. All 300,000 members of the municipal labor force have been working on expired contracts for years, declining to negotiate with outgoing Mayor Michael Bloomberg in hopes of striking a more favorable deal with de Blasio.

Labor leaders are asking for current and retroactive raises, a balloon payment that could eclipse $7 billion, which is nearly 10 percent of the city's entire $72.5 billion budget, according to the nonpartisan Independent Budget Office.

"There is no question this is the biggest fiscal problem the incoming mayor faces," said George Sweeting, deputy director of the IBO. "It will impact everything else."

If de Blasio were to fully acquiesce to the unions, his scramble to fund the raises would have immediate and dramatic ramifications.

Agency budgets would be slashed, meaning vital services, from trash pickup to police staffing to school supplies, would likely be cut. City workers would be laid off. And de Blasio would have little choice but to raise the one tax he can control, the property tax, which could drive homeowners and businesses from the city.

"To pay for all that, they would have to be sweeping cuts that would really impact the quality of life in the city," said Carol Kellerman, president of the independent Citizens Budget Commission.

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