NEW YORK — New York City is withholding vital funds earmarked for the widows and children of cops, firefighters and other uniformed city employees who died in the line of duty as the agency in charge of the funds reprioritizes its debts, the Daily News has learned.

Since the beginning of the fiscal year, the city’s Office of Labor Relations has stopped providing $850,000 in quarterly payments earmarked for widows and children of fallen employees through the agency’s Health Insurance Stabilization Fund.

The payments go to the city’s unions, which use the money to offset prescription drug, eye and dental exam costs for families of city employees who died on the job.

Margaret Mosomillo, the widow of Police Officer Anthony Mosomillo, who was shot and killed while trying to arrest an ex-con in 1998, used these funds just this week, she said.

“I picked up a prescription, went to the dentist, and had my yearly eye exam,” Mosomillo told The News Wednesday. “We’re being victimized all over again. It makes me so emotional to hear this. [My husband and others] made the ultimate sacrifice, and they want to cut the funds. It just doesn’t make sense. For what?

“The coldness in which this city is treating us,” she said. “To withhold such a small amount of money when they spend millions on migrants. It’s unacceptable!”

The city has provided the money from the Office of Labor Relations Health Insurance Stabilization Fund since 2001. So far, the office hasn’t missed any of its quarterly payments, but on July 1 the agency announced it won’t pay out anything from the fund until it can “collectively bargain” the debts it currently owes.

Since there is a lag in issuing the checks, no one has felt the pinch yet. However, if the city doesn’t unfreeze the accounts, survivors of city employees who died on the job could begin missing checks as soon as early next year, union officials said.

“It’s just shameful,” Vincent Vallelong, the president of the NYPD’s Sergeants Benevolent Association said. “[These men and women] have given so much to the city — more than any politician and any business — and they should never, ever at any time think that their benefits are being held up for ransom.

“The city is being extremely shortsighted. It’s foolish,” he said. “I get they’re trying to work out a deal and get new vendors, but there should be a guarantee that this money won’t be touched, and there isn’t.”

During a recent meeting, the Office of Labor Relations questioned why the money earmarked for widows and children of fallen cops and firefighters “should take priority over other amounts owed to the city and vendors,” union officials said.

“That callous response is nothing short of pathetic and reeks of incompetence,” Vallelong said.

Harry Nespoli, the chairperson of the Municipal Labor Committee, which represents the city’s unions, pointed out why these families should be given the highest priority in a letter to Renee Campion, the commissioner of the Office of Labor Relations.

“Widows and orphans had their lives turned upside down by the death of their family member in the service of us all,” Nespoli wrote. “This contribution, while not bringing them back, in some small way helps compensate them for that loss.”

Union officials believe the city is using these payments as leverage in an ongoing financial battle with the unions.

“[Withholding the payments] is a discretionary action and serves to have the least financial impact,” one union official said. “It does however create the most imposing moral impact on those surviving after a line-of-duty death of a loved one when the person who died is their main source of income.”

An email to the city’s Office of Labor Relations was not immediately returned.

If the city doesn’t release the funds, unions will pay for the much-needed medical care out of their own pocket, Police Benevolent Association President Patrick Hendry said.

“The PBA is never going to allow our line-of-duty families to be deprived of the benefits they deserve,” Hendry said. “However, the city has a moral and legal obligation to provide those benefits. We expect the city to honor its obligation. This issue should not be entangled in other collective bargaining matters. We hope to see it resolved quickly before any benefit payments are missed.”

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