Adam Lisberg, NY Daily News, September 26, 2010
Mayor Bloomberg is on a quest to reduce pensions for retired city workers - because the city's cost for them will rise 6% in the next four years.
Bloomberg is quiet, though, about the bonanza for the bankers who lend the city money - even though the city's cost for them will rise 28% in the next four years.
Why the disparity?
Both of those costs are considered "uncontrollable," because New York can't legally cut a penny from what it owes its retirees or its bankers.
Still, Bloomberg wants to curb costs by persuading Albany to reduce pensions for future employees, despite resistance from state lawmakers who are in debt to public employee unions.
"This issue of pensions," Deputy Mayor Howard Wolfson told the Citizens Budget Commission last week, "it would be a very important legacy issue for this mayor. ... We are going to take this issue on."
There's no similar push to rein in city borrowing, however, and certainly no public campaign against it.
In this year's $63.2 billion budget, New York will spend $7.6 billion on pensions, and $5.4 billion to repay borrowed money.
You've surely seen stories of double-dipping cops or firefighters retiring with princely sums, because it's easy to get struggling taxpayers to point to them in anger.
Quick, though - can you point to the banker who got a fat bonus for structuring a no-bid bond deal to lend the city money?
City borrowing has exploded under Bloomberg, who has sold billions of dollars in bonds and used the proceeds to repair roads and bridges, build schools and police stations, and reverse decades of neglect.
Those bonds work just like mortgages: It takes decades to pay them off.
Most of those bonds were sold without competitive bidding, though, says Controller John Liu - who has started using competition to bring down the city's rates and payments on new debt.
In one bond refinancing last summer, his office opened the deal up outside the usual circle of top banks like Citi, Bank of America and JP Morgan.
That brought in a smaller minority-owned firm, Loop Capital Markets, which structured the complicated deal to save New York $20 million more than it expected.
"Lowering the cost of borrowing should be a priority," Liu said. "The city taxpayers are a major, major customer of many of these large institutions, and we haven't leveraged all of our purchasing power."
Bloomberg hasn't ignored New York's growing interest payments. He has spread out long-term spending to reduce its borrowing needs, kept its credit rating high and quickly refinanced bonds when interest rates drop.
His finance commissioner, David Frankel, even negotiated a better deal last week with a bank that handles some nuts-and-bolts city business like processing checks - saving $600,000 a year.
"We are always working with lenders to try to reduce the cost of debt service, and we've had a lot of success," said Bloomberg spokesman Marc La Vorgna. "And we do have a lot of leverage as a large customer."
The mayor is close with Wall Street. He hobnobs with its titans, made his fortune selling it data, and respects its power as New York's economic engine.
So it's hard to imagine Bloomberg talking publicly about city banks the way he talks about city workers - saying they should accept sacrifices to help keep New York solvent.
He talks to those titans privately, though, at dinner parties and charity functions. Perhaps he should raise the idea.