The Gathering Storm - 2002
By Henry J. Stern
April 29, 2002


    Four months into his term, Mayor Bloomberg is beginning to feel crosswinds from people who are not satisfied with his budget proposals.

    The potential adversaries include people who want to be mayor themselves; political leaders who want access to the patronage and contracts they have not received for many years; and advocates for various causes who believe, in good faith, that the city should spend more, tax more, redistribute wealth, and provide additional social services.

    A number of factors contributed to Bloomberg’s surprising election.  Democrats who disliked Mark Green’s personality or ideology played a role, as did Democratic party leaders who wanted another shot at the mayoralty in 2005.  A Green victory would have tied up the position until 2009, a long time to wait for a job.  By deserting Green, they helped themselves.  (A similar situation occurred in 1997, when Ruth Messinger was the Democratic nominee, and it was in the interest of many Democratic politicians to see that she lost, so the mayoralty would be an open race in 2001, as it was.)

    Nonetheless, the large majority of Bloomberg supporters were people who agreed with most of Mayor Giuliani’s policy goals and wanted them continued.  These people are Democrats and Republicans who see themselves as tax-paying, hard-working, God-fearing New Yorkers, though they are unsympathetic to those who do not share their values.  There are also voters, including a surprising number of liberals (small and large  “L”) who supported Bloomberg for his honesty and independence from political machines.  Many believed that anybody who could make four billion dollars legitimately deserved a chance to manage the city.  And some people just liked his commercials.

    The mayor’s views are, however, at variance with the city’s progressive establishment, which consists of labor unions, Democrats and their minor-party allies, social agencies, and service providers.  There is also a difference in viewpoint between those who make proposals and those who have to pay for them.  The latter tend to be more realistic and practical.  The agenda of the spenders has some merit, but how do you deal with a $5 billion budget gap?

    The issues now on the table include settlement of labor contracts with teachers and public safety employees, including productivity improvement.  These changes in work rules are only obtainable while wage increases are being negotiated.  For example, what good would it do to add twenty minutes to the teachers’ workday if they don’t spend the time teaching?

    The Council is considering other legislation that would impose costs on the city, such as raising wages of employees of private businesses which have city contracts.  The restoration of budget reductions, particularly in the area of education and social services, is high on the Council’s agenda.  To pay for this, a variety of new taxes are proposed which would affect the city’s economy in various ways, some more negatively than others.

    City taxes, in general, require the consent of the State Legislature to be imposed.  Such approval is highly unlikely to be granted without the support of the mayor and the governor.  One measure the City Council could enact without Albany’s permission is an increase in the real estate tax.  This would offend both large property owners, who are rich and powerful, and small homeowners, who are numerous.  It is therefore not likely to pass, although anything is possible when the City Council meets.  Although city property taxes on homes are substantially lower than in adjacent Nassau County, an increase on office buildings would raise commercial rents even higher, and make the city less competitive with the suburbs and New Jersey.

    If there is a proximate (not a root) cause of the city’s fiscal problem, it is that, in the seven fat years of the 1990s’ prosperity, the state and the city sharply reduced taxes.  They did it to attract and retain business and people.  New York was an extremely high-tax state, now it is somewhat less so.  The trouble is that now, in a sideways or recessional economy, tax revenues are not enough to support the rising cost of city services.  The situation was worsened, of course, by the terrorist attack on America.

    These issues will occupy city government for the next eight weeks, as the budget must, by law, be adopted in June. (The city’s fiscal year begins July 1.)  Negotiations on the budget will take place between the Mayor and the Council.  Either they will reach agreement, or there will be two separate budgets.

    Last year was the first time since consolidation (1898) that New York City elected a Republican mayor to succeed another Republican mayor. In our current system of governance, the Mayor, or whichever party wants to spend less, has the better hand.  Mayor Bloomberg has the additional advantage of a Republican state senate.  And Mayor Bloomberg, although undoubtedly ideologically suspect to conservatives, is a Bush and Pataki supporter.  The Republicans are highly unlikely to hand over fiscal control of the city to relatively radical Council Democrats.

    What we will learn in the next two months is whether the Mayor will stand with the views of most of the people who supported him, or bend to the will of local elected officials who are responsible to small but intense constituencies.  The hardest part of governing is standing up for what you think is right when many influential people disagree with you.   The first year sets the tone for the administration.  We know that responsibility will prevail, and that the City will grow stronger.

Henry J. Stern is the director of NYCivic.