Mayor Rudolph W. Giuliani pledged yesterday to cut 15,000 jobs in the next 15 months, and in exchange the Municipal Assistance Corporation gave him $200 million to finance his severance plan to get about half of those workers to leave.
By winning the use of the $200 million surplus, Mr. Giuliani did what his predecessor, David N. Dinkins, and other officials had not been able to do since the surplus developed in 1990. In fact, the corporation has until now resisted several efforts to use the money, including a plan by Mr. Dinkins to pay for early retirements for workers in 1992 and a proposal by Gov. Mario M. Cuomo to use it for education.
The money will finance Mr. Giuliani's plan to offer severance payments to 80,000 city workers in the next three weeks in an effort to cut 7,600 jobs by the end of June. But the Mayor will then face the even more difficult task of cutting more jobs to meet the promise of a total of 15,000 by the June 1995 deadline.
In fact, about 2,500 of the Mayor's proposed cuts would fall in the Board of Education, but the Schools Chancellor, Ramon C. Cortines, has so far agreed to lay off only about 700 workers and to not fill 500 vacancies. Yesterday the Mayor criticized the Chancellor's position, saying he was not attacking the board's "bloated overhead" with enough vigor.
In an interview yesterday, Eugene J. Keilin, the corporation's chairman, said it was Mr. Giuliani's promise to permanently reduce the city's payroll of 216,000 workers, along with a "historic agreement" he struck with the unions on Wednesday, that persuaded the corporation. The commitment, he said, was "the return on M.A.C.'s investment."
But the approval came only after Mr. Giuliani agreed to the condition that requires the city to repay part of the $200 million if the Mayor does not cut the 15,000 jobs. "It's not a string," Mr. Keilin said yesterday. "It's a rope."
Still, the condition could work to Mr. Giuliani's advantage, giving him additional leverage to squeeze further concessions from the municipal labor unions and to bargain with the City Council, some of whose members may challenge deep job cuts.
The severance packages, which were offered to the first of the 80,000 municipal workers yesterday, represent a major part of Mr. Giuliani's preliminary plan to close a $2.3 billion gap in the budget for the fiscal year that begins on July 1.
It remains to be seen, however, how many workers will accept the offers, which range from $3,500 or two weeks pay for newly hired workers to $15,000 for workers with 30 or more years of service, as well as nine months of health care benefits. Under the Mayor's plan, the remainder of the 15,000 jobs would come from the cuts at the Board of Education and attrition in the city's other agencies.
The Mayor and the city's municipal unions reached an agreement on the severance offers on Wednesday night. That intensified the flurry of negotiations with the Municipal Assistance Corporation, which ended after midnight yesterday.
Less than two weeks ago, Mr. Keilin expressed reservations about the Mayor's severance plan. He said that by excluding police officers, firefighters and teachers, the Mayor made it more difficult to achieve the job cuts he proposed -- reservations that he reiterated yesterday.
However, he said the commitment to reduce jobs by 15,000 would force Mr. Giuliani to re-examine his refusal to touch those workers if he could not find enough politically acceptable cuts in agencies he has chosen for deep reductions, including the Departments of Social Services, Homeless Services, Parks and Recreation and Transportation.
"He's the Mayor and he's entitled to a crack at it, and if he can do it and persuade the Council to do it, then it's done," Mr. Keilin said. "We believe that to do the things he wants, he may have to do other things he doesn't want to do."
Under the agreement, the city will have to repay part of the $200 million surplus if Mr. Giuliani fails to remove 15,000 jobs from the payroll by June 1995, leaving a total of 201,200 jobs financed entirely by the city. The penalty would work out to about $13,000 for each worker below 15,000.
The commitment could force the Mayor to take tougher steps if the severance packages do not attract enough workers over the next three weeks. In announcing the severance program, Mr. Giuliani pointedly refused to rule out the possibility of layoffs to help close the budget gap.
In announcing the agreement at City Hall yesterday, Mr. Giuliani praised the corporation and the unions for their cooperation. And he said that the agreement, even with its conditions, was essential to cutting the city's payroll by 15,000 jobs.
"What we're saying is we're committing the city to accomplishing that," the Mayor said. "Not only are we very comfortable with that, it's a good target for the city to have."
The corporation, created by the state in 1975 as the city teetered on bankruptcy, markets debts for the city. As the city climbed out of its fiscal crisis in the 1980's, the corporation generated a series of surpluses byreorganizing its debts. The corporation has parceled out those surpluses, totaling $3.5 billion, over the years.
Greater Flexibility
The newest surplus of $200 million has been the subject of intense lobbying since 1990. Mr. Dinkins argued, unsuccessfully, to use it to pay for labor settlements, to pay for an early retirement plan and to create an endowment for innovative public schools. Other officials, including Governor Cuomo and City Council Speaker Peter F. Vallone, had also proposed using it to pay for education.
The corporation, however, has insisted that the surplus be used only to reduce the size of the city's government, permanently moving spending in line with revenues.
The corporation's executive director, Quentin B. Spector, said an important tool in doing that was the agreement the Mayor reached with the unions to suspend civil service and union restrictions that prevent the city from shifting workers between agencies. That, he said, would allow the Mayor greater flexibility in honoring the commitment without having to repay part of the surplus.
