Mayor Offers Preliminary Budget;
No New Taxes And Few New Cuts.
Rivals Call It Too High or Too Low.

By Henry J. Stern
January 28, 2005

Thursday morning at 8:30, in the Blue Room at City Hall, Mayor Bloomberg presented his preliminary budget for fiscal year 2006, which will begin July 1.  The budget now goes to the City Council, which will hold public hearings, mainly hearing speakers who want more city funds for their organizations or their projects.  The mayor must submit the executive budget in late April, and the Council will act on it, usually in early in June.  For the last three years, after some sturm und drang, the mayor and the Council have agreed on a budget, which has been adopted on time, unlike the Albany model.
 
The mayor presented an optimistic budget, relying on increased revenue from real estate taxes and other sources to achieve the balance required by law.  There were few substantive cuts, and those that were made in libraries and cultural institutions are traditionally restored by the City Council, which then claims credit (and contributions) for being of assistance.  Look, everybody needs campaign funds for the city to match, at 4-to-1 or better.  The mayor proposed no major service reductions or tax increases.  The $400 rebate to homeowners and co-op and condo owners that the mayor instituted last year with the permission of the legislature continues by law unless it is repealed.  Nobody is talking repeal.  The rebate is often offset, however, by increases in the assessed value of residential real estate. 
 
As one could predict, all the other mayoral candidates denounced the budget.  It was attacked by some for being too generous in its revenue assumptions, suggesting that the money would not come in and the budget would become unbalanced.  It was attacked by others for being too stingy in its appropriations, failing to meet the city's needs.  Some members thought revenues would be more than adequate, that the city could afford to spend additional hundreds of millions, and that they knew just how to spend these funds.  We link to their comments, as reported in the press, so you can see for yourselves what the mayoral aspirants are telling us (see below).
 
There are a number of potential problems in the budget:

1) It is possible that the revenues the mayor projects will not materialize during the fiscal year.  If they do not, there will have to be a mid-year correction, reducing appropriations.  If there is more money available than predicted, the city is likely to spend every penny of it, since fiscal restraint is rarely the rule, particularly in election years.

2) Nobody knows what the final effect of the Campaign for Fiscal Equity court decision will be, and whether the courts, or the Legislature, will require the city to spend more money on education.  If they do, there goes the budget.  It is quite possible that the lawsuit, which began in 1993, will not be resolved until fiscal year 2007, or later.

3) The state and federal aid which the mayor anticipates may not materialize to the extent that he expects, and additional burdens on the city may be imposed if the transit system does not receive sufficient public subsidies.
 
The mayor made his power point presentation on an unfortunately tiny screen.  But everyone had hard copies from which to follow him.  You knew that he was familiar with the material, and he presented it in a logical, workmanlike fashion.  He did not wear a body mike or show Mayor Giuliani's bravura memory for facts and figures, but he had the data all at hand and explained them in language reporters (including this one) could understand.
 
The budget the mayor presented was shaped to a considerable extent by political requirements.  This is, after all, an election year.  The ritual denunciations of the budget by his rivals in both parties were no surprise.  You would have to wait a long time to hear one of them say, "This is pretty good, but I think I could do better."
 
If Mayor Bloomberg had proposed serious measures to reduce the budget, he would have been denounced by all the other players as a billionaire Scrooge, a hard-hearted monster, squeezing pennies from the poor, putting families out of work, dooming children to disease, shortchanging their education, allowing them to burn to death for lack of firefighters, and giving criminals free rein to terrorize the city.  The mayor offered statistics showing that homicides, fire deaths and even fatal traffic accidents had declined to near record lows in 2004, despite smaller staffs in the relevant agencies.  He defined the job of a commissioner' as "doing more with less," which accurately describes the last two city administrations.
 
While it is true that the budget must be balanced by law, Judgment Day comes not in January but in June and July. The Council will hear the people, tweak the budget, provide for their priorities, and ultimately find ways to pay for the additions they will undoubtedly make on behalf of their consciences, their constituents, and their contributors.
 
Having observed this process since before most of you were born, as a commissioner, councilmember and Board of Estimate staff member, I have a somewhat different perspective from the newbies.  Let me share some thoughts with you. First, remember that the January figures are preliminary, not final. We know that there are millions of dollars of fat in the budget.  However, cutting fat hurts, particularly if you, your friends or your causes turn out to be the fat.  No one likes to be found redundant, although many city employees are.  If cuts must be made, let the other guy suggest them. You're pretty safe, he is not likely to.
 
Budgets are not set in stone.  We have received a pretty snapshot of the city's financial plan, fueled by hopeful estimates which may or may not materialize.  But we know that the economy, particularly real estate values, is on an upswing.  It is unlikely, in the absence of tragedy, that the increase will become a bubble.
 
The problem for homeowners is that if your house or apartment rises in value to, say, a million dollars, and you pay property, taxes on the higher valuation, the city does well, but you do not profit until you sell the house.  But if you do that, where will you live?  In the car? 
 
There was extensive coverage in today's newspapers of the budget submission.  Details on mayoral priorities and funding for agencies can be found in the links below.

Links:

• Times: "Mayor Budgets for Tax Rebate and No Big Cuts," by Mike McIntire, ppB1, B7; "Rivals in Mayor's Race Assail Bloomberg's Budget," by Winnie Hu, pB7

• Sun: "The Bloomberg Budget," editorial, p14; "Bloomberg Budget Lets Taxes Sunset, Counting on Help From D.C., Albany," by Dina Temple-Raston, pp1, 3; "Opponents Attack Mayor on Budget Plan," by Jill Gardner, p3

• Newsday: "Mayor deftly turns deficit to his advantage," analysis by Dan Janison, pA24; "Exercising fiscal restraint," by Dan Janison and Bryan Virasami, pA24; "Plan calls for more fees, fines," by Bryan Virasami and Dan Janison, pA25; "Bloomberg seeks to delay some school construction," by Ellen Yan, pA25

• News: "Hizzoner says he's got chops to run on, but troubles loom," analysis by David Saltonstall, p16; "Mike boasts of 'tough choices'," by Michael Saul, pp17; "New math adds up to tardy school repairs," by Kathleen Lucadamo and Joe Williams, p17

• Post: "Mike's Mandate Miseries," editorial, p28; "$951 mil surprise in Bloomberg's budget," by David Seifman, p4