Wall Street Journal
February 10, 2011

Fire, Police Unions Fight for Bonuses


New York City's police and fire departments have a historic rivalry.

Their commissioners have clashed in the recent past over jurisdictional issues like which department should take the lead in a disaster. There have been debates and hearings over who should be the primary agency in certain emergencies such as pulling people out of the East River. Every year they hold a "Battle of the Badges" event in which cops box firefighters in Madison Square Garden and the fighting among the two agencies rarely is contained to the boxing ring.

But on Wednesday the heads of the police and firefighter unions stood shoulder-to-shoulder on the steps of City Hall united against Mayor Michael Bloomberg, who they both called a "liar." What brought the rivals together? Money.

For the past month, Mr. Bloomberg has renewed a call to eliminate a $12,000-a-year pension supplement for about 60,000 retired police officers and firefighters that the mayor has repeatedly called "Christmas bonuses." Mr. Bloomberg said the city is "now kicking in more than $600 million a year to subsidize it" at a time when they're trying to close a $2 to $4 billion budget gap for the upcoming fiscal year.

"Nobody wants to get cut back—I understand that," Mr. Bloomberg said on Wednesday.

But, he said, "We have to make a decision. Do we want to send out Christmas bonuses or have more teachers? It's that kind of decision."

At their joint news conference, Stephen Cassidy, president of the Uniformed Firefighters Association of Greater New York, and Patrick Lynch, president of the Patrolmen's Benevolent Association, bristled at the suggestion that Variable Supplement Fund pension payouts were "bonuses."

"He suggests it's a Christmas bonus as if the city is reaching into its general fund and giving the police officers and firefighters a Christmas bonus," Mr. Lynch said. "No. That is our money."

The union chiefs said that the Variable Supplement Fund payouts date back to negotiated contracts between the city and the fire and police unions in the late 1960s. At that point Mayor John Lindsay wanted the ability to invest money the city was setting aside for police and fire pensions in the stock market. At that time, the law required that the pension-fund money could only be invested in fixed-income securities like bonds and mortgages. In exchange, the unions sought to increase their pensions from 50% of their final salaries to 60% percent.