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Where's the Revenue?
June 7th, 2010

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A banner unfurled at the hearing this morning. Credit: Photo Housing Works/Julie Turkewitz

A balanced budget is a simple thing.

If you don’t have enough cash, you have to cut. If you don’t want to cut, then you have to raise the cash.

Makes sense, right?

This morning at City Hall, the director of the Office of Management and Budget, Mark Page, tested council members’ grasp on the concept. For the most part, those council members would much rather raise revenue instead of slash at city services.

They had a couple of suggestions — none of which were palatable to Page. Staying in his usual character, Page shot them down, one after the other.

Take Councilmember Letitia James, who suggested early retirement incentives to help ease the burn of layoffs.

To Page, that would only make matters worse.

“When you take a group of city employees and accelerate when they leave, what you are doing is moving from that 40-year municipal lifetime to something shorter,” Page said. “You pay them a premium for retiring early. … Now say that person would work another four years. Well, that four years you are paying the first guy that premium and you’re paying somebody else’s pension and health costs.”

Page went on: “You save money the first year. You start losing money in the second year. By the fourth year, you’re under water.”

If the city were going to layoff a large number of workers (let’s say, hypothetically, the 4,400 teacher layoffs were back on the table), then the prospect of early retirement or buyouts could be explored, Page said.

Well, why not use the surplus from the city’s health care trust fund — which officials estimate will be at $1.4 billion this year — to soften the budget blow, asked Councilmember Vincent Gentile?

Page said no way.

“I think that the level of restraint in spending proposed in this budget, and obviously subject to negotiation to some degree in the adoption process, we think is the right approach to our circumstances not just in ’11, but looking forward to ’12,” said Page. He said the budget this fiscal year utilized $4 billion in one-time revenue sources, and the city already faces a $3.8 billion budget hole for fiscal year 2012.

“We have clearly not addressed the budget gap in ’12 in this budget proposal,” Page said. Tapping into the health care trust fund should be tabled possibly until then, he said.

Several council members took aim at the over-budget, highly controversial payroll project, CityTime. Page went on defense.

“I hope you’ll actually have the patience to listen to me,” Page told the council. “It’s an extremely valuable piece of management infrastructure that as an employer of a great number of individuals New York City in 2010 desperately needs. In hindsight, you can look back at how this job has been done. You can question whether it should have cost as much as it did, whether it should have cost less, whether it should have cost more.”

“To contemplate turning off this system at this moment would be crazy,” said Page.

OK, what about getting to the root of the problem, said Councilmember Jimmy Oddo. Tackle the rapidly increasing cost of city pensions, health care and debt service.

That is something which seemed more palatable to the budget director, though his answer didn’t satisfy Oddo.

“I was expecting and hoping for more of a kick ass and take names approach,” Oddo said.

By on June 7, 2010, 5:31 pm
In category: City Hall,Economy,Electoral Politics,Gotham City,Law,Measuring UP,nextNY,Public Finance,Social Services,Work and Labor | Comments Off

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