Nicole Gelinas
opinion
Jun 18, 2023 | 7:05 PM
Retired city officials are understandably outraged that the city has changed its health plan and will be forced into a less flexible insurance plan starting in September.
But don’t let them surprise you. I had to give something.
Retirees are living comfortably for now.
Mayor Eric Adams signed a new contract last week with healthcare provider Aetna to begin administering less-permissive Medicare contracts this fall, over the objections of Comptroller Brad Lander.
The city expects to save $600 million annually thanks to increased federal funding for the new Advantage plan and stricter regulations for things like professional visits.
Retirees don’t like this.
But they can’t blame Adams.
They can also blame the union leadership. Two years ago, the city’s Labor Commission, which is under the umbrella of union leaders, agreed with then-Mayor Bill de Blasio to make the switch as part of a long-running effort to reduce health care costs.
The teachers’ union won a majority in the leader’s vote.
why? Realism: Even the union understands that money is not infinite and needs help finding savings somewhere to finance current workers.
Days before Adams enrolled in a new retiree care plan, the city and teachers’ federation announced a “significant salary increase.”
Teachers will receive a 17% salary increase over five years, a one-time $3,000 bonus, and an annual bonus that will reach $1,000 in 2026.
The minimum salary for first-year teachers will increase by more than $10,000 to $73,349. In her eight years instead of fifteen, all teachers earn her six figures.
A raise is not a problem.
These are the best things the city can do in an environment of high inflation.
But the teachers’ deal is the biggest deal Adams has made with nearly every union in the city, including the police.
Most include significant starting salary increases and bonuses, but without the reward of requiring additional work or incurring additional responsibility for performance.
Contracts have costs.
The city added $16 billion to its budget over five years to pay for those costs. This year’s additional cost he is $ 1.7 billion. It will be $4.8 billion by 2027.
At the same time, the city expects to spend an additional $4.3 billion on immigration by the end of next year. This is a challenge that the mayor himself created by challenging the impossible. It would be the only city on earth to provide shelter on demand to the entire world. .
Thanks to new labor agreements and “exile” costs, the City of Adams is not close enough to reach a fiscal 2024 budget agreement with the city council by the deadline next week at the end of June.
The city council and mayor have not been able to agree on offsetting savings for the $108.3 billion plan.
and the expected deficit is Next Summer increased from $3.2 billion to $4.2 billion. If immigration costs continue to rise, another billion dollars will be added.
Such deficits were manageable in an era when the city’s commercial real estate tax base was consistently expanding and Wall Street was booming.
But financial firms from Citigroup to Goldman Sachs have laid off thousands, leaving half of their offices vacant and plunging in value.
No room for more taxes: Governor Kathy Hochul just raised taxes on New York City businesses by $1.1 billion a year for the Metropolitan Transportation Authority.
Next year, she plans to introduce a $1 billion annual congestion pricing program.
Both are significant increases in the cost of doing business.
Current city officials may not be concerned about their predecessors’ plight after retirement. They seem less sympathetic to a generation that liked their pay raises, built a home and paid for their children’s education much easier.
And considering private-sector retirees don’t have former employers to fund their health care, the new Medicare plan isn’t too bad.
You pay for Medicare yourself, and if you retire before age 65, find your own health insurance.
But even current employees should consider the city’s ease of lowering retiree health care plans.
Unlike pensions, state constitutions do not guarantee Any Health care for retirees.
Benefits are not constitutionally guaranteed, so the city has no trouble spending large sums of money on medical pledges. A $90 billion difference has accumulated between the amount promised and the amount saved to pay for future costs.
The only thing that stands in the way of urban retirees no Taxpayer-funded health insurance is a city law, easily amended in times of financial crisis, but it also requires union guidance.
Members would be wise to watch who their leaders, and implicitly the city workers themselves, chose this time.
Nicole Gelinas is a contributing editor for the Manhattan Institute’s City Journal.
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