“Legacy Costs” Are Eating Up A Quarter of New York City’s Budget


In late January, Mayor Bloomberg released plans for his twelfth and final budget. In it, we see an attempt on behalf of the Mayor to leave the City in a fiscally solvent manner when he leaves next year, including a culmination of spending preferences (higher city agency budgets) and an unfortunate reality of cutback measures (layoffs, attrition, etc.). We’re left with a budget totaling about $70.1 billion to close a $1.1 billion deficit shortfall.

On a larger scale, City Council is exactly like most ordinary Americans (read: us). New York City’s budget racks up bills that eventually have to be paid off one way or another, all of which are promises made in the past by politicians to give this amount money to so and so. Following this trend, the IOUs gradually take up a larger portion of the budget. And this time around, it looks like these “legacy costs” will suck up nearly 25 percent of all of our government’s funds in the next two years.

According to data collected by the Citizens’ Budget Commission, all of the Council’s expenditures have skyrocketed.

Pension costs in 2005 were $3.2 billion; now, they’re $8.2 billion. Healthcare costs in 2005 were $1.2 billion; now, they’re $2.4 billion. In total, the “legacy costs” in 2005 were $5.8 billion; this coming fiscal year, our past promises are a whopping $17.8 billion .

This leaves a quarter of the budget solely dedicated to neutral spending – of course, these workers were promised pensions and healthcare benefits in the past but, from a citywide perspective, we’re left with an enormous loss of money that could go to much more utilitarian purposes. And it’s a black hole of resources that’s basically off Bloomberg’s plate come November – this is a budgetary dilemma that the successor will have to recognize and deal with almost immediately upon entering office.

So much for owing people money.