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Mayor: $466M settlement to fill gap in NYC budget

By Samantha Gross
Associated Press / May 3, 2012
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NEW YORK—Nearly half a billion dollars in settlement money that some advocates had hoped would turn into a windfall for struggling social services programs must instead be used to cover an unexpected budget shortfall in New York City, Mayor Michael Bloomberg's office said Wednesday.

The money -- $466 million pledged by technology giant SAIC Inc. to avoid federal prosecution over its role in the scandal-plagued CityTime payroll project -- would almost cover what the administration described as a new $495 million budget gap brought on by tax revenue losses and city agency expenses.

Hard times for Wall Street firms are responsible for much of the gap, according to a partial preview of the mayor's budget plan provided by his office. Bloomberg is scheduled to release his full proposal Thursday, and has until the end of June to negotiate a final version with the City Council.

The city's ranks of teachers -- already thinned by attrition in recent years -- will remain steady under the new budget plan, according to a person familiar with the proposal. The person spoke to The Associated Press on condition of anonymity to preserve the confidentiality of budget negotiations. A preliminary proposal by the mayor in February had called for the possible loss of another 2,500 teachers. But, City Council Speaker Christine Quinn had objected to that provision, saying that and other youth cuts would "shortchange the next generation."

Already, the city has lost more than 5,000 teachers since the 2008-2009 school year, leaving about 73,700 instructors for the city's more than 1 million public school students. In the last three years, the city has lost one-out-of-15 teachers to attrition, and last year the mayor pushed for the layoff of 4,000 more teachers before reaching a deal to avoid pink slips that included concessions from the teachers' union.

In the preview released Wednesday, Bloomberg's office projected better-than-anticipated performance by firms in the technology, film and television, tourism and higher education sectors. But that growth wasn't enough to fully offset the losses in tax revenues from the financial services sector. The projected tax revenue gap is now $352 million, with another $143 million in agency cost overruns adding to the hole.

Stu Loeser, a spokesman for the mayor, said the numbers were evidence that the mayor's efforts to diversify the city economy had paid off.

"The financial markets will always have ups and downs," Loeser said in a statement. "Growth and job creation in non-finance sectors like tourism, tech and TV production ... softens the blow from the drastic drop in Wall Street profits."

The administration's predictions presented quite a turnaround from those offered just one month ago. Then, the city's Independent Budget Office issued a far rosier forecast, saying the city could expect a surplus in this budget cycle of $544 million, and of more than $1 billion if the CityTime money was taken into account.

The mayor's announcement was a blow to advocates who have lobbied for the settlement money to be used to shore up threatened social services initiatives. In March, the City Council Women's Caucus called on the mayor to use the money for child care and after school programs.

On Wednesday, the Executive Director of Citizens' Committee for Children denounced the administration's announcement.

"We are outraged to hear that the mayor has not chosen to use the CityTime settlement money to stave off the profound loss of services to New York City's children and working families that will result from his sweeping cuts to child care and after-school programs," Jennifer March-Joly said in a statement.

Bloomberg himself had said that he intended to use the CityTime settlement to help close the gap of more than $2 billion expected in next year's budget cycle.

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Follow Samantha Gross at http://www.twitter.com/samanthagross

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