Four years ago, Michael R. Bloomberg ran for the mayoralty of New York based on his experience as a successful entrepreneur and as the manager of his own company. Since he assumed office, the mayor has effectively managed the fiscal status-quo: He has navigated New York through successive multi-billion-dollar budget deficits, including a significant post-9/11 deficit, without cutting back extensively on basic services. But as a strategy for the cityâ€™s continued long-term success, pragmatic management, even when executed by an expert pragmatic manager, has its limits. Even with his managerial skills, abetted by record tax hikes, the mayor has failed to remedy the cityâ€™s persistent budget deficits â€“ and no projection shows the persistent gaps closing in the future.
The city can no longer afford a purely managerial approach to its finances. Out-of-control spending has become the cityâ€™s most pressing problem in need of a radical fix since former mayor Rudolph W. Giuliani controlled crime. Competent management of the cityâ€™s day-to-day finances only masks the problem, and postpones an inevitably necessary resolution.
The mayor argues that the persistent deficit is caused by growth in four areas: Pension & benefits for city workers, Medicaid for low-income New Yorkers, and debt service on capital spending. He has labeled these costs â€œuncontrollableâ€ because they are directed or influenced by parties outside of direct city control, including the governor and the State Legislature (pensions and Medicaid), city labor unions (benefits for city workers), and decisions made by past mayors (debt levels).
But these costs are uncontrollable only because the city has chosen not to control them. To assert control over these costs would require re-thinking the size, scope and functions of New Yorkâ€™s government.
If New York does not start to think differently during the next mayoral term, its fiscal woes threaten to erode much of the progress achieved in other aspects of New Yorkâ€™s governance over the past 12 years.