city labor costs out of control

Since 2007, the mayor’s office has given agencies credit for fringe-benefit cost savings, saying it better reflected the real cost of employing a government worker. But it has never before lumped the costs of providing those benefits into the budgets that agencies must cut.

“This is upping the ante,” Mr. Turetsky said. “If you don’t cut costs through headcount reduction, then you have to come up with deeper cuts,” he explained.

The new approach appears to be a quiet acknowledgment that the city’s labor costs are rising at an unsustainable rate. Most city spending is devoted to wages, salaries, health care and pensions — expenses that have surged in the last decade, as Mr. Bloomberg has granted government workers big raises, and the value of pension investments has plunged, requiring the city to kick in money to cover any shortfalls.