Bloomberg Budget Goes Easy on Headcount
FISCALWATCH MEMO
February 20, 2002

One welcome change in Mayor Michael Bloomberg's preliminary budget is a more accurate count of New York City's enormous municipal workforce. It turns out there are even more city employees than anyone previously thought—ironically underscoring just how little Mayor Bloomberg is initially proposing in the way of city workforce reductions, despite all the talk of budgetary "pain."

Rather than identifying the size of the workforce as part of the budget problem, however, the new mayor benignly characterized it as evidence that New York is simply "more compassionate" than other cities. This kind of compassion doesn't come cheap: personal service expenditures for fiscal 2003 are projected by the Mayor at $22.1 billion, more than half the total budget.

New figure shows much larger city workforce

Under former Mayor Rudolph Giuliani, the Office of Management and Budget had reported a full-time equivalent headcount that excluded part-time, seasonal and per-diem workers—a category that has skyrocketed in recent years. Giuliani’s last official city headcount was 250,000, but the Independent Budget Office (IBO) recently estimated that the total was more like 288,000, once all the part-timers were included.

The IBO’s estimate, it turns out, was still too low. Bloomberg's preliminary budget revealed there was a total of 306,000 city government full-timers and full-time equivalent as of December 31. This does not count 57,000 city-subsidized workers who work for the Health and Hospitals Corporation, cultural institutions, libraries, the Housing Authority and the School Construction Authority, and whose salaries are subsidized by city funds, but are not considered part of the city government workforce.

Bloomberg’s new, adjusted headcount reflects an increase of 17,000 city government employees, or 5.8 percent, since June 1998.

Recent trends in city staffing are tracked in the chart below, using both the traditional city budget method and Bloomberg’s adjusted count.

How Big is the City's Workforce?
Three Ways of Counting Heads

Source: New York City Office of Management and Budget

Despite the sharp workforce growth in recent years, the mayor says his preliminary budget has targeted only 5,000 to 7,000 city positions for elimination in the next fiscal year—a token reduction in the neighborhood of two percent of the new, adjusted headcount, to be accomplished entirely through early retirement incentives and attrition.[1] Most significantly, the mayor says he will "avoid" layoffs in the year ahead.

Differing approaches to closing budget gaps: Bloomberg v. Giuliani

In tone and substance, Bloomberg’s plan is a pretty sharp contrast with the preliminary budget offered eight years ago by then-Mayor Rudolph Giuliani. Faced with a projected 1995 gap of $2.3 billion, Giuliani targeted 15,000 jobs[2] for elimination—and pointedly refused to rule out layoffs. In fact, the excessive size of the city's workforce, and the need to reform work rules and boost productivity, was an insistent theme of Giuliani's first budget presentation.

Giuliani in his first budget highlighted the fact that New York’s municipal workforce, as a percentage of private employment, was larger than those of seven other cities—50 percent larger than Chicago, for example. “My hope is that we can bring the size of city government in line with a realistic tax base,” he said.

For all his tough talk, Giuliani ended up winning only a few significant concessions from labor. Wage freezes the unions reluctantly accepted during his first two years in office were achieved only at the price of costly catch-up raises over the next three years. To make matters worse, Giuliani during his final term allowed the workforce to begin growing again.[3] His last budget would have brought the official full-time equivalent count (excluding part-times) to an all-time record level, before the events of 9/11 forced the city to adopt a hiring freeze.

Bloomberg's first preliminary budget, quite unlike Giuliani's, stresses the theme of "cooperation" with the unions. “New York City employees will play an important part in the solution to our current financial difficulties,” the new mayor says. But the city's unsettled labor agreements are a potential time bomb that may yet blow up Bloomberg's budget.

City employee costs loom large for future budget gaps

Members of two of New York's three largest municipal unions—United Federation of Teachers and the Patrolmen's Benevolent Association—have been working without a contract for the last two years. The United Federation of Teachers is now at an impasse with the city, and the Patrolmen's Benevolent Association seems irreversibly headed to testing its newly won right of binding arbitration before a state labor board. City firefighters are in a sort of limbo, having indefinitely put off a vote on their tentative contract after the tragedy of 9/11.

Bloomberg's budget includes a collective bargaining reserve sufficient to retroactively grant teachers, firefighters and police officers the same general deal that other uniformed and civilian employees reached last year—salary increases of roughly 8 to 9 percent over 27 months. But following Giuliani's lead, the mayor's preliminary budget sets no cash aside (visibly, at least) to cover any collective bargaining agreements for fiscal years 2004 and 2005, when city budget gaps are already projected at $2.5 billion and $2.9 billion, respectively.

The budget also sets a target of $500 million in savings from "fringe benefit cost containment" in fiscal 2003. However, according to the mayor, more than half that amount would come from stretching out the increase in city pension fund contributions needed to pay guaranteed cost of living increases to retired workers, which hardly meets the definition of a productivity improvement. That leaves about $215 million in other possible union givebacks, or about one percent of total personal service costs.

Hoping for the best

Time will tell, perhaps sooner rather than later, whether Bloomberg's conciliatory tone will control the cost of city employees better than Giuliani's more outwardly confrontational approach. The City’s future fiscal health may ride on the answer to this question.

Notes

  1. Calculated the traditional way, the official full-time headcount projection in the mayor’s preliminary budget (as presented on page 72 of Volume 1 of the Financial Plan) actually calls for an increase in the city workforce between December 2001 and July 2003, once a new “attrition replacement” police class is sworn in at the end of this period.  Even including a likely reduction in Board of Education employment, which is not yet reflected in the estimate, this would indicate that Bloomberg’s proposed reduction in the headcount would be coming largely from the ranks of part-time and per-diem employees.
  2. As defined by the traditional headcount measure excluding part-time and per diem employees.
  3. However, using the comparative labor statistics cited Giuliani’s first budget—a measure of “local government” that included part-timers and public authority workers not on the city payroll—New York’s workforce has shrunk from 16.7 percent to 14.3 percent of the private sector workforce between 1992 and 2000. It was still about 42 percent larger than Chicago’s, though.

POSTED: FEBRUARY 20, 2002

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