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July 11, 2023
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NICOLE GELINAS

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WITH NO ROOM TO RAISE TAXES, WHERE WILL ADAMS FIND THE MONEY FOR HIS PRICEY
UNION DEALS?

By
Nicole Gelinas


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June 18, 2023 7:05pm
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Today's Video Headlines: 7/11/23

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MORE FROM: NICOLE GELINAS


 * WITH NO PLANS FOR ENDLESS MIGRANTS, ADAMS CAN'T TRULY CLAIM HIS BUDGET IS
   BALANCED


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 * CITY COUNCIL PRIMARIES TESTING PROGRESSIVES' STRANGLEHOLD OF NYC


 * FOLLOWING FATAL BATTERY FIRES, NYC NEEDS MORE RULES FOR E-BIKES


 * WE'VE ALREADY DEFUNDED THE POLICE — AND MADE THINGS WORSE

Retired city workers are understandably upset the city is changing their health
insurance, forcing them into a plan with less flexibility effective September.

But they shouldn’t be surprised: Something had to give.

Our retirees are getting off easy — so far.

Mayor Eric Adams registered the new contract last week with healthcare provider
Aetna to start administering the less-generous Medicare contract in the fall,
overriding Comptroller Brad Lander’s objections.

Thanks to a higher federal subsidy for the new Advantage plan, as well as
stricter rules for specialty visits and the like, the city expects to save $600
million a year.

Retirees don’t like this.

But they can’t fault Adams.

They can blame their union leadership: Two years ago, the Municipal Labor
Committee, an umbrella of union leaders, agreed with then-Mayor Bill de Blasio
to make the switch, as part of a longstanding commitment to cut healthcare
costs.

Mayor Eric Adams registered the new contract last week with healthcare provider
Aetna to start administering the less-generous Medicare contract in the fall.
Robert Miller

The teachers union dominated the leaders’ vote.

Why? Realism: Even that union understands money is not infinite, and it needs to
help find savings somewhere to fund raises for current workers.

Days before Adams registered the new retiree healthcare plan, the city and the
United Federation of Teachers announced “substantial raises.”

Teachers will get 17% hikes over five years and a one-time $3,000 bonus, plus
annual bonuses that reach $1,000 in 2026.

A few days before Adams announced the new retiree healthcare plan, the city and
the United Federation of Teachers announced “substantial raises.” SOPA
Images/LightRocket via Getty Images

The minimum salary for a first-year teacher will go up more than $10,000, to
$73,349; after eight years, rather than 15, all teachers will earn six figures.

The raises are not the problem.

They’re the best the city can do in an environment of high inflation.


SEE ALSO


ERIC ADAMS’ POLICE DEAL BORROWS A BAD DE BLASIO HABIT

But the teachers’ contract marks the biggest deal Adams has done with nearly
all the city’s labor unions, including the police.

Most include substantial increases to starting pay, plus bonuses, with no
givebacks in terms of extra work required or extra accountability for
performance in return.

The agreements are expensive.

The city has added $16 billion to the budget over five years to pay for them.
This year, the extra cost is $1.7 billion; by 2027, it will be $4.8 billion.

At the same time, the city expects to spend $4.3 billion more on migrants by the
end of next year — a challenge the mayor himself created by attempting to do the
impossible: be the only city on Earth that provides shelter on demand to the
entire world.

Thanks to new labor deals and “asylee” costs, Adams isn’t even close to inking a
budget deal for the fiscal year 2024 with the City Council by next week’s
end-of-June deadline.

The council and mayor can’t agree on offsetting cuts to the $108.3 billion
blueprint.

The “substantial raises” from the UFT will include teachers getting a 17%
increase over five years and a one-time $3,000 bonus. UCG/Universal Images Group
via Getty Images

And the projected deficit for next summer has grown from $3.2 billion to $4.2
billion. Add another billion to that, if migrant costs continue to soar.

Such deficits were manageable when the city’s commercial-property tax base was
consistently growing and Wall Street was booming.

But financial firms from Citigroup to Goldman Sachs are laying off thousands,
and offices overall remain half empty, meaning big write-offs in value.

There isn’t room to raise taxes: Gov. Kathy Hochul just boosted taxes on New
York City businesses by $1.1 billion a year, for the Metropolitan Transportation
Authority.

Next year, she’s set to implement the billion-a-year-levy congestion-pricing
program.

Both are massive hikes to doing business.

Current city-government employees may not be worried about their predecessors’
plight in retirement — they prefer their own raises and don’t appear to have
much sympathy for a generation that had a much easier time amassing home equity
and paying for children’s education.

And the new Medicare plan is not that bad, considering that private-sector
retirees don’t have any former employer to fund their health care.

They pay for Medicare on their own, and people who retire before age 65 find
their own health insurance.

Some say that the teachers’ contract marks the biggest deal Adams has done with
nearly all the city’s labor unions. Robert Miller

But current workers, too, should consider the ease with which the city
downgraded retirees’ healthcare plan.

Unlike pensions, the state constitution doesn’t guarantee any retiree health
care.

Because the benefits are not subject to a constitutional guarantee, the city
hasn’t bothered putting much money behind its healthcare promises —
it’s amassed a $90 billion gap between what it’s pledged and what it’s saved up
to pay these future costs.

140
What do you think? Post a comment.

The only thing that stands between city retirees and no taxpayer-funded health
care is a city law, easily amended in a budget crisis — and union leadership.

Union members would be prudent to observe who their leaders — and implicitly the
city workers themselves — chose this time.

Nicole Gelinas is a contributing editor to the Manhattan Institute’s City
Journal.




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Filed under
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 * city council
 * eric adams
 * medicare
 * unions
 * united federation of teachers
 * 6/18/23

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