Liu: Bloomberg Failure to Get Labor Deals Threatens City Budget Balance

Chief Leader - December 24, 2013

by DAVID SIMS

City Comptroller John C. Liu Dec. 17 capped his four years in the job with a State of the City address championing a rise in pension investments and cuts in contract waste while warning that municipal wage contracts needed to be settled and education funding was still well below levels recommended in the Campaign for Fiscal Equity ruling.

Mr. Liu is concluding a tumultuous term that saw his office help expose the massive fraud in the CityTime contract and reject several other city contracts in efforts to draw attention to an abundance of outsourcing by the Bloomberg administration.

Mayoral Run Fizzled

He also mounted an unsuccessful run for Mayor that was backed by many of the city’s unions but marred by the criminal convictions of his campaign treasurer and a fund-raiser on charges of fraud related to the use of straw donors to obtain matching funds from the Campaign Finance Board.

Mr. Liu’s successor, current Manhattan Borough President Scott Stringer, was in the audience for his farewell speech, which focused on the fiscal challenges facing the next administration.

While noting that the city had added 380,000 diverse private-sector jobs (only 17,000 in the financial services industry), a rise in tax revenues and robust returns from pension investments (which have risen by $50 billion in the last four years to $150 billion), Mr. Liu said that the “balanced budget” presented by Mayor Bloomberg to his successor was actually full of risk.

“The largest risk is the failure to adequately deal with labor contracts,” he said. The United Federation of Teachers and Council of School Supervisors and Administrators’ demand for retroactive raises fitting the pattern of two four-percent hikes will cost about $3.5 billion, he estimated, before any other future raises are budgeted.

While money has been saved through the transfer of the bloated CityTime project over to city workers, the similar in-sourcing of the 911 emergency-call-system project and the refinancing of city bonds, cutting waste will not be enough to fix the city’s potential budget gaps, he said.

Stop the Giveaways

“One of the most important issues is changing the way the city gives out tax breaks to big corporations and developers in exchange for job creation,” Mr. Liu said. Often, such jobs do not materialize, making the tax breaks an unnecessary waste of city funds, he continued.

The increase in income inequality under the Bloomberg administration is also destabilizing for the city’s tax base, he noted. “Aside from the moral issues, dependence on such a small group of wealthy taxpayers means New York City is increasingly at the mercy of the volatility of that wealth,” Mr. Liu said. “Any economist can tell you that this wealth is not a stable source of revenues.”

Mr. de Blasio’s campaign, which focused on the “tale of two cities” written by this inequality, promised help on these fronts, and Mr. Liu said he supported the tax hike on the wealthiest to fund universal pre-kindergarten among other de Blasio initiatives.

As he exits office, Mr. Liu said he hoped the spirit of Mr. de Blasio’s campaign would endure under the new administration. “We look forward to a de Blasio administration that is dedicated to doing something about it.”

Believer in Public Service

Noting that he left a lucrative career in the private sector to become a City Councilman 12 years ago, Mr. Liu said he hoped the allure of public service would continue for future generations.

“Imagine a time when working for government seemed as exciting as joining the tech industry does now. Imagine a time when Wall Street was sleepy but the public sphere was invigorating,” he said.

“It’s hard to know how that same kind of fire can be lit today. How we can send it rushing through the country like it did back then,” he continued. “But I can tell you this: my commitment is to continue to give back to this great city that welcomed my family and me when we were immigrants from Taiwan back in the seventies, and that gave me a great public school education without which I could never have achieved what I’ve done so far.”

Mr. Liu gave no hint to his future plans, however, outside of a joke. “My mother, of course, is very excited. She says now I’ll finally become the doctor she has always wanted me to be.”