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While I’ve complied for a year with the worthwhile protocol of avoiding comment on the winner of the 2001 mayoral race—except on assignment on NY1’s “Wiseguys” segment—Newsday’s invitation to discuss the mayor and the city budget deserves a substantive reply.
Because it’s a crisis and because Mayor Michael Bloomberg’s been in political denial.
Obviously, widening gaps between revenues and expenditures at the city and state levels were inherited by the 108th mayor. But why has it taken Mayor Bloomberg a year to acknowledge what everyone in state and city government knew, especially since Sept. 11, 2001?
To his credit, City Council Speaker Gifford Miller, also new to his office, concluded that some new revenues would be necessary for the city to balance its books. And other chief executives with comparable problems—New Jersey Gov. Jim McGreevey (D), California Gov. Gray Davis (D) and Nassau County Executive Tom Suozzi (D)—all included some tax hikes as part of the solution.
Rather than protect his Albany ally in an election year, the mayor ideally could have used the traditional start-of-term honeymoon to lay the political groundwork for the common sacrifices—including unpopular tax hikes—that would obviously be needed. Instead, the deficit was papered over in part through short-term borrowing and one-shot budget-gap closers, neither of which is available now. They mayor has lurched from Dr. Pangloss to Cassandra, from concluding in June that the budget was balanced and then concluding in October that we may need 25-percent property-tax hikes because it’s as bad as the 1970s. As a result, we’ve lost valuable time, dug ourselves into a deeper hold and made the pain of gap-closing greater.
The city has had plenty of early warning. In January 2001, the New York City Independent Budget Office reported that growing budget gaps starting in 2002 would be “increasingly hard to close” and that “gaps of $3.4 billion and $4 billion forecast for 2003 and 2004 will be even more difficult to close.” Then the economy slowed, the World Trade Center disaster happened, and tax receipts plummeted. In May, the state comptroller said that New York City faced at least a $4.7-billion gap in 2004 and $5 billion by 2006.
There were similar warnings for New York State. And a $10-billion estimate for next year’s state deficit comes from none other than the Republican State Senate Majority Leader Joseph Bruno.
As a former public official, I understand that labor leader do not want to hear about worker productivity improvements and that business leaders don’t want to hear about tax increases. And a governor in an election year doesn’t want to offend any interest group and risk losing their votes. Indeed, in the first gubernatorial “debate” this month, Gov. George Pataki repeated his absurd pledge that taxes wouldn’t be raised next year. (Should he win re-election, how long after Nov. 5 will we have to wait until he says a version of “oh, that $10 billion budget gap! Some revenue enhancements are now prudent”?)
It’s now time for a smart, balanced budget plan to get ahead of the budget crisis. That means: a) some real spending cuts, b) some real tax increases along with a program for tax reform, c) some real personnel attrition by better use of technology to distribute more services and information online, and d) some real productivity packages, ideally in the form of “gainsharing agreements” with municipal unions so their members can capture some of their own savings.
The choices will be politically difficult. The Patrolmen’s Benevolent Association would be sure to fight a switch to one-officer patrol cars in lower crime precincts, even if cops could get some of the $150 million gained in pay hikes. Business interests would oppose closing city corporate income tax loopholes. Suburbanites won’t like restoration of the commuter tax. Entrenched bureaucracies might balk at on-the-shelf procurement reforms that could easily reduce by 10 percent the cost of the city’s purchases, saving $500 million a year. So, the mayor and the winner of the November gubernatorial election must take an all-for-one-and-one-for-all attitude, playing no political favorites.
Whatever decisions are made, they should adhere to the long-held policy of progressive taxation that those who can afford to pay more should pay more. Certainly it would help if Albany restores some of the personal income-tax progressivity that was lost as the top rate was halved under Pataki’s leadership, and if we reduce reliance on regressive sales taxes that are not federally deductible and shift more to progressive income and property taxes, which are.
Ultimately, if the political culture does not change so that the long-term public interest prevails over short-term political expediency, we’ll continue on the budgetary roller-coaster—popular tax cuts in flush years and emergency budget gap-closing efforts when they’re the only alternative to a state take-over.
We’ve lost a year. It’s time to put politics-as-usual aside and adopt a plan no one will like but all will accept because it’s honest and fair.
© Newsday, 2002
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