How much will union raises really cost?

The message screamed loudly in the Daily News last week and in yesterday’s City Council budget hearings: New York City will go over a fiscal cliff if it gives retroactive raises to hundreds of thousands of municipal employees who have been working without contracts.

The city Office of Management and Budget calculates that raises including backdated pay increases — providing income union members would have received had their contracts been renewed sooner — would cost $7.8 billion in 2014 and $3 billion a year after that.

But the actual cost of a deal with municipal unions is far from certain, and other estimates have been lower than the mayor’s. The Citizens Budget Commission, a nonprofit watchdog, projects the initial cost at $7.2 billion. And the city’s Independent Budget Office tallies just $4.5 billion.

What accounts for the difference? It’s all in the assumptions. The Mayor’s Office started with an estimate of $3.7 billion to account for retroactive raises of 4 percent for the United Federation of Teachers, whose members have been working without a contract since late 2009, as well as some other workers left without contracts in a round of talks that ended in 2010.

And that, in turn, led to the premise that other workers would get retroactive raises too.

“If you did increases for the teachers retroactively, it’s kind of hard to believe that you wouldn’t have to do it for all city employees,” Mayor Bloomberg said in his presentation of the 2014 executive budget last month. Bloomberg’s estimate includes raises of roughly 2 percent for other city employees dating back to the end of their contracts expiring between 2010 and 2013, bringing the city’s estimate cost of retroactive raises up another $4.1 billion.

The Citizens Budget Commission did a similar calculation but assumed that aside from the teachers, workers whose contracts expired before 2010 would not get retroactive raises. And the Independent Budget Office made more modest assumptions than the mayor or budget commission did about how many years those 2 percent raises would cover.

“Everybody’s just working on scenarios,” said IBO chief of staff Doug Turetsky, of the various estimates being bandied about. “There’s many, many different ways you can try to resolve it.”

Deciding the amount the city will — or will not—  pay in retroactive raises to union employees is something more likely to be worked only out after the upcoming mayoral election.

“There is no momentum to settle these contracts by the end of Mayor Bloomberg’s term,” said Maria Doulis, director of city studies at the CBC. “It will likely fall to the next mayor to do so.”

Mayoral candidates are all over the map (and the New York World Mayoral Matrix) on this issue. Democrat John Liu, who last Wednesday clinched an endorsement from the city’s largest municipal public employee union, District Council 37, has said he believes unions deserve some form of retroactive increases. Just how much is up for negotiation, though.

“It’s probably not going to be the entire amount of the retroactivity, but it’s not going to be zero either,” he said as he accepted DC 37’s endorsement last week.

Among the candidates at the other end of the spectrum is Republican Joe Lhota.

“The budget right now has no money in there, whatsoever, for any labor settlements, either going back or going forward,” Lhota told Brian Lehrer.

But will the unions ever agree to settlements with no back pay?

The Independent Budget Office has called this question “by far the largest fiscal uncertainty” facing the city and “a gamble that may be hard to win.”

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