We have been commenting for a while on the city's pension time bomb-basically cribbing from the great work done by E.J. McMahon. Now, Michael Barbaro at City Room weighs in to underscore that our concerns aren't simply right wing noise: "It’s a ticking time bomb in New York City’s budget: the cost of providing health care to retired city workers. By 2013, the price tag will grow to $96 billion, according to budget documents released at the annual meeting of the state’s Financial Control Board on Monday afternoon. That’s 50 percent bigger than the city’s entire budget for next year, which is $60 billion — and the cost is growing at the staggering rate of $6 billion a year."
And the FCB went right after the mayor for his fiscal legerdemain: "Starting a few years ago, federal accounting rules required New York City — and local governments across the country — to account for future health care costs, which are based on a variety of factors, like life expectancy and the growing cost of medical care. But it did not require the city to set aside money for the cost. Mayor Michael R. Bloomberg took the unusual step of doing that anyway. He set up a retiree health trust fund, and squirreled away more than $2 billion in it. With interest, that initial investment grew to $3.2 billion.So far, so good. But when the economy began to decline this year, City Hall decided to tap into trust fund to help pay for something else: pension costs. It plans to take $1.1 billion from the fund over the next three years, leaving $2.1 billion."
So, is Mike Bloomberg the new Abe Beame? The FCB certainly wasn't pleased: "And at Tuesday’s meeting of the Financial Control Board, a relic of the 1970s fiscal crisis that must approve the city’s budget, three members of the board, who had previously praised Mr. Bloomberg’s creation of the retiree health trust fund, scolded the city for taking money out of it: “Unfortunately, under the financial plan, resources are being drained from the trust fund,” they said, in prepared remarks. “Troubling to us is that many reports on the city’s fiscal condition treat the Health Benefit Trust fund like it is a budget reserve to be used to close deficits. While we understand the very difficult decisions the city has made and will continue to have to make concerning budget cuts and tax increases, we believe that if you take a long-term view, it is fiscally dangerous to allow the unfunded liability to continue to grow.”
Now can we agree that the pension situation has been exacerbated by a mayor who hasn't been as scrupulous as he should have been in controlling the growth of the municipal labor force? After all, as McMahon has pointed out, every new public sector hire is a pension knife in the tax payer's heart-not to mention the wallet.
To us this is, as we have said before, so Grasshopper and the Ant. The profligate Mike Bloomberg-unmindful of the coming fiscal winter-kept on adding payroll and raising taxes to pay for the additional workers. Now, as a result of his improvidence, he has placed the financial well-being of the city in great jeopardy. The cost of the tax and spend big government chickens has come home to roost.
Can someone remind us, once again, just why we need-in the midst of a recession and a budget crisis that Mike Bloomberg made worse-to over turn the will of the people to bring this fiscally imprudent guy back?