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Mike's Borrowing Binge
New York City's finances may be headed for the red - and faster than most folks think.
Doug Turetsky of the city's Independent Budget Office has a scoop on GothamGazette.com, the Web site of Citizens Union: The city, he reports, is looking to borrow not $1.5 billion, as advertised, but $2 billion.
"The city already borrowed $1 billion last October . . . and the mayor is proposing to borrow another $1 billion next fiscal year, which brings the real total to $2 billion," writes Turetsky.
Mayor Bloomberg, he warns, "may have not fully detailed how much would be borrowed."
Mayoral aides insist the extra $500 million will be reimbursed by the Federal Emergency Management Agency in connection with 9/11-related costs.
But will it be? And, if so, when?
Meanwhile, the mayor is calling for the city to borrow another $250 million from the Municipal Acceptance Corporation.
And then there's the possible sale of future Off Track Betting revenues to realize instant cash, a scheme reported yesterday by The Post's David Seifman.
Not to mention the City Council's own efforts to push the mayor to borrow even more, which can't be far off now that he's opened the door to the idea.
New York learned the insanity of taking out long-term loans to pay current bills in the mid '70s, when such practices nearly bankrupted the city.
Budget watchdogs are said to have swallowed the billion-and-a-half borrowing pill only because Bloomberg is new to the job and facing a daunting deficit, the result of the recession and the terrorist attacks of September.
Sure, no one likes to borrow money - not to pay day-to-day bills, anyway. Even Bloomberg, who as a successful businessman surely understands the issue, has made it clear that he detests the idea.
So why do it?
As Steven Malanga shows on the preceding page, Bloomberg resorted to borrowing without first cutting the budget to its bare bones.
Yes, he trimmed at the margins.
And those affected - library users, for example - may be inconvenienced a tad.
But the mayor plans to eliminate only 5,000 job slots - out of 365,000!
No one - not a single worker - will be laid off. Nor does he plan on significant productivity gains from the unions.
And here's the biggest proof that Bloomberg would rather borrow than cut spending: Asked yesterday by The Post if the mayor would commit any unexpected revenues to reducing his borrowing, his staff declined to take a stand.
"It's way too premature" to make such promises, a Bloomberg official said. "We're not thinking about hypotheticals."
But the mayor himself has acknowledged that revenues could be higher or lower than anticipated.
If he really does loathe deficit financing, then why not commit to keeping it to a minimum? Why not promise to use any extra funds to keep the borrowing down?
A cynic would conclude that Bloomberg wants to spend the extra money - in addition to the borrowed funds. (And when it comes to fiscal irresponsibility in this town, cynics are rarely proved wrong.)
If this is the mayor's intent, it's dangerous business indeed - putting the city's credit and financing at serious risk.
Moreover, the new debt will have to be repaid down the road - further bloating spending.
And already sky-high taxes.
That alone makes Bloomberg's plan a bust: As Malanga points out, spending and taxes need to be reined in, pronto, to boost the economy.
Bloomberg's failure to see it that way - at the very moment that Gotham is trying to overcome its economic woes - could do the city untold harm.
©2002 New York Post
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