Issue of the Week

2002 Budget Roundup

By Mark Berkey-Gerard

13 May 02

For George Chuang, a manager at the Full Ho Restaurant in downtown Flushing, the budget debate currently being waged at City Hall can be narrowed down to one issue -- trash.

Chuang is responsible for keeping the sidewalk and nearly two feet of the street in front of his restaurant clean. He sweeps several times a day, but nearby trashcans overflow with food wrappers, soda cans, and newspapers. If he cannot keep the area clean, he gets fined -- $50 the first violation, $100 for the second, up to $250.

"The garbage was picked up two hours ago," he said. "But when it spills over, the owner gets the ticket."

Under Mayor Michael Bloomberg's budget proposal, garbage pick-ups in the business areas like downtown Flushing would be cut from seven times a week to two times a week starting July 1.

Chuang fears that dirty streets will not only mean more fines; it eventually will mean less business. "We need pick-ups every day or several times a day," Chuang said. "Two times a week is not enough. The streets will fill with garbage, and people will not come to dinner."

For most New Yorkers the city's looming $5 billion budget deficit, and what it will mean for them, is not so clear-cut.

On one hand, the mayor has painted a dark picture of the future if the city does not make the $1.8 billion in cuts in services that he is suggesting. When he presented his budget a few weeks ago, the mayor recalled the fiscal crisis of 1975 when the city had to lay off 63,000 employees, shut down firehouses, and close hospitals to keep from going bankrupt.

On the other side of City Hall, the City Council says the mayor has resorted to "scare tactics." What he should do, they argue, is accept their proposal for nearly $1 billion in new taxes that would lessen the cuts to schools and keep the city running smoothly.

The unions, lobbyists, advocates, and non-profit groups are all fighting to hang onto their piece of the $40 billion budget. Teachers are threatening to strike if they do not get a new contract. Thousands of senior citizens recently filled City Hall park to protest cuts to programs for the elderly. Last week, a group of AIDS activists staged a sit-in at the entrance to the mayor's office, locking arms and chanting "This is what Democracy looks like!" until police hauled them away.

Through all of the debate, it is difficult to assess just how bad things could get, nor to answer the questions most individuals are most interested in: Will crime go up? Are there enough textbooks in my child's schools? Will I have a job? Will I have to pay more taxes?

While many details will be negotiated in the next few weeks, New Yorkers could see some radical changes as soon as July 1.

If the mayor's budget is approved, a library in the South Bronx says it will have to close down two days a week (Read a story); hundreds of elderly in Coney Island will lose their senior center and their weekend meals (Read a story); and a firehouses may be slower in responding to fires.

In the next few weeks, the debate and dire predications will escalate as the mayor and City Council must agree on a final budget by June 5.

And everyone involved -- the mayor, the City Council, the lobbyists and unions -- will try to convince New Yorkers that their way is the most sensible, the least painful.

BUDGET BACK-AND-FORTH

The city's budget process is designed to be year-around collaboration between the mayor and the City Council.

The mayor releases his first draft called the preliminary budget in February. Then after holding a series of hearings where they listen to heads of agencies, lobbyists and citizens, the City Council releases its response in April. The mayor's produces a second draft of the budget, called the executive budget. The City Council then holds another round of budget hearings between May 9 and May 28. The mayor and the City Council agree on a final budget by June 5.

But so far the two sides of City Hall have done more posturing than collaborating and with the deadline just weeks away, the mayor and City Council are at an impasse over cuts and taxes.

Mayor Michael Bloomberg's plan calls for $1.8 billion in cuts to services and borrowing $1.5 billion which will be paid back over the next 20 years. The mayor is also counting on $1.3 billion in aid from federal and state government and concessions from unions. If the city can not get the help it needs the mayor says he is prepared to make an additional $500 million in "contingency cuts." His only new tax is a $1.42 increase in the price of a pack of cigarettes.

The City Council says the mayor's cuts are too deep and will disproportion ately hurt schools and the poor.

The council wants to restore the mayor's proposed cuts to education, programs for the elderly, parks, and libraries. The only way that is possible, they argue, is through nearly $1 billion in new taxes. A personal income tax increase would produce $400 million for education, restoring the commuter tax would help offset borrowing, and liquor and property tax would raise an additional $96 million.

However, with the single exception of property tax, every one of the council's tax increases must be approved by the State Legislature.

Each individual council member is also fighting for approximately $80,000 in discretionary funds to use in their district. This money goes to community programs, improvements for parks, senior centers, and local arts. Council members want these funds so they can demonstrate what they have done for voters.

The mayor and the City Council also disagree over who should compromise in the next few weeks.

"In the end, it is my responsibility to explain to the City Council what is doable and what is not," the mayor said when he presented his budget a few weeks ago.

"The mayor may be a new politician, but he's still a politician," said City Council Speaker Gifford Miller. "And politicians respond to the public."

HOW DID WE GET HERE?

Since 1996, New York City has had a strong economy and the good fortune of bringing in more money than it spent. Each year whatever was left over from the previous year was carried over to help balance the budget or went back to New Yorkers as tax cuts.

Now the city is paying for those flush years. The city workforce has grown larger and more costly. And tax cuts enacted since 1995 will now cost the city about $2.6 billion -- half of this year's budget deficit.

But the deficit is not a total surprise. Last year, some in the city warned that the budget surplus would not continue in 2002. But because it was an election year, the long-term problems were largely overshadowed by campaign promises.

"Mayor Bloomberg would have inherited a very large budget shortfall even if the tragic events of September 11 never occurred," said Ronnie Lowenstein of the Independent Budget Office.

September 11 also added to the problem. Tourism took a dive, lower Manhattan was shut down for several weeks, and the city brought in fewer taxes from struggling businesses. The terrorist attacks worsened the recession in New York. The city lost 150,000 jobs since December of 2000, which is three times as high as the job loss experienced in other large cities.

All of this adds up to a budget deficit estimated at $5 billion , or roughly 12 percent of the total budget. The city expects to have comparable deficits for each of the next three years, and estimates that in 2006 it will be even worse. Then, the city could face a $6 billion gap.

WHAT ARE THE OPTIONS?

With the downturn in the economy, many are looking to new taxes as a way to solve the city's woes. New York City already has the highest taxes in the nation and the subject pits the mayor against the City Council, Republicans against Democrats, the city against Albany, and businesses against unions.

"Smart, moderate taxes can actually help strengthen the economy and debt rating agencies would see it as a sign of stability," argues Glenn Pasanen of City Project, a watchdog group that is calling for $1.8 billion in tax increases, a new toll on the East River bridges, and more help from Albany.

On the other hand, the Citizens Budget Commission argues against borrowing and new taxes and says that the mayor should cut deeper, especially to the city's workforce. "Talking about cuts is a way of making the fiscal crisis real to citizens," said Charles Brecher of the organization.

To try to give lawmakers some more creative options to consider, the Independent Budget Office produced three dozen different ideas for how lawmakers might close the deficit. Some of the options include:

  • restoring the fare on the Staten Island ferry
  • ending a tax break for Madison Square Garden
  • bringing back the commuter tax
  • reopening the Fresh Kills landfill
  • shortening the work week for many city employees
  • raising the income tax rate on the wealthiest citizens by one percentage point.

But even these proposals would have to go along with deep cuts to the services that New Yorkers have come to depend on.

MEASURING THE PAIN

So should the city cut maintenance workers at parks? Should glass, plastic, and metal recycling be scraped until a more affordable plan can be put together? And will crime rise if the number of police is reduced?

These are some of the difficult issues behind the numbers being debated at City Hall. And the mayor and the City Council disagree on many of them.

Aging
Facing a cut of 11 percent, the Department of Aging is planning on closing seven senior citizen centers and delaying the opening of four new centers. If the mayor's contingency plan goes through, an additional 15 centers would be closed. (See a map of elderly population and locations of senior centers.) Weekend meals for 12,000 elderly would be eliminated, the number of social workers would be cut, and programs and activities would be reduced.

Arts
The city's cultural programs would have to absorb a 15 percent cut in their budget, which would affect local community arts groups as well as large museums and institutions. Lincoln Center, MOMA, Guggenheim Museum, and the Queens Art and Cultural Council would not receive the funding they expected this year and would have to delay new construction.

Children
During better economic times, the city had planned on expanding its subsidized child care program. According to Citizens Committee for Children nearly 200,000 New York children are eligible for childcare, but because of lack of funds only about half receive assistance. Now the city is scrapping its $80 million program to expand day care. The cuts also come at a time when many families are moving off of federal welfare benefits.

Corrections
The city's inmate population has been declining since 1992 and hence the mayor's budget plans to save $20 million by cutting 500 corrections jobs. The city also plans to close three facilities, one on the Brooklyn Navy Yards and two boats that sit off of Rikers Island that can hold over 1,600 inmates, but have been empty for some time. The city will go ahead with a new facility that can hold 448 inmates with serious disciplinary issues.

One of the few things the mayor does spend money on in his budget is expanding juvenile detention centers. It calls for 224 new beds to be built. At the same time, contracts with six community-based groups that try to keep youth out of jail will be cut by $750,000.

Education
The battle over control and funding of the city's schools is the primary focus at City Hall. Mayor Bloomberg has argued that he will not put more money into the school system until he can oversee it like other city agencies. The City Council dubbed their budget the "Education First" plan and called for restoring $354 million of the mayor's cuts and instituting a personal income tax increase that would raise an additional $400 million a year.

Meanwhile the teachers union is still trying to win a new contract and find new teachers. Over half of the new teachers are uncertified and an estimated 7,000 of 80,000 teachers may retire this year.

Fire Department
On September 11, the fire department lost 343 people and a combined 4,000 years of experience. Now the fire department will try to rebuild its ranks and morale with $60 million less in its budget. In order to save money, the city hopes to reassign firefighters who can not do active duty because of medical reasons and employ 675 fewer full-time, uniformed firefighters than it had in November 2001.

The mayor's contingency plans would consolidate eight engine companies. No firehouses would be closed, but some would be left with just a ladder truck. The firefighters union argues that they have already lost too much this year to endure further cuts. "We've already paid the price in blood, and so have the police officers," said Matty James of the Uniformed Firefighters Association. "Any level of cuts to police and fire is unacceptable."

Garbage and Recycling
In the hope of saving $56 million , the city has proposed eliminating the city's metal, glass, and plastic recycling program (See recent Issue of the Week). Merchants and residents near busy business districts are also worried about a plan to cut commercial trash pick up from seven to two times a week.

Health
Last year, the City Council created a number of new programs in violence prevention, school mental health, and alcoholism treatment. The mayor's budget would cut 11 such programs in order to save $8 million. To try to save area hospitals that are running deficits, the city will cut 1,000 jobs of people who do not provide direct care to patients. The City Council is lobbying for more funding for HIV and infant mortality prevention programs.

Housing
The capital plan for new building projects has been cut by 18 percent or $380 million, most of which was scheduled to go to rehab houses and neighborhoods. The programs cut would affect both low-income families looking for apartments and middle income families trying to purchase new homes. "You need to have a funding stream that is insulated from the ebb and flow of the budget process to keep momentum going," said Joe Weisbord of Housing First. "But right now we are not keeping up with going housing needs. We continually fall further and further behind."

Homelessness
Last year, New York City experienced the largest one-year increase in homelessness since the Great Depression, according to the Coalition for the Homeless. In January of 2002, over 31,000 people were homeless and nearly half of those were children. The city has proposed giving shelters $17 million less next year without reducing the number of available spaces.

Parks
The mayor's plan cuts 13 percent from the city's parks and recreation budget -- which largely means reducing the number of people who perform park maintenance, do clean up, and run children's programs. "The full time workforce is at an all-time low," said Mike Klein of New Yorkers for Parks. "Full time workers under Mayor Koch was 5,000 and now we're down to 2,000."

Police
To offset the loss of some of the police positions, Mr. Bloomberg's budget calls for hiring 800 civilians to take desk jobs held by police officers, freeing up the officers for patrol duties. But the proposed reduction in the size of the force drew criticism from unions who warned of cutting too deep. "The one thing that we have learned over the past years is that what brings tax revenue into the city is the safety factor," said Patrolmen's Benevolent Association President Patrick Lynch. "When people feel safe, tourists come and businesses stay and recruit here."

THE COUNCIL'S OWN BUDGET?

If the mayor and City Council can not reach an agreement, the council has the option of passing its own budget.

The last time the council did this was in 1998, when Speaker Peter Vallone and Mayor Giuliani disagreed over taxes and a new Yankee stadium. The council passed its own budget, the mayor vetoed it, and then the council overrode the veto with the required two-thirds majority. Giuliani then refused to spend the money that the council allocated, creating a stalemate that lasted for five months.

The prospect of passing its own budget is a last resort, one that many in the new council would like to avoid. "It would not be in the best interest of the city," said council Deputy Majority Leader Bill Perkins. "We have to protect the services of the city, but we also have to build unity."

OTHER BUDGET RESOURCES

RELATED GOTHAM GAZETTE ARTICLES

Three budget watchdogs debate the mayor's proposals:

  • Glenn Pasanen from City Project finds that the mayor's plan lacks vision and asks for biggest sacrifices
  • E.J. McMahon of the Manhattan Institute says Bloomberg showed his compassionate side (wrong-headedly) when he spared the city workforce from massive cuts.
  • Doug Turetsky of the Independent Budget Office says the mayor is being clearer than his predecessors about what he is doing -- except for a half billion dollars here and there.

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