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City Won't Bleed From Bloomberg's Ax


City Won't Bleed From Bloomberg's Ax

January 4, 2002
Urban PolicyNYC

Overshadowed by his predecessor for most of an all-too-brief transition period, Michael Bloomberg has emerged into the mayoral spotlight with an impressive early show of fiscal leadership.

In telling his commissioners to plan for spending cuts of 5 percent to 20 percent, Bloomberg took an essential first step toward reducing a fiscal 2003 budget gap estimated at upwards of $3.6 billion. The substance of the new mayor's policy has been matched by the refreshingly no-nonsense tone of an experienced private-sector manager.

Predictably, some city officials are already balking at the notion that they can or should do more with less. They'd better wise up - if Bloomberg is as serious as he appears to be, this is only the beginning.

But is it realistic to suggest that city government can continue to function effectively on up to 20 percent less?

The answer: Absolutely, yes.

First of all, it's not as if City Hall has been subsisting on a starvation diet these past few years. City spending rose by 26 percent from fiscal 1997 to 2001, well more than double the rate of inflation. Rudolph Giuliani's final budget, adopted last June, effectively incorporated a $2-billion operating deficit, which the former mayor patched over with surplus funds accumulated in prior years.

In other words, even before the World Trade Center attack caused revenues to plummet below projections, the city was spending at a simply unsustainable rate. Sooner or later, something was going to have to give.

A prime reason for this spending spurt has been the growth in the city's payroll. Counting seasonal and part-time employees, the city's "full-time equivalent" workforce now stands at 288,000 - a whopping increase of 31,000 since 1996, Giuliani's third year in office, and 11,000 more than the peak level under former Mayor David Dinkins.

Reducing the head count by 25,000 - the target suggested by an advisory commission to Dinkins in late 1993 when the workforce was considerably smaller - would save nearly $1.5 billion in current terms and make a good head start on closing the gap. Much of that reduction will have to come from the Board of Education, which has added 15,000 teachers and teacher aides over the past five years with little or no progress to show for it.

As it now stands, the city budget includes sufficient funding to give teachers the same 8-percent base salary increase that other city workers settled on last year. But they shouldn't see a penny of it without conceding significant productivity improvements, starting with an agreement to work a longer day. The same goes for police officers, who, like teachers, have been seeking a big pay raise that the city could not afford even before the devastation of Sept. 11.

Bloomberg's inaugural call for a reduction in elected officials' staffs was especially welcome - and long overdue. While the official head count for the office of the mayor has declined to its lowest level in at least a quarter-century, the staff assigned to the city's other elected officials has grown by more than 2,000 over the past 20 years.

There's little to justify this expansion, especially considering that the five borough presidents have been left with little real power or responsibility in city government since the elimination of the Board of Estimate more than a decade ago. The office of public advocate also serves little purpose but to fill sudden mayoral vacancies. That job could be eliminated and its standby role filled by the speaker of the City Council.

Equally significant, Bloomberg in his first regular press conference as mayor made a point of mentioning that the city's gargantuan capital budget will have to be scaled back. In fact, capping annual city-funded capital expenditures at $4 billion (roughly equal to the level of capital spending between 1996 and 2001) would generate $440 million in annual debt-service savings over the next three years.

Of course, the new City Council is likely to resist the level of budget cuts Bloomberg will find necessary to close the budget gap. The council's only alternative, however, would be a property tax increase. With commercial property taxes in New York already hovering 79 percent above the average for surrounding jurisdictions, this would amount to economic suicide - fitting Giuliani's memorable description of tax increases as "dumb, stupid, idiotic and moronic."

In his inaugural address, Bloomberg pledged not to increase taxes and declared, "We must not repeat the mistakes of the past."

So far, so good.