NEW YORK — In a development with big implications for New York’s mayoral race, AFSCME District Council 37 Executive Director Lillian Roberts announced the union’s decision to endorse Democrat Bill Thompson for mayor.

The announcement came at the union’s Aug. 13 Political Action Committee meeting.

To cheers, echoing the Obama campaign, of “Yes, we can!” Thompson, currently the city’s comptroller, entered the room of 500 activists, surprising those in attendance.

This promises to be no paper endorsement. DC 37’s phone banking and get-out-the-vote operations have long been much courted by politicians, both Democrats and Republicans.

“New York City is at a crossroads,” Thompson said, describing what a third Michael Bloomberg term would mean. “We can continue in the direction we have been going over the last eight years, in a city where we can’t afford to live, with the working and middle classes pushed out, with jobs going to Wall Street and not working people, and housing we can’t afford. Or we can move in a different path for New York.”

“This is a great day, to receive the endorsement of the people who make the city work. I have a weapon in this fight money can’t buy,” he said, referring to Bloomberg’s astronomical $26 million already spent on media advertising in his campaign. “I have you!”

The announcement served as a stinging rebuke to the mayor’s pose as a “friend of municipal labor” in this campaign. Coming from New York City’s largest municipal union, with 125,000 active members and 55,000 retirees, it was a blow to the aura of inevitability carefully painted by the Bloomberg campaign around a third term.

Polls show a dramatic drop in support for Bloomberg since May. In the wake of labor’s role in electing Obama last November, DC 37’s endorsement also points the way toward much-needed labor electoral unity in New York state and city politics. This also happens in the context of the still unfolding economic crisis, as Mayor Bloomberg and the forces behind him seek to place the burden of the crisis on poor and working people, rather than taxing the rich.

The endorsement of Thompson also builds on DC 37’s recent grassroots mobilizations against Bloomberg’s union busting program of contracting out.

Stewards and rank and file members have fanned out this summer to communities around the city, spreading the message against a “shadow government” marked by $9 billion a year spent by the Bloomberg administration on outside consultants (out of a total budget of $60 billion). Leaflets have documented how city workers can do the job better and for less expense.

This grassroots mobilization followed the union’s effective media mobilization in May. This included a campaign of extensive radio and subway ads, showing municipal workers on the job for New Yorkers. It attacked the city’s use of outside contractors as an attempt to destroy the civil service system. It urged taxpayers to join the union in the fight to protect public services.

Many activists on DC 37’s Lobby Day in Albany this spring were struck by how many of the issues chosen were associated with Bloomberg policies. Lobbying efforts included defense of the present pension system against attacks by the mayor, opposition to the dictator-like “mayoral control” of the schools, and calls for curbs on privatization and contracting out of city services.

Almost immediately the Bloomberg campaign sought to spin DC 37’s endorsement its way, charging that Thompson won the endorsement by making a “secret deal” with DC 37. Thompson refuted these charges, countering that, far from involving any “deals,” the endorsement was based on his substantive responses to questions put forward by the union’s screening committee.

“I was asked questions about a city where members could live,” Thompson said. “I was asked about housing affordability. I was asked about a school system that is not just about standardized testing, but about competing on the highest level. I was asked questions about jobs being contracted out, which has accelerated tremendously under the Bloomberg administration.”

“New York City is at a crossroads,” Thompson repeated. “Do we want another eight years of this path? I want another path for New York.”

As DC 37 members chanted once again, “Yes, we can!” Thompson led the crowd of activists in a new slogan, building on the promise of the Obama campaign’s “Yes, we can!” with “Yes, we will!”

The meeting closed with an announcement that DC 37 would be the lead contingent in the Sept. 12 Labor Day march.