Council Takes Aim at Outside Contracts to Save Jobs, Services

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For the first time since the recession began, City budget makers are dealing with significant cuts in both State and Federal aid, only partially ameliorated by the improving tax revenue picture of a fragile recovery. Add to that a more than billion dollar increase in pension costs and spending priorities are being squeezed.

On Friday, the City Council released a detailed critique of the Mayor Michael Bloomberg's proposed budget, providing one boundary of the debate ahead. Early next month, it will be the Mayor's turn when he unveils his formal Executive budget.

The Council response document, required by the City Charter, drew a rhetorical line in the sand for the upcoming budget battle. It raised concerns that plans to cut 6,000 teaching slots would cause class sizes to continue to rise. It also took issue with the Mayor's plan to cut 400 NYPD civilian jobs, which Council analysis found would further reduce the number of officers on the streets.

"We have reached a point where further cuts in critical service areas endanger not only progress we have made in many areas over the course of many years, but also the welfare and safety of New York City residents," the Council Budget response document asserted.

The Council budget analysis zeros in on what it said was a 4 percent rise in outside contracting costs, which are projected to cost the City $10.2 billion, more than 10 percent of the City's entire $65.6 billion budget.

City Council Speaker Christine Quinn said heightened scrutiny by the Council of outside contracts for things like technology would produce some savings that could be used to dial back the scale of proposed layoffs.

"So there's no reason that as a matter of reflex these contract costs automatically go up like $100 million -- that's 1,000 to 1,300 teachers," said Quinn in a Sunday morning phone interview.

"These contracts have been going up faster by a significant factor," said Quinn. "Why aren't we using our leverage in this tough economy and saying to these vendors 'you know what, we need you to do it for 4 percent less for the next two years.' Are they going to walk? I don't think so."

The City's increasing reliance on outside contractors, particularly in the technology realm, was called into question last December when Federal prosecutors and the City's Department of Investigation uncovered the CityTime payroll software scandal. Allegedly, CityTime contractors were able to bilk the City out of $80 million from a contract that had ballooned to more than ten times its original size, even as it failed to meet it's delivery timetable.

Speaker Quinn said the Council wants to shine a light on all of the City's 17,000 contracts, some of which are 1,500 pages long. "We are going to call it the Contract Transparency Act and it will require posting online of the terms, conditions and deliverables for every contract."

Currently, Quinn said, there are multiple levels of accountability checks for both City employees and non-profit social service agencies that have municipal contracts, which private contractors successfully elude.

The City Council is concerned with several other items in Mayor Bloomberg's proposed budget, including plans to close 20 firehouses, cuts to the Administrative Children Services, reductions in the District Attorneys budgets, reductions in support for the libraries and less support for community colleges.

The Council budget analysis also offered the first comprehensive review of the impact of both State and Federal cuts to programs that support teen employment, youth social safety net and after school programs.

Last summer, the City received 143,000 applications for 36,000 summer youth jobs in both the public and private sectors. This year, only 23,000 jobs will be available.

The Council document noted there are 3,800 homeless youth on the streets in the City. Last year, the Council and the Mayor funded 250 shelter beds for that population. The Mayor's budget cuts that number in half.

The Council advised Mayor Bloomberg not to go ahead with plans to cut the City's capital construction plans by 10 percent in order to save on the City's borrowing costs. Originally, the Mayor had called for a 20 percent rollback.

The Council report said "the short term economic costs of cutting the City's capital program now far outweigh the minimal debt service savings that would be realized and indeed those savings could be more than outweighed by the loss of tax revenue from construction industry firms and their employees."

Several years ago, the Mayor and City Council created the Health Care Trust Fund to pay for the future health care costs for City retirees. It contains close to $2.5 billion. "The Mayor's preliminary budget calls for taking $400 to $500 million out" for next year's budget said Quinn. The Speaker said Council members will likely want to see more of that fund used to reduce layoffs and service cuts for next year. "But it would be a big mistake to take it all," said Quinn. "We still need money for gaps in 2012, 2013 and 2014."

Later this month, the Department of Education's capital spending plan will be released, outlining what the agency considers its top priorities. The DOE has said it needs to find ways to house an additional 50,000 students.

One wild card that remains are the revenue numbers produced by receipts from personal income tax, which will show up on April 18. If they are stronger than projected, the Council and Mayor will have an easier time closing a deal.

They have until the end of June to do so.