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Lessons For

by Glenn Pasanen, Nov 11, 2003
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A year ago Mayor Michael Bloomberg put the finishing touches on a city budget that forced some $6 billion of deficit-reduction actions. That bold fiscal success - based mostly at the last moment on an 18.5 percent increase in property taxes - is in sharp contrast to the mayor's political loss with his three city charter proposals in the election this month. Yet the release of the city comptroller's annual financial report this month is a reminder that the mayor's budget balancing last year has worked remarkably well. At least in broad budget terms, city services in the 2003 fiscal year (ending June 30, 2003) remained stable - in spite of the severe economic and fiscal crises caused by national and city recessions, the World Trade Center attack, and a previous administration's tax cuts.

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At the same time, buried in the comptroller's report and the sad little 2003 Charter Revision Commission exercise are some lessons for more democratic fiscal management. A public distaste for mayoral hubris seems to have fired up opposition to the nonpartisan election ballot question. But the defeat of the obscure ballot questions 4 and 5 reined in other dubious mayoral power grabs as well. Question 4 would have expanded mayoral discretion in city contracting, yet the city comptroller's new annual report cites several contracting problems - particularly in information technology procurement -- that suggest more, not less, outside monitoring. And question 5, an odd mayoral wish list of expanded powers, included the elimination of the preliminary mayor's management report (discussed in October's Finance column). Yet the comptroller report suggests current management can't even count potholes accurately.

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Budget Stability and Services

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The comptroller's report reflects the depth and vision in last November's budget modification. The property tax increase meant a full-year, recurring $1.7 billion revenue boost, helping the city to end the 2003 fiscal year with more than a $1.4 billion surplus. The carry-over of that surplus to the current year served as a big stabilizing factor. Political acceptance of the property tax increase -- and the new personal income and sales tax rates added in June 2003 for the current fiscal year's budget -- may or may not be evident in the recent council elections, but none of the re-elected incumbents seems to have suffered for their votes for new taxes.

The payoff for the revenue initiatives is clear in the comptroller's report. In several large service areas, budgets were stable or up substantially in 2003. If the budget numbers for fiscal year 2001 (i.e., the full fiscal year before September 11) are compared with those in fiscal 2003 (the first full fiscal year after September 11), the results range from an 18 percent increase in public education spending to just over a one percent increase in public safety and judicial spending:

· 2003 education spending was up 18.4 percent to $14.5 billion.

· Health spending rose to $2.7 billion from $2.3 billion, up 16.3 percent.

· Social services spending went to $9.8 billion from $9.2 billion, up 6.8 percent.

· Public safety expenditures hit $8.8 billion, up 1.2 percent from $8.7 billion.

Money, of course, does not guarantee services. But the few available numbers suggest stability and even some gains. The increase in education dollars is apparently largely the result of delayed salary increases. The number of full-time pedagogical staff, for example, was stable over the two years, although the ratio of students to pedagogues was up fractionally (11.2 to 11.6). As for educational performance results, indicators are few: the percentage of pupils meeting and exceeding standards in English language arts rose over two years nearly one percentage point in grade 3 (to 43 percent) but lost 1.2 percentage points in grade 8 (to 32.5 percent!).

In health, there are even fewer numbers in the comptroller's report. At the city's municipal hospitals, the number of billable outpatient day and emergency room visits was down slightly (from 5.7 million to 5.65 million, or just under one percent) from 2001 to 2003 - arguably a small improvement. There are also few statistics in social services. The number of persons receiving public assistance dropped from 497,100 in 2001 to 421,500 in 2003 (over 15 percent). Since 1994 the number of recipients is down 719,100, or 63 percent. (Neither the semi-annual mayor's management reports nor the comptroller's report can say where the former recipients are today.)

In the public safety area, the comptroller's statistics on service delivery point out that from 2001 to 2003 the number of uniformed officers decreased from 38,630 to 36,120 (- 6.5 percent). Nevertheless, the mayor's management report for 2003 (in pdf format) shows that major felony crimes fell by more than 14 percent during the same two years - an interesting opportunity for productivity analysis in a $3.5 billion agency.

Another section of the comptroller's report that is useful for measuring budget effects is the one on contracting. It shows that between 2002 and 2003, service contract expenditures (on everything from computer and child welfare services to legal and youth services) rose almost seven percent, from $6.66 billion to $7.02 billion. Most of the categories of health, social, and human services included here show little change. But there are some big-dollar exceptions to the status quo:

· Contracted homeless-family services were up 35 percent, to $297 million.
· Contracted individual homeless services went up 9 percent, to $148 million.
· Contracted employment services were up nearly 14 percent to $339 million.
· Contracted day care services were down 14 percent, to $331 million.

Contracting

The votes against ballot questions 4 and 5 were slightly less harsh than the vote against nonpartisan elections (64 percent and 66 percent against, respectively, vs. 70 percent). But they were also questions obviously of much less interest, with about 100,000 fewer people voting on 4 and 5 than the 471,000 who voted on question 3. The low turnout for the ballot questions (less than 13 percent of registered voters, according to The New York Times post-election figures) and the 100,000 non-responses on questions 4 and 5 among even those dedicated folks should be a signal that constitutional change is too important to trust to mayoral-driven summer exercises.

Coincidentally, the release of the comptroller's annual report provides some evidence that the few hardy souls who voted down expanding the mayor's contracting powers (#4) and eliminating the mayor's preliminary management report (#5) did the smart thing. For instance, the comptroller found that a $28 million amendment to an $84 million IBM contract "was beyond the scope of the original contract and accordingly required a new procurement. This contract is symptomatic of a greater procurement problem in which large computer contracts are written with vague scopes of work, loosely supervised, and not graded for performance. The Comptroller's Office is closely monitoring such contracts."

As baseball- and football-fan mayors look to new city subsidies for sports teams, it's always useful to keep in mind comptroller audits of these teams. Most recently, the comptroller found the New York Mets owed the city $4.6 million in rent because they "understated revenue by $18.8 million and overstated deductions by $35.4 million." The newest team in town, the Staten Island Yankees, is already following the big-league practices: The minor league Yankees owed the city Economic Development Corporation "$373,517 for various items including electricity, fees or signage revenue, and late payment charges." The audit also found "internal control weaknesses."

An audit of one of the Human Resource Administration computer systems -- its Auto Time System -- "found that the system was incomplete and cost $24.8 million, $15.2 million more than the initial contract amount." Nor did the audit see any way that $15.7 million in anticipated savings would be realized.

The Mayor's Management Report

The vote against ballot question 5 means, among other things, that the preliminary mayor's management report lives. This is a slightly awkward situation, since the mayor made it clear he thinks the document is not worth the trouble. What might invigorate the use (and value) of the February report is closer cooperation between the mayor and the City Council, the report's charter-mandated recipient. As noted in our October Finance column, the Council under Speaker Peter Vallone was an aggressive participant in the management-report process. The council held separate hearings and issued in-depth analyses, complete with extensive recommendations for the next round. Over the past two years, both these council efforts have been abandoned.

If the mayor and the council need any evidence to get back to serious work on the reports -- the best test of mayoral accountability -- the city comptroller's report is again a useful guide. A section summarizing some " Service Delivery/Program Performance" audits notes, for instance, that "an audit of [Administration for Children's Services] disclosed that the agency does not adequately monitor its 493 contracted day care centers."

Then there are the potholes. Potholes have often been the most visible (and most embarrassing) measurement of a mayor's management skills. The mayor's management reports keep records of potholes and repair operations, but look at what the comptroller found:

"Audit of [Department of Transportation] found that the agency lacks a useful standard for measuring the performance of its pothole repair operations. [The agency] took an average of 57 days - ranging from one to 2,494 days (seven years) to complete 1,774 sampled pothole repair ordersâ€|and some repairs are counted more than once in theâ€| pothole productivity figures."

Whether it's potholes, failed computer systems, the whereabouts of 719,000 former welfare recipients, or education performance standards, there is need for information, analyses, and self-examination in city government. We have budget stability for the moment, but particularly with no strong economic turnaround in sight, the city would gain from a higher standard of accountability in its work and its reports. The ballot voters had it right.

Glenn Pasanen, former associate director of City Project, teaches political science at Lehman College of the City University.

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