Civic Report No. 46 November 2005 Mayor Bloomberg & The Limits of Pragmatism by Nicole Gelinas Senior Fellow, The Manhattan Institute for Policy Research Endnotes Campaign Finance Board Debate, Nov. 1, 2001. Bloomberg was referring to a measure of spending that includes federal and state grants as well as city-funded spending; this budget has now grown to nearly $52 billion for the current fiscal year (2006). "The Overview: Taxes and Spending," New York Times, Nov. 4, 2001. "Financial Plan: Fiscal Years 2002 to 2006," City Office of Management and Budget, January 2002. "Budget Summary," City Office of Management and Budget, Apr. 25, 2001. "Review of New York City's Financial Plan," State Comptroller, July 2005. Before 9/11. "Since this administration began, we have acted to reduce the FY2006 gap by $3.8 billion," Office of Management and Budget, January 2005. According to the Mayor's Management Report, crime is down 20 percent in four years. Quality-of-life summonses are up nearly 30 percent since 2000, while summonses for "unreasonable noise" have more than doubled. Fire-response times are up nearly three percent, but fatalities are down. In sanitation, 91.5 percent of streets are considered acceptably clean, up 5.6 percentage points since 2000. 9 If Giuliani's last city-funded budget had grown at the rate of inflation over the past four years, the city-funded budget would be about $33.6 billion today. 10 Bloomberg may have negotiated against taxpayers when it comes to employee pensions. Under the city's recently negotiated contract with the teachers' union, the city has agreed to study the feasibility of pushing the State Legislature to allow teachers to retire at age 55, after 25 years of service, as long as the change represented no cost to taxpayers. But there is no way to implement such a change without significantly exacerbating the city's future pension liabilities. "Philadelphia Mayor Ed Rendell: 1996 Municipal Leader of the Year," American City and County, Nov. 1, 1996. "Next Stop: Competition?" City Journal, Spring 2005. "New York City's $4 Billion Medicaid Bill: What is Driving the Rise in Costs?" and "As Medicaid Enrollment Has Surged, Composition of the Caseload Has Changed," Independent Budget Office, May and June 2003. Author's correspondence with Independent Budget Office, Oct. 27, 2005. Florida has applied for and won a federal waiver to experiment with private managed-care of Medicaid. "New York City's Growing Debt Burden," State Comptroller, July 2005. "January 2005 Financial Plan," OMB. Instructional headcount has decreased by five percent, to 91,000 from 95,000, while civilian headcount at the education department has fallen by three percent, to 21,600 from 22,200. (School enrollment and class sizes have decreased only slightly.) Both the state and federal governments, as major contributors to education funding, pay for a share of the costs attributed to salaries & wages. "Review of New York City's Financial Plan," State Comptroller, July 2005; "The Comptroller's Comments on the Adopted Budget for Fiscal Year 2006," City Comptroller, July 2005; author's calculations based on IBO figures of $77 million in annual cost increases for a one-percent teachers' raise (the figure includes payments for pensions and benefits).

EMAIL THIS | PRINTER FRIENDLY CB 46 PDF PRESS RELEASE SUMMARY: Mayor Bloomberg and The Limits of Pragmatism, by Manhattan Institute Senior Fellow Nicole Gelinas, investigates the Mayor’s approach to the city budget and concludes that the mayor’s strategy of managing the "status-quo" is not sufficient to shepherd New York City’s economy. Table of Contents: Executive Summary About the Author Four years ago: A private-sector approach? Figure 1. Before 9/11, New York already faced successive annual budget deficits that would have represented more than 9 percent of annual city revenues. The past four years: Why managing the status-quo hasn’t fixed the city's long-term fiscal woes Figure 2. Since 2002, growth in city-funded spending on Medicaid, debt service, and employee pensions and healthcare has far outstripped growth in spending on other services. Figure 3. City tax revenues have met or exceeded pre-9/11 projections, due to tax increases, high real-estate taxes due to transaction volume, and the continued economic recovery. Figure 4. City spending has grown faster than inflation during all but one year of former Mayor Giuliani’s second term and of Mayor Bloomberg’s current term. Figure 5. Despite its recovery in tax revenues since 9/11, New York continues to face significant future budget deficits. Thinking differently: Pensions & benefits for city workers Figure 6. Under Mayor Bloomberg, the number of city-funded employees is down . . . but spending per employee is up. Thinking differently: Medicaid Thinking differently: Debt service Figure 7. Debt Service as a Percentage of City Tax Revenues, 1984 through 2015 Thinking the same, or differently? Education spending Managing the status-quo: What happens if we don’t change our ways? Conclusion Endnotes