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This city budget season has started two months early, and the debate already involves lawsuits and squabbling. While it's not unprecedented, Mayor Michael Bloomberg's move to seriously revise city spending mid-way through the fiscal year gives some indication of how our economy has spoiled. Like it or not, some programs will have to be chopped.
Since the mayor announced his intention more than two weeks ago to cut city spending, rescind the $400 property tax rebate (a proposal whose fate remains uncertain) and increase property taxes by 7 percent come January, the City Council, uncharacteristically, has not waved any white flags. In some cases, they have called war.
Today is the last day of a weeks worth of hearings. Lines have been drawn and a victor is far from chosen. A vote is expected in early December.
In his typical fashion, Bloomberg's plan does not focus primarily on this year's gap, but the budget hole the city will face in 2010 and beyond.
He plans on cutting this year's budget -- through both raising taxes and reducing spending -- by $2.2 billion. (For more on the mayor's budget strategy, go here.)
That budget hole: $300 million.
Most of these cuts will go toward reducing the budget gap the city faces in fiscal year 2010. If the mayor's proposals win approval, they could reduce that deficit to an estimated $1.3 billion.
Why take these measures now?
"Everyone has to understand this is the only way we're going to get through this and have a future," Bloomberg said, sounding particularly doomsdayish, at a financial presentation earlier this month at City Hall.
The presentation, which normally takes place in January, sprang from the turmoil on Wall Street, which, Bloomberg argues, means the city needs to start cutting costs immediately -- seven months before the end of the fiscal year.
Most fiscal watchdogs say taking action early -- and addressing our fiscal problems before they turn too dire -- is characteristic of Bloomberg's approach to budget balancing.
"It's certainly consistent with the way he's operated since taking office," said Doug Turetsky of the Independent Budget Office. "He doesn't just wait until you get there to start doing things."
Even so, there still may be some wiggle room now. For the City Council, that comes in a $400 property tax rebate.
Tax and Spend Policy
Rarely do the City Council Speaker Christine Quinn and Mayor Bloomberg disagree publicly. Quinn has shepherded two controversial pieces of legislation -- both spearheaded by Bloomberg â€“ through the council this year alone: term limits and congestion pricing.
But when it comes to delivering $400 checks to thousands of city homeowners, Quinn has staked out a position on one side, Bloomberg on the other.
Though the speaker declined to promise residents that they would get their rebate checks, which were supposed to be mailed in early October, Quinn said the council would do anything in its power to preserve the rebate.
"I can guarantee New Yorkers we are going to fight as hard as we can to get them those checks as quickly as possible," Quinn said at a press conference last week.
Part of that fight comes in the form of a lawsuit filed by council members Vincent Ignizio, James Oddo, Vincent Gentile, Lewis Fidler and Tony Avella. Assemblymember Louis Tobacco also signed onto the suit.
"This is just one of those out of touch with reality moments that you guys have over there from time to time," said Fidler addressing administration officials at a budget hearing on the rebate check. "I don't think you realize how much people who are living hand to mouth are expecting that check."
The council has argued the mayor cannot withhold the rebate checks without its approval -- which is a nonstarter. Bloomberg, who initially said he would not issue the check because the city had "no money," has started to back down. Last week, the mayor said he would work with the council to find "balance."
The rebate would cost the city $256 million. The tax hole for this year is $300 million. Do the math: The mayor's plan to increase taxes by 7 percent in January would bring $576 million -- more than enough to cover this year's gap. In fact, under his plan, the city would end the year with a surplus.
Again, it's about priorities.
Though the $400 rebate has become the council's cause of the moment, others say it's a regressive tax and the city should do away with it.
"They shouldn't have had the rebate in the first place," said Carol Kellerman, executive director of the Citizens Budget Commission. "This is not a need based amount. This is an amount if you are a single-family property owner. It doesn't matter if it's a townhouse on Fifth Avenue."
Who Wins and Who Loses
In addition to the tax increases, Bloomberg has proposed about $500 million in spending cuts in this fiscal year and more than $1 billion for next year's fiscal year. The agency cuts equal a reduction of 2.2 percent for fiscal year 2009 citywide.
Agencies have been ordered to cut their budgets by 2.5 percent for this year's budget and by 5 percent for fiscal year 2010. Some departments have received marginally more -- or less -- funding than others, but for the most part the cuts are across the board. (Check out a full funding breakdown here)
But for small agencies, a 2.5 percent cut can mean a lot. In addition, these cuts come on top of the spending reductions, which mostly hit social services agencies, that the council approved in June.
"They are looking to cut out anything that they are not required to provide," said Allison Sesso, deputy executive director of the Human Services Council. "This is just compounding cuts that were already taking place."
For example, the city plans to reduce the Department for the Aging's budget for "non-core social services," which has raised an alarm among some advocates. It also proposes to eliminate a $1.2 million program that provides adult day care to debilitated seniors and is doubling the co-payments parents pay to the Administration for Children's Services for day care programs from $1 to $2.
The mayor has also proposed eliminating 127 positions at the children's services agency, increasing caseloads for supervisors*. The city plans to close a job center and a clinic treating sexually transmitted diseases in Harlem and a homeless shelter at Bellevue Hospital Center.
At the Department of Homeless Services, the city will save $5 million in 2010 by providing incentives to city contractors for getting families out of emergency shelters and into public housing. Advocates say, however, the amount of available housing for these families remains stagnant.
The department also plans to require homeless working families to contribute to the cost of their shelter, which could bring in about $1.3 million next year.
For some advocates, that move touches a nerve.
"Many families actually save money while they're in a shelter," said Patrick Markee, a senior policy analyst at the Coalition for the Homeless. "It seems counterproductive and a little bit cold hearted."
Reductions in Blue
The Police Department plans to do its part to close the budget gap by putting fewer cops on the street. According to Police Commissioner Raymond Kelly, the department will cut new hires by half, eliminating one of the two yearly officer-training classes. Normally, police academy classes begin in January and July, and slightly more than a thousand officers graduate from each class. The elimination of the January class will save $36 million next year, but it will bring the department’s force to its lowest level in years. Along with reducing the number of new recruits, Kelly said, further reductions will come through attrition and a cut in civilian staffing, generally in clerical, administrative and custodial positions.
Before Bloomberg mandated the budget cuts, the department had planned on a peak headcount next year of almost 37,000 uniformed officers. At a joint hearing of the City Council’s public safety and finance committees on Nov. 24, council members expressed concern that crime would rise with fewer officers on the street. Kelly countered that the overall crime rate has decreased by 28 percent since 2001, when there were about 40,000 officers on the force—the department’s all-time peak.
"We’re going to do everything we possibly can to continue to reduce crime in this city," Kelly told committee members. "We’ve done it effectively at a time when we lost some 5,000 officers. Crime has still come down and it's safer than its ever been."
Public safety committee chair Peter Vallone Jr. was not convinced. While overall crime has fallen, Vallone said, certain violent crimes have increased: Murder is up 6 percent, and rape and burglary are each up 2 percent so far this year. And, he said, the decline this year in overall crime is the smallest so far since 2001.
"The NYPD always says it can do more with less, but at this point, Batman would have trouble doing more with the amount of resources we have allotted," Vallone said in a statement issued after the hearing. "If public safety suffers, everything suffers."
Vallone is particularly worried that any rise in crime could exacerbate New York’s economic crisis, affecting tourism, retail and real estate.
The department plans additional savings by shifting additional law enforcement duties to traffic enforcement agents. For example, until now, only uniformed police officers could ticket vehicles for obstructing traffic at intersections. Gov. David Paterson recently signed a bill requested by Mayor Michael Bloomberg that allows the city’s traffic enforcement agents to issue these tickets.
Even city's public school have not escaped the current round of budget cuts. The administration has proposed $180 million in cuts to the Department of Education's $21 billion budget this year and $385 million next year. In June, the department took a $200 million reduction but, partly through the efforts of the council, school classrooms were spared.
This time around though, classrooms would see a $103 million reduction. Where exactly that would fall will remain largely up to individual principals, although no teachers will lose their jobs. "The principals have made it clear that none of these cuts are easy or without pain, but they expected these cuts," Deputy Chancellor Kathleen Grimm told City Council.
For the first time, the administration proposes to reduce spending at the District 75 schools serving handicapped students â€“ although by a relatively modest one half of one percent.
Other cuts will come in administration where the department proposes to eliminate 338 positions, cut back on the Teaching Fellows program, trim expenses on meetings and eliminate science assessment. Some maintenance positions serving schools will also be lost.
Given how volatile school spending cuts tend to be, Friday's hearing on the reductions was relatively low key. Public Advocate Betsy Gotbaum reiterated her concerns about the department's spending on its so-called accountability initiative, Fidler suggested the school use energy efficient light bulbs, and John Liu wondered how much the department had spent on an ill-fated plan to centralize kindergarten admission.
There were, though, apparently no real fireworks. Those could come at public hearings today. On the other hand, almost everyone at the hearing realized this round of cuts could be the relative calm before the storm. The state has not enacted any cuts for now, but everyone anticipates that will change. With the state providing 41 percent of the Department of Education's funds, how much of the cuts could fall on city schools remains anyone's guess.
"I make it a policy not to predict what Albany will do," Grimm said.
At another of many budget hearings last week, Councilmember Gale Brewer questioned the administration on how it collects taxes from vacant buildings.
Sitting at the very top of the dais, Brewer couldn't help but add a closing remark.
"Don't cut the libraries," she jabbed.
A typical council-mayoral battleground, libraries under the budget plan would cut back hours to an average of five and a half days from the current six. Some branches, said an aide to the council's libraries subcommittee chair, Gentile, would only be open for five days, while others will be budgeted for the extra half day. The library cut would save $8 million in this fiscal year.
The council will also almost certainly object to cuts at the police department and the Department of Health and Mental Hygiene. The administration has proposed delaying a police class of 1,000 officers, reducing the overall headcount at the department. The training program at the fire department's academy will be cut from 23 weeks to 18 and several engine companies will lose their night hours, for a combined savings of $7.5 million.
Councilmember Peter Vallone, head of the council's public safety committee, has made this police headcount reduction part of his checklist for elimination.
The mayor's proposal to eliminate the city's dental program for children, which began in 1903, is also drilling up some ire. The program serves 1 percent of the city's kids and costs $2.5 million.
Most agree the worst is to come.
All of these cuts do not factor in an estimated $12.5 billion deficit in Albany, which is sure to translate into deeper slices in school aid statewide. This year, the city received $11.7 billion from the state -- about 20 percent of the entire budget.
The State Senate is set to hold a special session next month to consider cuts by Gov. David Paterson. The governor is also scheduled to release an updated fiscal response to the crisis in December.
These budget revisions also do not take into account debilitating deficits at the Metropolitan Transportation Authority and the New York City Housing Authority. The city's public hospitals network, the Health and Hospitals Corp., is also struggling, say officials.
Our fiscal troubles are far from over.
"I think this is a very difficult budget year, but you typically don't see these budget modifications change very much," said Markee. "We're a lot more worried about what's going to happen in next year's budget."
*When this story originally appeared, it gave the impression that all caseloads at the Administration for Children's Services were increasing. In fact, regular caseworkers will not be affected by the budget cuts. Some supervisors, who had taken on only a few cases in the past, will now have a full caseload.
Dara L. Miles contributed reporting to this story.
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