2003 City Budget - After The Handshake

By Mark Berkey-Gerard

For months, New Yorkers have been hearing dire predictions about the city budget and the $5 billion deficit. Senior citizens centers shut down. Trash piling up on the streets. Recycling eliminated. Millions of dollars in education funding slashed.

But when the mayor and the City Council shook hands on a $42 billion budget agreement, both sides declared a tempered victory. The city - both sides agreed„had made it through a difficult process by "spreading the pain."

Still it would be difficult to call it good news.

Some members who had vowed to not to budge on education funding, tried to explain to parents waiting on the steps of City Hall how cutting $60 million to schools was still a victory.

"What started out as a $358 million cut to education is now very small," said Brooklyn Councilmember Bill DeBlasio. "I think we ended up with much more than the mayor ever imagined."

Facing staggering $5 billion deficit, the power of the mayor, and the fact that Albany still controls much of what the city can do, the council found its ambition in check.

The 2003 budget, which begins July 1, includes significant cuts and extraordinary borrowing measures: The plan means:
  • reducing the size of the police force by 1,600 people
  • eliminating ambulance shifts
  • cutting funding for parks, cultural programs, and homeless shelters
  • suspending plastic and glass recycling programs
  • and increasing the city's debt by $1.5 billion.
"I don't think when any of us took office in January that we thought we would have to go through these kinds of measures," said Queens Councilmember Leroy Comrie.

To its credit, the council still exceeded some expectations.

Term-limits that ousted 38 of the 51 members in January did not create chaos. And the council was able to win back roughly $175 million that the mayor wanted to cut, nearly equal to what the old City Council was able to do in better fiscal times.

The City Council was able to claim victory for:
  • keeping seven senior centers open
  • creating new day care for 3,000 children
  • keeping libraries open six days a week
  • saving 40,000 summer youth jobs
  • restoring funds to programs for HIV prevention and infant mortality
  • and reducing cuts to cultural programs from 15 to 5 percent.
"We saved this city from further bleeding," said Councilmember Charles Barron.

But the council's call for $1 billion in new taxes to pay for schools and social programs was ignored. The city only asked the state to approve a $218 million -- $1.42 increase in a pack of cigarettes, a 65-cent a month charge on cell phones, and an increase in parking fines.

So as this year's budget battle comes to a close, are there clear winners and losers? Has anything changed with the new mayor and new City Council? And will this year's solutions be next year's problems?


When the lobbyists and advocates who spent several months camped out in front of City Hall saw the cuts in the new budget, they agreed that it was not good news, but it could have been worse.

The City Council kept its support for HIV prevention measures. Weekend meals for senior citizens were preserved. Drug and alcohol programs, summer jobs for youth, and even housing programs for homeless were reduced, but still intact.

Still some council members felt they had fallen short of what they promised voters when they campaigned in their neighborhoods.

"We still have a poor and working-class that are suffering, and rich, upper class that are not," said Bronx Councilmember Helen Foster.

If someone can win in a budget process, then Mayor Michael Bloomberg likely came out on top.

Throughout the budget negotiations, Mayor Bloomberg focused more on gaining control of the city schools and tended to ignore protests from the other side of City Hall. The mayor even chose to play in a charity golf tournament the day the budget was due.

"While he is doing 18 holes, we're preoccupied with one hole," complained Harlem Councilmember Bill Perkins, referring to the city's deficit.

In his first six months in office, the mayor has gained control of the city schools, negotiated an overdue contract with teachers, and now has balanced a budget during the worst fiscal crunch in decades. There were no massive layoffs of city employees and no steep new taxes. And he was able to give the City Council enough that they too could lay claim to victory.


As usual, much of the bad news is cloaked in government jargon that can confuse the average citizen.

The mayor's office referred to a 65 cent a month tax on cell phones, which will generate some $41 million, as a "surcharge." The increase in parking fines, which is expected to raise some $62 million, is a "fee." The mayor reserved the word "tax" for his $1.42 cent levy on a pack of cigarettes, which will now cost $7. The cigarette tax was the one exception, the mayor said, because it would save lives.

On the other side of City Hall, the City Council prefers to talk about "restorations" to the budget, not what they have agreed to cut. The council's major claim is that it avoided $300 million of a $358 million in proposed cuts to education. Officials also added that the $58 million would come out of administration, not out of the classroom.

But as one parent pointed out, the money was never really taken away.

"We have to drop this language, talking about restorations," said Cecilia Blewer, a mother of two public school children and one of 36 people who were arrested in recent education demonstrations. "It's their job to fully fund education. And this is still a cut."


Although the city has a new mayor and new City Council, this year's budget process followed familiar patterns.

The mayor released the first budget proposal in February laden with deep cuts that he most likely never intended to make. The council responded by saying they would fight for senior citizens and children and proposed new taxes that they knew would never be approved. The council then threatened to pass its own budget as it did in 1998. The mayor promised to veto any council budget that included tax increases.

But as was most often the case under former Mayor Giuliani and former Council Speaker Vallone, the two sides finally met in the middle, with the mayor having the upper hand in last minute negotiations.

"It seems like they used the same road map to negotiate the budget as they have in the past," said Doug Turetsky of the Independent Budget Office.

And for all its new energy, the City Council found its hands tied by the power of the State Legislature. Every new tax - except a property tax - must still be approved by Albany. In the end, the council's talk of restoring the commuter tax, which would have brought in $450 million a year, was just a political gesture.

Others noted that the last minute, closed-door negotiations between the mayor's and council's staff once again left the public and even many of the council members out of the process.

"Some of the obstacles are technical... but the bulk of them are political, such as the secret negotiations over hundreds of millions of dollars in the final days," Glenn Pasanen wrote in a recent article.


The city's recycling program was a victim of this year's budget negotiations.

Mayor Bloomberg wanted to scrap the city's metal, glass, and plastic recycling program until a new more efficient plan could be put into place. The council argued that not only was it bad for the environment, but suspending the program would undercut years of public education about recycling.

Again the two sides compromised: plastic recycling will be suspended for a year and glass recycling will be suspended for two years. Paper and metal will continue.

"Given the scenario, we realize we can't have pure victories," said Councilmember Michael McMahon, chair of the waste and sanitation committee who fought the mayor as long as he could. "We all got half of what we wanted."

The amount of money that will be saved continues to be in dispute. The mayor's office estimates it will save $40 million a year; the City Council says it will be more like $20 million. Environmental groups argue that whatever the savings, it is just a sliver of a $42 billion budget, and it amounts to bad policy.


Although the budget was unanimously approved by the City Council, the plan presents some serious questions for the future of the city.

The city is using several one-time funding measures that they will not be able to repeat in the future.

The city will funnel $275 million in state aid to pay for the new teachers' contract. Next year, the expenses will continue, but the state is unlikely to give such a sum. In a bizarre move, the city is also selling one of its water tunnels for $100 million so a private owner can use it as a tax write-off.

Because of the events of September 11, the city has asked to borrow some $1.5 billion that will be paid back with interest over the next 20 years.

This year's plan also assumes roughly $500 million in labor union negotiations and federal assistance that are still being negotiated. If that money does not come through, the city may have to borrow even more.

As the budget watchdogs warn of future deficits over the next three years, some City Council members are already looking ahead to some of the taxes that they gave up and promising a bigger fight next year.

"The battle for the commuter tax is just beginning," said Councilmember Bill DeBlasio. "We are going to need those revenue proposals we put on the table more than ever in the coming months."


Three budget watchdogs debate the mayor's initial proposals in Feburary 2002:
  • Glenn Pasanen from 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.