Mayor To Propose Setting Aside $2B From Tax Revenues for Health Costs
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
Mayor Bloomberg is planning to squirrel away some of the money the city is expected to receive as a result higher-than-expected tax revenues from real estate and other transactions to cover future health care costs for city retirees.
When he presents his preliminary budget today, Mr. Bloomberg will propose the creation of $2 billion fund to pay for those future costs, officials in his administration told The New York Sun.
Under the mayor’s proposal, the fund will be made up of $1 billion in revenues from this fiscal year and $1 billion from the same funding stream for fiscal year 2007.
It comes on the heels of Mr. Bloomberg’s State of the City pledge last week to reach agreements with the city’s labor union on employee contributions to health insurance. In the same speech he also said he would seek “pension modifications” to address the ballooning costs creating a structural imbalance in the city’s long-term finances.
The fund is only a small part of the city’s roughly $50 billion budget. The mayor has already said he will earmark money for dozens of others programs, including affordable housing and a new anti-poverty initiative.
The $2 billion account, city officials said, is a response to new government accounting standards that require state and local municipalities to report how much they owe to city retirees for health care costs.
The requirement does not go into effect until 2008, but Mr. Bloomberg is apparently getting a jumpstart and is going beyond the mandate to stash away money to pay for the expenses.
Simply reporting the numbers is expected to increase awareness about how much taxpayer money is being spent on health care for retirees, which could add to the pressure unions are feeling to make concessions in future contracts.
The fund will require City Council approval and some said they expect the $2 billion total to be negotiated down.
It is unclear what the fund means for the rest of the budget. The mayor today will outline how the budget money is being shuffled around.
The mayor has already instructed city agencies to slash a combined $750 million from their budgets. Civilian agencies were told to cut 7% for the next fiscal year and uniformed agencies, like the police and fire departments, were ordered to cut 3.5%.
The mayor’s will also propose another $400 property tax rebate for homeowners and a new 50-cent cigarette tax hike. Both require approval from Albany.
