Mr. de Blasio looks to be inheriting a city in good shape, not in free fall from some economic crisis or natural or man-made disaster. But the budget challenges he faces are real and immense, for the short and long term, both for the new initiatives he has promised and the lurking obligations he will have to confront.
There is a reason Mr. Bloomberg’s notional budget was greeted cautiously, if not skeptically, by the de Blasio camp, and dismissively by the city’s municipal unions. The unions have been working on expired contracts for years and are demanding about $8 billion in retroactive pay, which the Bloomberg budget does not account for. His plan assumes, rather, that the unions will accept the five-year deal Mr. Bloomberg has offered them before — no raises for three years, then two years of 1.25 percent raises. There has been intense hostility between the Bloomberg administration and unions representing 300,000 city workers, and it will be Mr. de Blasio’s mighty challenge — as the populist, pro-union candidate — to negotiate, and somehow pay for, a way out of the impasse.
Mr. de Blasio has not yet named a budget director, but his aides are poring over the budget. They say there are other fiscal concerns, like the prospect of deep federal spending cuts forcing the city to spend hundreds of millions more to support the ailing Health and Hospitals Corporation and New York City Housing Authority. There is also uncertainty about federal aid for the recovery from Hurricane Sandy.
Then there is Mr. de Blasio’s ambitious plan to provide universal prekindergarten and after-school programs for middle schoolers, at a cost of at least $500 million a year, to be paid for by a new tax on rich New Yorkers. He is making this proposal at a time when Gov. Andrew Cuomo is pushing state tax policy in the opposite direction.
A commission Mr. Cuomo appointed, with former Gov. George Pataki as co-chairman, is considering huge cuts in property taxes. Mr. de Blasio will need the State Legislature’s approval for his tax increases, a hard sell even for a persuasive messenger. If Mr. de Blasio has to find $500 million by other means, it will be tougher.
There are, of course, many ways of reducing spending and raising revenue, few of them politically easy. The nonpartisan Citizens Budget Commission and the city’s Independent Budget Office are full of ideas, like cutting overtime and lengthening the workweek to 40 hours for many city employees. One of the most consequential would involve reining in health costs by getting members of city unions to pay for a portion of their health insurance premiums — say, 10 percent for an individual, 25 percent for family coverage — which the commission estimates could save the city at least $2 billion a year. It would be a huge change for New York, but would bring it belatedly in line with other cities and the private sector.
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