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Top New York Stories of 2008

by Gail Robinson, Dec 22, 2008
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Consider how the world looked a year ago.

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Sen. Hillary Clinton was about to sail through the Democratic primaries on the way to her party's presidential nomination. Rudy Giuliani, though faltering, still stood atop some polls for the Republican nomination. Lame duck Mayor Michael Bloomberg mulled a White House bid of his own, while City Council Speaker Christine Quinn touted herself as a champion of reform and fine-tuned her alliance with the mayor in the hopes of succeeding him in 2009.

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Up the river, Eliot Spitzer girded himself for another year of battle with his Republican nemesis Senate Majority Leader Joe Bruno.

Securities firms handed out a record $38 billion in bonuses, helping to send the average price of a Manhattan apartment to $1.4 million. New luxury projects dotted the skyline, as the city planned for massive new development from Jamaica to the Hudson Yards.

It all seems very long ago. For a look at how we got from there to where we are now, here are the Top 10 New York stories of 2008:

Obama Elected President as New York's Contenders Falter

Illinois Sen. Barack Obama was elected president of the United States on Nov. 4, becoming the nation's first black president. With only four years in the U.S. Senate and a "funny name" as he himself says, Obama stood as the underdog a year ago. Instead New York Sen. Hillary Clinton had staked out the role of frontrunner, garnering the support of all the state's -- and many of the nation's -- leading Democrats. On the GOP side, Rudolph Giuliani seemed to have a decent shot of parlaying his image as America's mayor -- garnered in the aftermath of the Sept, 11, 2001 attacks -- into the nomination. Meanwhile, Mayor Michael Bloomberg looked on, pondering scenarios that could make the nation turn to a bipartisan billionaire.

The setbacks began for Clinton with a third place finish in the Iowa caucuses in early January (Former Sen. John Edwards narrowly beat her out for second place.) She saved her campaign with a victory in New Hampshire's primary, putting her and Obama on a grueling multi-month multi-state fight to the finish. But despite a number of victories, including a resounding triumph in the New York primary on Super Tuesday -- Clinton never again captured the lead.

The race did not end until the final primaries in June when Obama clinched the nomination, paving the way for his nomination at the Democratic National Convention in Denver in August.

Giuliani faded far earlier. Faced with disconcerting poll numbers, he stayed out of the crucial early contests, focusing his attention on Florida. After he came in a distant third there, he withdrew, leaving as his legacy one of the long campaign's best lines (uttered by Joe Biden): " "There's only three things he mentions in a sentence: a noun, and a verb and 9/11."

Giuliani went on to campaign for the eventual Republican nominee, Arizona Sen. John McCain.

As 2008 began, Bloomberg continued to play it coy about his ambitions, fooling virtually no one. The mayor apparently dreamed of a polarizing race -- John Edwards vs. Mike Huckabee, say -- that would leave America hankering for a man of the center. When that failed to materialize, Bloomberg abandoned his dreams and went on to pursue other ambitions (see below).

Once Obama became the nominee, he received enthusiastic backing in New York, capturing 62 percent of the state's votes on Election Day. Celebrations in Times Square, Harlem and other parts of the city greeted his historic election. And while New York may have to play second city to Chicago over the next four years, Obama has turned to New York for a number of key appointees including Hillary Clinton for secretary of state, Timothy Geithner for treasury, Eric Holder for attorney general and Shaun Donovan, city housing commissioner, for the Department of Housing and Urban Development.

Stock Market Tumbles and New York's Economy Follows

The effects of cascading failures in subprime mortgages and the ensuing credit crunch spread to Wall Street in September. Like dominos, a parade of major financial institutions began to lose money and even shut down, transforming Wall Street and New York's economy. Bear Stearns failed, Lehman Brothers collapsed, and Merrill Lynch was saved only after being swallowed up by Bank of American (which would face its own troubles down the road). To prevent more carnage, the federal government devised a $700 billion rescue package.

While much of New York (so far) avoided the worst effects of the housing foreclosure crisis, it bore the brunt of Wall Street's woes. By November unemployment in the city had reached its highest levels in nearly four years. The city comptroller predicted the five boroughs could lose 170,000 jobs by the end of 2010, with unemployment reaching 7.4 percent. The effects trickled downward, affecting the jobs of cabdrivers, restaurants and shops whose business came from the brokers and investors. With fewer financial companies -- and fewer employees at the ones that remained -- demand for office space waned, along with money to build it, putting the future of a number of high profile developments in doubt.

City, State Confront Billion Dollar Deficits

The economic turmoil also played havoc with city and state tax revenues. The mayor's office forecast that, money raised through the city's personal income tax would fall from $8.4 billion in fiscal year to $7.6 billion in the 2009 fiscal year before bottoming out at $6.6 billion in 2011. The state forecast rising revenue as well.

After a string of relatively flush years, deficits returned in 2008. And unlike the federal government, the city and state had no choice but to try to fill them.

In June, the mayor and the City Council approved a budget that kept spending virtually flat in contrast to the increases of recent years. Then as the nation's and city's economy deteriorated further, Bloomberg called for all city agencies to cut an additional 2.5 percent for this year and 5 percent for 2010. He also sought to block the $400 property tax rebate checks New Yorker property owners have come to expect and to increase property taxes by 7 percent.

The usually compliant council balked. After some fairly heated negotiation, the council and mayor agreed in late December to the 7 percent property tax increase and hiked the hotel tax. Bloomberg consented to mailing out the $400 rebate checks. With the city still a facing a more than billion dollar shortfall for next fiscal year and the economy continuing its nosedive, more cuts seem certain.

Things looked even grimmer in the state capital. There legislators refused Gov. David Paterson's request that they make cuts in the current fiscal year's budget, leaving the governor and the legislator to grapple with an anticipated $15 billion shortfall for the next 15 months. In response, Paterson in later December proposed a $121 billon state budget for next year featuring major cuts in education and Medicaid and an array of new and increased taxes. Among other things, Paterson would levy charges on sugary soft drinks and music downloads.

In Staggering Fall from Fortune, Spitzer Resigns After Night in D.C. Hotel

Gov. Eliot Spitzer's 15 months in office had been far from the triumph many predicted but no one expected such a spectacular crash. On March 12, the governor resigned, some 48 hours after it became publicly known that he had been the client of a high-priced prostitution ring. Even a public used to the foibles of the political leaders could only gasp at the downfall of Spitzer, who delighted in going after others suspected of wrongdoing and who as attorney general prosecuted several prostitution rings.

Lt. Gov. David Paterson succeeded Spitzer and, as a long-time -- and well-liked -- legislator quickly sought to try to end the sharp atmosphere in Albany that had characterized Spitzer's 14 months in office. Given the enormity of the state's problems though -- particularly its looming financial woes -- he faced a daunting task.

Council Extends Term Limits So Bloomberg Can Run Again

Bloomberg's search for his next job took an unexpected twist in October when he announced he would really like to hold on to the one he has now. Contending that the city needed his fiscal expertise in these tough financial times, Bloomberg set about reversing the law -- approved twice by voters at the ballot box -- limiting all city officials to two terms. As has often been the case, he enlisted as ally City Council Speaker Christine Quinn, who also faced the loss of her job in 2009 because of term limits -- and whose mayoral hopes had faltered in the wake of a scandal involving City Council funds (see below). Members of the city's business establishment also backed the mayor's bid, while on the other side good government groups and the Working Families Party, among others, argued that, whatever the shortcomings of term limits, the mayor and council should not unilaterally overturn the will of the voters.

On Oct. 23, in one of its most divisive votes ever, the council approved the extension of term limits. Legal challenges continue. Meanwhile Bloomberg has promised to put the issue before a charter revisions commission -- but that will have to wait until after the billionaire mayor already has had his chance for his third term.

GOP Loses State Senate Majority But Now What?

After more than 40 years, the Republicans lost their majority in the State Senate, putting the body in Democratic hands -- or so it seemed on election night. Democrats won two GOP seats in November, getting at least a 32 to 30 edge.

But the party, which already held the governor's office and the Assembly majority, seemed unable to close the deal. Three renegade Democratic senators from New York City withheld support from the party's Senate leader, Malcolm Smith, trying to extract various concessions. The party leadership and the three reached a deal in early December, only to see it crumble. And so it remained with only days to go before the next legislative session begins. Stay tuned.

Congestion Pricing Falters But Tolls Get Another Look

Despite support -- albeit a bit grudging -- from the New York City Council, Gov. Paterson and then Senate Majority Leader Joe Bruno, Mayor Bloomberg's plan to charge people to drive into Manhattan during the work week sputtered to a halt in early April. Assembly Speaker Sheldon Silver refused to bring the issue to a vote, effectively killing it and costing the city $354 million in federal aid in the process.

As the year ended, though, another more conventional plan to charge people to drive in Manhattan was getting a renewed look. A commission on transit finances headed by former Metropolitan Transportation Authority Chairman Richard Ravitch called for placing tolls on the East River and Harlem River bridges to raise funds to help plug the MTA's huge budget shortfall -- without drastically cutting service. The plan, though, seemed likely to encounter the obstacle that blocked congestion pricing: the opposition of many officials whose constituents would have to pay those tolls.

Investigators Target Council's Discretionary Funds

In April, the New York Post reported that, over a period of at least several years, millions of dollars in City Council "discretionary funds" were allocated to organizations that apparently did not exist. The weeks that followed saw a stream of questions and concerns about the council's so-called member items, or what John McCain would call "earmarks." In addition to the phantom groups, some funds were meted out to organizations run by relatives of council members or by people who gave heavily to their campaigns. Some of the organizations did not do the work they claimed to do or did political chores for elected officials. The mayor had his own pot of money that he gave outto his favorite council members to, in turn, dole out to their pet charities.

The revelation led to indictment of two aides to Brooklyn Councilmember Kendall Stewart and sparked a fight within Council about how to subject the process to greater scrutiny and transparency.

Nine Die in Construction Crane Accidents Prompting New Rules

Two construction crane accidents within two and a half months of each other, both in Manhattan, killed nine people, prompting concern about whether the city government had sacrificed public safety in its effort to building more, higher and faster. The accidents led to the resignation of the buildings inspector and tighter rules on crane regulation.

Clinton to State, Kennedy to Senate?

In a development it's safe to say no one foresaw a year ago, President-elect Barack Obama has selected Hillary Clinton as secretary of state. That creates a vacancy for her Senate seat -- though not in the way many expected.

As the jockeying began with all the usual suspects (Rep. Caroline Maloney, Attorney General Andrew Cuomo, Nassau County, Executive Tom Suozzi, etc., etc.), Caroline Kennedy began making it clear that she would like the job. Just by wanting the job, the fundraiser for the city's schools and daughter of the late president, emerged as the odds-on favorite for the job. Her simply wanting the post seemed to create a juggernaut -- despite questions about her experience, stands on the issue, public support or lack thereof. As the year ended, though, some pundits began sensing an anti-Caroline backlash and bandying new names about.

Despite the barrage of press accounts, the race remained too close to call. There is only one voter -- Gov. Paterson -- and, so far, he's not talking.


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