Bloomberg's State Of City Speech: Mayor Sets Sights On Pension Reform
NEW YORK — Mayor Michael Bloomberg warned in his "State of the City" address Wednesday that New York still faces deep budget problems and promised he would seek to cut pensions for government workers that he said were more generous than those found in the private sector.
In his speech on Staten Island, Bloomberg said reforms of the city's pension system will be his administration's number one priority in Albany in the weeks ahead. The mayor said he had enlisted the help of former mayor Ed Koch in the effort to wrest control of city-worker pensions back from the state.
The mayor said he wants to raise the retirement age to 65 for non-uniformed workers. The change, which would only apply to new hires, would save billions of dollars over the long term, Bloomberg said.
He said the city would ask state lawmakers to change the law to allow the city to negotiate pension benefits directly with the unions during collective bargaining. Right now, the state, not the city, sets pension benefits.
Even if the state does not act, Bloomberg said he is dedicated to forcing change in a system that will cost the city $7 billion this year. He vowed not to sign any contract with a salary increase unless it also included benefit concessions that save the city money.
Currently, most non-uniformed city workers can retire at the age of 57, while city teachers who have served at least 25 years can retire at the age of 55.
"City workers deserve a safe and secure retirement, but right now, they receive retirement benefits that are far more generous than those received by most workers in the private sector – and that provide for a much earlier retirement age," Bloomberg said. "It would be great if we could continue to afford such generous benefits, but we can't."
Year-end bonuses for future uniformed retirees would also be eliminated, saving about $200 million per year.
"City taxpayers just cannot be expected to give substantial holiday bonuses when so many of them are out of work or having their own wages frozen or cut," Bloomberg said.
Patrolmen's Benevolent Association president Patrick Lynch responded after the speech that the union intends to fight to protect the payments, which were promised in return for concessions in an earlier round of pension reforms.
District Council 37 of the American Federation of State, County & Municipal Employees, the city's largest public-employee union, assailed the mayor's plans.
"Mayor Bloomberg chose to take the low road in his State of the City address; attacking city workers and the modest $17,000 per year pensions they've acquired after making contributions during decades of dedicated service and sacrifice," said the union's executive director, Lillian Roberts.
The $17,000 figure is the average received yearly by the 50,000 retirees that belong to the union, which represents about 125,000 current city workers, many of them among the city's lowest paid, the union said. Union officials also said workers contribute to their pensions throughout their careers.
Bloomberg also said he would seek to overturn a rule requiring that public school teachers be laid off in order of seniority. The requirement prevents administrators from considering merit as they cut personnel and would result in the cheapest teachers being laid off first, he said.
In other parts of his speech, the mayor said spending cutbacks won't stop New York from transforming itself into a city of the future.
He says he is still planning hundreds of millions of dollars in development projects along the city's waterfront and other improvements meant to maintain the city's status as a world capital. And he vowed not to raise taxes to close the city's budget deficit.
Among new initiatives announced in the speech was an online attempt to "crowdsource" city improvements by providing an Internet forum where people can propose and comment on ideas, some of which will be adopted by the city. A partnership with Citigroup Inc. would give credit and loans to hundreds of small businesses. Another new program would assist immigrant entrepreneurs in opening and expanding small businesses.
The mayor repeated promises to pursue immigration reform on the national stage, working with News Corp. mogul Rupert Murdoch and their coalition of businesses and mayors. The group supports providing a path to legal status for those in the U.S. illegally, and Bloomberg said Wednesday that reform could help attract businesses that would otherwise launch overseas.
Bloomberg said he doesn't want to see the city repeat mistakes of past fiscal downturns, when vital city services broke down due to a lack of money.
"We won't forget the single most important lesson of the 1970s: When you stop investing in the future, the future hits the road," the mayor said. "Jobs, people, capital – they all leave. We didn't allow that to happen after the attacks of 9/11 and I promise you we won't allow it to happen now."
(This version CORRECTS in 13th paragraph that workers contribute to their pensions throughout their careers, instead of for 10 years.)
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SAMANTHA GROSS 01/19/11 07:30 PM ET Associated Press