Mayor Michael Bloomberg's Budget Mid-Year Plan
On November 14, 2002 Mayor Michael Bloomberg presented his mid-year budget plan to close a $1.1 billion deficit in the current fiscal year and a $6.4 billion budget gap next year. The mayor is calling for nearly $844 million in service cuts and a 25 percent increase in the city property tax rates. He is also asking the State Legislature to extend the city's personal income tax to anyone who works in the city regardless of where they live. The city is also looking to employees to save $600 million by working more productively, possibly through a longer workweek. Under the mayor's plan, the municipal workforce would be cut by 8,000 employees by 2004, mainly through buyouts and attrition.
An excerpted, edited transcript of Mayor Michael Bloomberg's remarks.
WHAT THE CITY HAS DONE SO FAR?
The first question is what have we done in the first nine months. Did we act appropriately? I think the answer to that is that we did.
In the last nine months, we borrowed $1.5 billion and we did not raise taxes materially. With the cigarette tax and some fees, we basically said we were going to make it through by cutting services by $1.5 billion and borrowing a $1.5 billion.
Why did we not raise taxes earlier? The truth of the matter is that we were coming out of 9/11, and everybody was worried that people, residents, and companies would leave the city. Today we are 14 months after 9/11. People have come to realize that although we do live in a more dangerous world than we thought we did, but New York remains the safest big city, our police department, as much as any institution possible could, has developed the tools to keep terrorism away.
Now, we fundamentally have a problem in that our tax revenues have declined more than we expected. There is no way out of it but to raise taxes.
We are cutting services to the point where I think we can still provide public safety, clean streets, a better education for our children, comply with all of the court ordered mandates to provide housing and social services. This city is not going to cut its expenses below where the quality of life would deteriorate.
What I have tried to do is have every single commissioner look me in the eye and say, "I'm not happy, it's going to hurt, but I can still keep the quality of life in the city."
I've have learned that protests are part of the job. People have a right to protest and I encourage them to speak their mind. But the truth of the matter is, we have to close the budget deficit. If we don't, the financial control review board will come in. And last time the came in the fired 20 percent of the fire fighters, 20 percent of the police, and 20 percent of the teachers. That is not a pretty sight and we will not let it happen again.
Cutting $200 million from the education budget
We will not cut anything in the classroom.
Joe Klein has started rationalizing the system, looking at what worked in the past and what did not. He announced the downsizing the School Construction Authority to make it more manageable. We believe we can provide better services and dramatically reduce the costs of building schools. If we had done that 10 or 15 years ago, we would have double the number of classrooms we have today for the same amount of money.
We will clearly have to go without some programs that we like. And unfortunately in the case of education, there are probably a lot of bureaucrats that we don't have a need for. We will try to find them other jobs. My hope is that economy recovers so they can. But we are not going to cut teachers in the classroom.
Reducing the police force by 1,900 police officers
The police commissioner's judgement is, that with the cuts we have proposed, he can continue to keep the streets safe. I think we can be pleased with the job that the police department has done. When I came into office, conventional wisdom was that the economy is going down, we have had a dramatic reduction in crime, and therefore the great challenge was not letting crime go up too much. In fact, we have kept crime coming down dramatically. We are on target to have the lowest number of murders since we started keeping statistics. We have said it before. Crime is not coming back in this city. Period.
Eliminating 2,500 daycare slots and 2,000 spaces in programs that work to prevent abuse
There is no argument not to do more for children. But we just don't have the money.
Closing 32 out 340 senior citizen centers
Clearly in the case of seniors, people will be inconvenienced and won't get the services we would like to give them. We have to find some ways to balance and make sure that we do the best job we can. If it means closing two centers, we have to make sure there is another center nearby to pick up the slack. People will be inconvenienced, but we are not going to let anybody suffer.
Right now, New York State charges you New York State taxes regardless of where you live. All we are asking Albany to do is to conform New York City's tax collection policy to the state's. People who say they are not taxed as commuters, don't look at their tax bills.
It the general policy throughout this country, for municipalities that have income taxes to charge non-residents. Not just at the state level, but at the city level. Cities like Los Angeles, Cincinnati, Cleveland, Pittsburgh, Daytona, St. Louis, Newark, Kansas City, San Francisco, and Yonkers Ă all tax non-residents. Taxing non-residents isn't new. New York State does it every single day and so do many cities.
This is not a commuter tax that I have called for. I've simply called for the city taxes to conform to the state tax. I worry very much about the people in the suburbs who work in the city. I am committed to providing them with the services that make this the city that they want to come into everyday. Everybody has to pay. And I'm going to have to make it as fair as possible.
WILL PEOPLE LEAVE NEW YORK?
Nobody can guarantee the future, but I don't think it is realistic today to say that people are so worried they are leaving the city.
The vacancy rate on commercial rate in this city is half of what it is in virtually other major city. And real estate prices remain very strong. These two factors and the fact that I know of no major company that is even suggesting they would move their headquarters out of the city, gives us comfort to say now we can address the problems we have differently.
If we stand up and take the necessary steps no matter how painful those may be, people will not just stay here, they will come to New York.
Everybody understands that there are costs for services. Those municipalities that address their problems openly and prospectively are the places where you want to have your business and raise your family. Those are the cities that will be the great cities of the future. And we are determined to make sure that New York remains one of them.
Every hotel in New York City is back to pre 9/11 capacity. Most hotels are full. The bad news is that they are full of American tourists as opposed to European tourists. The reason that makes a difference is that European tourists tend spend four times as much as domestic visitor. The disappointing lack of return of European tourists has more do with people not flying than with people not liking New York. There is no European city that isn't complaining about the same thing.
QUALITY OF LIFE
The crime rate is continuing to come down. It is quite amazing when you realize what has happened to the economy and every sociologist would tell you that it would have gone up. The welfare rolls are continuing to come down.
We had a big group of restaurant owners in here. They all will tell you that the police are doing an excellent job, particularly in the last month when we focused on some people who were loitering in the streets, panhandling, and the squeegee guys.
Squeegee guys are not going to come back in this city.
People who want to reduce the size of the workforce overnight just don't understand how government works.
We can go and cut people and the overtime we would need to maintain the services would wipe out economic benefits of those cuts. What is more, you don't build a workforce that is flexible and works hard by laying off.
I said in the beginning that layoffs would be my last act. And I will only layoff if we can not get through this any other way. But with cooperation with labor, and with early retirements and buyout, I believe we can continue to downsize the labor force without layoffs.
If we can't, nobody will stand up and say we are not going to do it. We will layoff people. But my hope is, and my expectation is, that with enough cooperation from everybody, we will not have to do it.
For all municipal unions, we are going to be able to pay our labor force more only if we get productivity enhancements. There just isn't any money. Our budget requires $600 million in productivity enhancements. That means more flexibility, longer hours. That's just to balance the budget so we don't have layoffs.
And going forward, we are not going to wait two years for a contract to expire and then negotiate. We are going to have to say, "You don't get raises for a period that has already passed." We don't have a way to raise that kind of money.
WASTE AND CORRUPTION
I can not find corruption in this city. Yes, there is a handful; we have lot of employees and nobody's perfect. I can't tell you there is a lot of waste in this city. Sure there are some things that we shouldn't be doing that we do. But they both tend to be very small. And I can't find a program in this city that doesn't really benefit people. The fact of the matter is this city and the previous mayors have all done a pretty good job.
You can't just say let's go cut corruption, waste, and meaningless programs. Fundamentally, they don't exist.
THE 1970'S FISCAL CRISIS
In the 1970's, the city lost control. We cut back services in this city by firing police officers, teachers, firefighters and every other type of municipal worker. So much so, that crime went out of control, trash wasn't picked up, the schools got worse, the fires didn't get put out. We can not ever let that happen again in this city.
The other thing that happened in the 1970's was that we borrowed and encumbered our children with the responsibility for the mistakes that we were then making. Just think about the following: this year, and the next, and the year after that, and the year after that, this city will pay approximately $500 million in interest and principal on loans that were taken out back in the 70's.
There are reasons to think that the city is in far better shape. Today, unlike then, we have the financial controls in place and a law that requires us to balance the budget. In the 70's, we got out of control because we spent too much. Right now, we have a problem because our revenues have declined.
Download a summary(in PDF format) of the First Quarter Budget Update and Financial Plan