This week, the city's labor unions got their first official glimpse at what Mayor Michael Bloomberg thinks future union hires should expect in the 21st century. The comprehensive proposal was presented to the Muncipal Labor Council not by Mayor Bloomberg himself, but by his Commissioner for Labor Relations James Hanley.
In his State of the City address this year, Mayor Bloomberg said he would not sign off on any pay raises unless he won pension concessions from the city's unions. This plan outlines the concessions he wants. If he can enlist Albany support, new hires will have to work longer to qualify and longer to collect their pensions, with non-uniform hires working until 65 to retire.
Currently, depending on years of service, and when they joined the city workforce, non-uniform workers can retire as young as 57, and in some cases even younger. These workers can be vested in the pension after just five years. The mayor's reforms would push that out to ten years. New hires would have to contribute more to their pension.
This year, thanks in large measure to the recent meltdown on Wall Street, the city has to pay $8 billion out of its budget to make good on pension obligations just for this year. That number is expected to be even higher next year.
The mayor says that the rising costs of pension and fringe benefits will increasingly squeeze out vital services. "Do we want to have teachers, cops, firefighters, sanitation workers and everybody else that helps the city function, or do we want to continue that benefit?" Bloomberg asked reporters rhetorically on Thursday. "There is no more money."
For District 37 President Lillian Roberts, who represents more than a third of the City's 300,000 workforce, the mayor's plan undermines not just public employees, but the city's middle class.
"One percent of this city receives 44 percent of the resources here in this city and that is ridiculous and the rest of us are bumping elbows here trying to get a crumb," Roberts said.
While the unions blasted Mayor Bloomberg's comprehensive pension reform proposals, the Citizens Budget Commission applauded them. Charles Brecher with the CBC said that when the stock market performs well, the city's contribution towards pensions goes down because the pension funds invested in the market produce the returns needed. But when it drops, as it just did, taxpayers have to make up the difference. And the impact can linger.
"When it does worse, the city has to put in more money in subsequent years, and they average it out over multiple years," Brecher said.
Brecher said another key pension cost driver is that, on average, pensioners are living much longer than they did decades ago. And Brecher said CBC backs the mayor's call to raise the city's retirement age to 65 for non-uniform workers and raising the bar for when workers can draw down a disability pension.
Bloomberg's proposed pension overhaul is also aimed at the city's uniformed services — police, fire and corrections.
Norman Seabrook, who leads the Correction's Officers Union, said the mayor is not factoring in the health impacts of the stress that police, fire and corrections officer face on the job. He says he sees the toll first hand when he attends the funerals of his rank and file. "I have been to 125 funerals of correction officers. And most of them had died at such a young age, they weren't even 50 years old."
Seabrook said since the city's increased pension costs are linked to the financial crisis, the city's wealthiest households should pay higher taxes, instead of rolling back public employee pensions. He said the mayor is using the crisis as a pretext to break the unions.
Under Mayor Bloomberg's pension reform proposal, future police, fire and correction officer retirees would also lose an annual $12,000 stipend known as a variable supplemental they get in addition to their pension. The Bloomberg administration calculates it could save $200 million dollars if it discontinued the stipend, which union critics call it a "Christmas bonus."
But Detective Endowment Association President Michael Palladino said that to get it, the unions agreed to a reduced pay scale for all future hires that has saved the city billions.
"The unions paid dearly at the bargaining table surrendering cash up front and also making concessions in that 1987-90 round," Palladino recalled.
The deal also permitted the city pension funds to diversify out of conservative bonds into the stock market, while pulling some money out for the city budget.