Mayor Bloomberg’s 2010 Executive Budget proposal is being portrayed as “grim” — but while the media and politicians focus on proposed spending reductions, a key measure of spending is actually rising at over twice the inflation rate.

The “City Funds” expense budget (excluding federal categorical aid, but including some temporary stimulus funds from Washington) will rise by 3.5 percent in fiscal 2010, which begins July 1, according to the Mayor’s Budget Message.  The Mayor’s Office of Management and Budget forecasts the Consumer Price Index will increase 1.6 percent in calendar year 2010.

The total city funds spending increase over the next four city fiscal years is projected by the mayor at $8.2 billion, or 19 percent, compared to total inflation of about 9 percent and personal income growth of 12.4 percent in calendar years 2009-2013. Seventy percent of the projected spending is attributed to what the mayor calls “uncontrollable” expenses, including pensions and fringe benefits — although these categories of employee compensation are shaped in part by generous collective bargaining deals the mayor agreed to as recently as last fall.

All this assumes that municipal unions agree to health insurance concessions and pension reforms sought by the mayor, which he says will save $400 million next year and up to $818 million by 2013.  Without union concessions, the annual city funds spending increase in 2010 will be more like 4.5 percent, rising to 6.4 percent in 2011.

The following chart compares the spending trend with OMB’s projected inflation and personal income growth for the fiscal plan period.  The numbers come from pages 8 and 22, respectively, of the Mayor’s Budget Message.

city-funds-chart1-2624519

About the Author

E.J. McMahon

Edmund J. McMahon is Empire Center's founder and a senior fellow.

Read more by E.J. McMahon

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