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NY City to fire teachers, cut capital spending

By Joan Gralla

NEW YORK (Reuters) - New York City Mayor Michael Bloomberg on Thursday unveiled a $65.6 billion budget plan for fiscal year 2012 that calls for firing 4,666 teachers and reducing capital spending 10 percent over the next decade.

Bloomberg blamed an approximately $4.4 billion reduction in aid from the state and the U.S. government for painful cuts that have already provoked a clash with school teachers and are certain to draw opposition from other public sector unions.

"The future does have some clouds," Bloomberg, a political independent, told a news conference.

New York City has withstood the recession better than many cities across the country, in part because Wall Street rebounded quickly from the 2008 financial crisis. For the second year in a row, Bloomberg has cut spending. The new budget plan is $300 million less than the current budget.

Bloomberg said the city was creating jobs at a faster rate than the rest of the country, had benefited from a record 48.7 million visitors in 2010, and that its commercial real estate market remained the strongest in the country.

That should help lead to an additional $2 billion in revenue over the next year half than previously forecast.

Even so, the city plans to lay off 4,666 of its 75,000 public school teachers and reduce a further 1,500 teaching jobs by attrition. Another 1,000 to 1,300 workers at other city agencies also will lose their jobs.

Bloomberg said his plan, which requires City Council approval, closes a $4.58 billion budget deficit without tax or fee increases.

Capital spending, which is separate from the operating budget and financed largely by borrowing, would be cut 10 percent over the next decade, realizing savings of about $6 billion. Bloomberg said he had considered a 20 percent cut but was talked out of it by City Council Speaker Christine Quinn.

Quinn, a Democrat, said she might try to restore some programs after Bloomberg proposed cuts in aid to disabled children, subsidies for adoptions, services for juveniles and the homeless.

The budget battle is a prelude to a separate conflict over which teachers to fire. Bloomberg wants those decisions made on merit rather than seniority but the state would have to agree.

"His complete insistence on teacher layoffs seems bizarre to us at this point. We think it's more of a political game and scaring people," Michael Mulgrew, president of the United Federation of Teachers, told NY1 television.

Bloomberg suggested he was free to take on public-sector unions now that he no longer will seek re-election.

"I have nothing to lose, I suppose is a nice way to phrase it," the billionaire mayor said.

"These are problems that never get solved because there is no short-term benefit to solving them. But that's why I ran for a third term," he said.

The mayor also pleaded with state legislators in Albany to allow him to negotiate pension benefits with city employees in order to slow growth in the city's contribution to the pension funds, which he said would otherwise increase from $7 billion this year to $8.4 billion next year.

City workers negotiate those benefits with the state.

(Reporting by Joan Gralla; Writing by Daniel Trotta; Editing by Chizu Nomiyama)