Since the mayoral race of 2001, New Yorkers have endured two years of acute fiscal crisis followed by a return to the cityâ€™s chronic fiscal troubles. Higher taxes have failed to end these difficulties: While the current budget is balanced, this yearâ€™s surplus will be swallowed up by a budget deficit next year. Informed voters know that the city remains in a perilous fiscal state, with annual deficits of $4 billion to $5 billion forecast as far as the eye can see, even as the economy continues to recover from 9/11 and the bursting of the tech bubble in 2000.
Despite these facts, the four Democratic mayoral candidates propose new programs that would hike the cityâ€™s projected $53.9 billion budget for next year by, on average, $1.66 billion each. All four candidates also propose to pay for this spending with even higher taxes on high-income earners, commuters or businesses.
Former Bronx Borough President Fernando Ferrer would impose taxes on Wall Street trades to pay for school-spending increases, and on owners of vacant property to pay for subsidized housing. Congressman Anthony Weiner would hike taxes on households making more than $1 million a year to fund a middle-class tax cut. City Council Speaker Gifford Miller would hike taxes on all three groups: high-income earners, insurance companies, and commuters. Manhattan Borough President C. Virginia Fields has not proposed a new direct tax on city residents or businesses, but, like Miller, she has proposed a commuter tax.
In addition to proposing new taxes, two candidatesâ€”Fields and Weinerâ€”have proposed to cut waste from the city budget to pay for some of their new spending. But neither has proposed cutting enough money to close the looming budget deficits, much less pay for their new spending proposals.
Some of the Democratic candidates acknowledge the harm done by the continued failure to reform the cityâ€™s chronically unbalanced budget.1 But none has proposed rational budget reform to address what city Comptroller William Thompson Jr. has called New Yorkâ€™s â€œcentral budgetary challenge: The fact that the growth of the cityâ€™s expenditures outpaces the growth of its revenuesâ€ between now and 2009, due, mainly, to rising Medicaid, pension and debt-service costs. 2 The candidatesâ€™ spending proposals, even if financed through higher taxes, promise to add to that budgetary imbalance.