Gotham Gazette

The Place for New York Policy and politics

Topics

Topics

Dedicated Taxes


NYC Taxes Annual Revenue for City *
Real Property $9.9 billion
Personal Income $3.9 billion
Sale and Use $3.6 billion
General Corporation $1.1 billion
Unincorporated Business $779 million
Real Property Transfer $509 million
Mortgage Recording $482 million
Commercial Rent $398 million
Utility $292 million
Banking Corporation $181 million
Cigarette Tax $156 million
Other $516 million
*Estimated from Mayor Michael Bloomberg's Executive Budget, Independent Budget Office, and City Comptroller's reports, and includes tax increase approved for fiscal year 2004
Like many New Yorkers, Forest Hills resident John Romanski has been frustrated by the recent budget battles at City Hall.

Romanski's property taxes went up more than a hundred dollars a year when Mayor Michael Bloomberg and the City Council raised them by 18.5 percent last fall. Then this spring, the mayor has closed firehouses, cut teacher's aides, threatened to reduce trash pickups in his neighborhood, and even proposed closing the Queens zoo. (For more on the final budget agreement see Breaking Down the Budget Game)

If his property tax increase was not going pay for all of these services, Romanski wondered, how was it being spent?

"I thought that if my real estate tax was divided up for essential services like police, fire, and sanitation, and the city was cutting back, then I might be in line for some kind of rebate," he said.

If Romanski lived in Nassau County, he would have had a little better idea of how his property tax money was being spent. In Jericho, for example, residents get a bill that includes not only a county and town tax, but also a tax to support libraries, and a separate levy to fund schools.

However, New York City operates with a highly consolidated government and budget process. Every year, $20 billion in taxes are collected and put into a general fund and then distributed to various agencies according to a budget decided by the mayor and the City Council.

Some argue that this kind of budget process means that things like education, parks, libraries, and cultural institutions routinely get shortchanged.

One way to relieve this problem - and citizens' confusion about where their money is going - is to institute dedicated taxes that go to specific purposes.

In April, Manhattan District Attorney Robert Morgenthau called for a "public safety tax" on commuters who earn a living in New York City to boost funding for the city's police, firefighters, hospital employees and other public safety workers.

Last year, the New York City Council proposed a personal income tax surcharge that would cost the average New Yorker $25 a year and would generate $400 million a year for school construction.

And for years, some parks advocates have been lobbying for a dedicated funding stream to pay for green space, such as is done in such cities as Chicago, Seattle, Denver, and Minneapolis. (See sidebar on Minneapolis parks.)

But in New York, which already has the highest taxes of any city in the country, would dedicated taxes provide reliable sources of funding or make it even harder to balance a $44 billion budget?

WHY NEW YORK TAXES THE WAY IT DOES

Most large cities, like Los Angeles, Chicago, and Houston, rely on just two taxes - the property tax and sales tax. But New York City has more than two dozen taxes including property, general sales, personal income, and business income taxes. (See chart for local taxes.)

Part of the reason that New York City must get its revenue from a wider range of sources is it also spends its money on a wider range of services. Most cities do not have the large municipal workforce, the extensive police and fire departments, and social service programs that New York does.

"In New York State half of Medicaid and welfare are borne by local governments," said George Sweeting, deputy director of the Independent Budget Office, who notes that in many cities the state and federal government pay the entire bill for these programs. "That forces the city to look at a range of revenue."

NYC'S DEDICATED TAXES - PAST AND PRESENT

The idea of a dedicated tax may seem alien in New York City, but it has been used in the past.

In 1989, the City Council and then Mayor David Dinkins approved the "Safe Streets-Safe City" surcharge on the property tax and persuaded the State Legislature to approve an income tax surcharge as well. In allowing the tax hike, the state required the city to have at least 38,310 officers, an increase of more than 6,000. The additional funding has been credited with dramatically reducing crime in the city.

In 1996, when the tax expired, City Council Speaker Peter Vallone proposed extending the surcharge for three years to renovate and build schools, but Mayor Rudolph Giuliani rejected the idea.

And although most New Yorkers are not aware of it, they already pay taxes that go to specific purposes.

A quarter percent of the local city sales tax as well as a portion of mortgage recording tax goes to the Metropolitan Transportation Authority to help fund subway, bus, and commuter rail service. And there is a $1 a month tax on every New Yorker's phone bill that goes to 911 emergency phone service.

And there are also designated fees that residents and businesses in certain areas pay.

In the city's 44 Business Improvement Districts, the property owners in a defined area vote to pay a special assessment on the property tax for security, street cleaning, park improvement, and other services above and beyond what the city provides.

In Battery Park City, which an independent state authority operates, more than a third of the $5.9 million spent annually in the parks on horticulture, maintenance, and programming comes from "civic facility fees" paid by residents and developers.

The Department of Environmental Protection, which oversees the city's water and sewers, is the one city agency that has its own revenue stream. Funding for maintaining and upgrading these systems comes from water and sewer fees levied and collected by the independent New York City Water Board. These fees are used to back bonds issued by the New York City Municipal Water Finance Authority for capital improvements. The State Legislature established the two independent agencies in 1984 because of a concern that the city was not adequately funding the modernization of the essential systems that supply and safeguard drinking water and collect and clean wastewater.

"We have dedicated funding for water and sewer because long ago it was realized that a good water and sewer system requires a long term view [and] should not be left up to the annual political shenanigans," said John Rooney, an advocate for funding parks in a similar manner.

HOW WOULD DEDICATED FUNDING WORK IN NEW YORK CITY?

Education

Most school districts in New York State are required to win voter approval for any substantial increases in their school budgets. That rule, however, does not apply to New York City, Yonkers, Rochester, Syracuse and Buffalo - often labeled the "Big Five" - in which school spending is subsumed by the larger, municipal budget process.

New York City schools get their funding from the state and the city budgets and must compete with other services like the fire department or sanitation for funding. The governor and State Legislature in Albany negotiate state education funding as part of the state budget package. Money is distributed to the various school districts through 40 different complicated aid formulas.

Some argue that means that New York students do not get their fair share. In 1999, New York City spent $9,623 per-pupil - $694 less than the state average of $10,317. The average downstate suburb, including Westchester, Rockland, Orange, and Nassau counties, spent $12,520 per student. Last week, the Court of Appeals, the state's highest court, agreed that the funding for education has been inequitable, and ordered the state to find a new formula so that schoolchildren in New York City are no longer at a disadvantage.

A personal income tax surcharge proposed by the City Council in 2002 would have generated $400 million a year for school construction. But Mayor Bloomberg never pursued the idea and it was abandoned when the mayor and the City Council chose to increase property taxes 18.5 percent to raise $1.7 billion for the general budget.

This year, the idea of a dedicated tax for education was never part of the budget process as the mayor gained approval from Albany to increase the sales and income taxes.

Some feel that if New Yorkers were given more say over how their tax money is spent - in particular on education - that city residents would support the idea.

"In my opinion, the majority of people would say `yes' to increasing the amount of money going to education if they knew the money was being well spent," said Councilmember Robert Jackson, who serves on the education committee. With the court's ruling last week, Jackson's opinion may soon be tested.

Parks

A dedicated real estate tax is the major source of funding for some of the country's s best park systems - including Seattle, Chicago, and Minneapolis. (See side bar on Minneapolis parks.)

"By and large, the systems that have dedicated funds are in better shape and do a better job," said Peter Harnik, author of Inside City Parks.

Minneapolis "may come closer to urban park nirvana than any other metropolis in the United States," urban parks expert Peter Harnik wrote in Inside City Parks, his in-depth look at 25 city park systems in the United States.

The Twin City is known for its 53-mile-long Grand Rounds parkway system of scenic roadways, trails, and paths linking many of the city's lakes, parks, gardens, and natural areas. There are miles of pedestrian and cycling paths and ski trails, all well maintained. Minneapolis has almost half as many sports fields and more recreation centers than New York City, even though it has one-twentieth the population. According Harnik's most recent data, in 2001 Minneapolis spent $164 per resident in parks operating and capital expenses, the third highest of 48 major U.S. cities. In comparison, that year New York City spent $54 per capita on parks.

A major reason Minneapolis has been able to create and maintain its extensive park system is that the parks are owned and operated by the semi-autonomous Minneapolis Parks and Recreation District, governed by an elected board of commissioners. The district determines its own budget and has the authority to levy taxes and issue bonds. It also keeps the fees and concession revenues from specialized recreation areas like golf courses and water parks.

In 2002, the park district received 9.6 percent of a resident's property tax bill, which would be $227 on a median value house. The other significant source of funding is state local government aid, which provided about 20 percent of the district's budget until recent cuts due to the economic downturn.

Having an elected park board has made the Minneapolis park district more accountable and responsive to residents. When the board had to cut the 2003 budget this spring, it went to the community for feedback on where the cuts should be made.

-Anne Schwartz

One argument often made for a dedicated tax for parks is that they require the long-term planning made possible by a consistent level of funding. A predictable revenue flow allows regularly scheduled maintenance of buildings and grounds that would otherwise deteriorate to the point where they need costly capital renovations.

From 1991 to 2002, for example, the city spent $1.9 billion in capital funding on parks - borrowed money on which the city pays interest - much of which went to restore things that had fallen into disrepair.

The Independent Budget Office has calculated that a dedicated property tax of 1.5 percent of assessed value could raise about $100 million for parks, roughly half of recent park budgets but far less than park advocates believe is needed. A dedicated tax of that size would raise property taxes $48 for the average coop, $29 for a rental apartment in a large building, and $34 for a single-family house.

David Lutz, the director of the Neighborhood Open Space Coalition, has been calling for a dedicated funding source for parks, favoring a tax on plastic grocery bags, beverage bottles and takeout containers. It would be similar to Ireland's year-old 15-cent plastic bag tax, which is earmarked for the environment - although that tax has been so successful in reducing supermarket bag use and litter that it has raised a fraction of the money expected.

Libraries

Many library systems across the nation are funded by local taxes. Homeowners on the North Shore of Long Island, for example, pay about $70 a year to fund their own library system.

New York has a system of libraries - the New York Public Library, Brooklyn Public Library, and Queens Borough Public Library, as well as the New York Research Libraries - that operate on a mix of city, state, and federal revenue as well as private contributions.

If the city were to dedicate part of the property tax for libraries, property owners would see a rise in assessed value from more than a third of a percent to almost one percent, depending on the borough, according to an Independent Budget Office estimate. To fund the New York Public Library, which serves the Bronx, Manhattan, and Staten Island, the average single-family home owner would pay about $58 more a year and the average condo owner would pay about $174 a year.

The idea of a library tax has not caught on and the alternative during the recent budget crisis has been to seek private funding. Recently the Carnegie Corporation donated $4.5 million and the Starr Foundation gave $1.5 million in an effort to raise additional money for library operation.

Cultural Centers

Recently, the Brooklyn Museum of Art announced that it would be forced to close for two weeks in August because of budget cuts. It is one of 34 institutions owned by the city or on city property that make up the Cultural Institutions Group, whose budget would be reduced to $77 million from $105 million under the mayor's proposed budget.

As with libraries, Mayor Michael Bloomberg's solution has been to encourage private donations.

"What I would suggest is that you write a check, get all of your friends to write checks, and if every one of your friends gets another person to write checks, with six degrees of separation, pretty soon everybody will be supporting the culturals," Bloomberg said.

Another idea, which was never discussed in this year's budget process, is to issue a hotel tax to help fund the Department of Cultural Affairs.

Under a scenario analyzed by the Independent Budget Office, increasing the hotel tax by 1 percent could raise additional $39 million for museums, theatres, zoos and botanical gardens. On the downside, the extra tax might reduce hotel stays, decreasing the city's total receipts from the hotel tax and the sales tax.

WOULD DEDICATED TAXES WORK IN NEW YORK CITY?

While advocates argue that dedicating taxes would generate a stable revenue and help protect schools, parks, libraries and museums from cuts, many budget experts consider dedicating taxes to specific services an unwise public policy.

"From a fiscal perspective, it is less attractive because it can skew priorities, particularly in a downturn like we're in at the moment, when competition for tax funding is very intense," said Ronnie Lowenstein, director of the Independent Budget Office. "At times like these, if you lock in a certain piece for parks or tourism or libraries, it limits the city's options."

The kind of dedicated tax that would be worth exploring, according to Edmund J. McMahon, of the Manhattan Institute, is one going to very local districts organized around neighborhood services, following the model of a Business Improvement District.

For example, if a park adds value to the surrounding area, those residents might be willing to pay for it. "If a neighborhood park is well kept up, if it's nice and clean and has a full array of services, it obviously helps keep up the property value," said McMahon.

However, in the last eight months, New Yorkers have seen hikes property tax, sales tax, income taxes, and cigarette taxes, so the chance that politicians or the public would go for more seems unlikely.

"I think most people feel we've had enough already," said Marcia Van Wagner of the Citizens Budget Commission.

The City Budget: Avoiding Fiscal Meltdown


Mayor Michael Bloomberg has pulled it off. With only some last-minute negotiations with the City Council left before the city budget is adopted (as of this writing), the mayor has marshaled support to fill an $8 billion budget gap for fiscal year 2004 -- the biggest gap since the mid-1970s’ fiscal crisis. He has done so with relatively few major service reductions because of an emphasis on new revenues. New property, personal income, and sales tax increases alone will total over $3 billion in 2004. The personal income tax increase – worth $784 million in 2004 – is quite progressive. In fact, the depth and the character of the tax increases suggest a “Nixon-to-China” analogy -- that is, a radical shift in policy that only a Republican could get away with!

Problems remain. The 2004 budget for the new Department of Education is likely to be almost $400 million less than the 2003 budget, the first time since 1996 that funding has been reduced. The heavy property tax burden on lower-income New Yorkers – renters as well as owners – has yet to be addressed. The mayor’s service and workforce reductions – some of which will be restored by the council – seem targeted disproportionately at vulnerable individuals and communities. The elimination of the sales tax exemption on clothing and the sales tax increase are regressive. And the personal income and sales tax increases were – like last November’s property tax increase – stealth measures, introduced and enacted at the last minute, with no chance for public debate.

But the mayor’s overall plan has worked brilliantly. The Independent Budget Office says he got as much as $210 million more than the $2.7 billion from the state that he asked for, if in different forms. (Governor George Pataki has threatened to use the courts to try to overturn some of the State Legislature’s budget actions.) He got more than the $200 million he asked for from the federal government. He will end fiscal year 2003 with a billion dollar surplus. He has worked productively with the City Council, which has contributed its own ideas and generally supported the major elements of the mayor’s plan. Above all, the mayor has smartly averted a fiscal meltdown.

How to Find $8 Billion

The City Comptroller’s May report on the mayor’s executive budget for 2004, the State Comptroller’s June executive budget report, and the Independent Budget Office’s June report on the Albany aid package give the big picture of how Mayor Bloomberg found $8 billion in savings and new revenues to fill the awesome budget gap.

The largest components include:
· $3.2 billion in reduced agency spending
· $3.0 billion in new taxes
· $1.0 billion in surplus from fiscal year 2003
· $530 million in savings from the state taking over city debt
· $350 million from bond refinancing, taxi medallions, and state revenue sharing

The $3.2 billion in agency savings includes attrition, layoffs, funding shifts (state and federal dollars replace city dollars), re-estimates of needs, service contract cuts, and other service reductions and eliminations. Final service and workforce reductions will depend on the City Council/mayoral negotiations in June before the 2004 budget is adopted.

The $3.0 billion in taxes includes, most dramatically, the full-year effect of last November’s 18.5 percent property tax increase ($1.7 billion). The Independent Budget Office’s June study of the Albany aid package lists the gains from the brand new taxes: a personal income tax surcharge for individuals making over $100,000 a year, and couples making over $150,000 ($784 million), a city sales tax increase of 0.125 percent ($123 million), elimination of the sales tax exemption for clothing ($277 million), and a 25 percent surcharge on the property taxes of absentee homeowner landlords, a smaller version of an idea first proposed by the Council ($70 million).

The property tax increase remains a mixed bag: fair in the sense that nearly everybody, renters as well as owners, participates, and businesses pay a substantial part of it, but unfair in the lack of tax relief for most who need it. The loss of the sales tax clothing exemption – which translates into paying $86 more on $1,000 worth of clothing purchases – is especially regressive. The one clearly progressive new tax is the (temporary) personal income tax surcharge, which adds two new tax rates for high earners (affecting only 4.1 percent of taxpayers, says the Independent Budget Office).

The property tax increase in November, additional federal aid, and other actions means that the city will end the current fiscal year (June 30) with a billion dollar surplus, which will be used to pay next year’s bills. The $530 million savings in debt service was a last-minute deal with the State Legislature: The city owes $2.5 billion in debt service left over from the Municipal Assistance Corporation (MAC) bonds issued to resolve the mid-1970s fiscal crisis, and the city was going to pay it off over the next five years. Now the debt will be re-structured and the $2.5 billion will be paid off over 30 years -- $170 million a year – by the state (at a total cost of $5.1 billion, according to the State Comptroller).

Among smaller parts of the new revenue package are: $165 million from the re-financing of Battery Park City Authority bonds, $65 million from the sale of taxi medallions, and $73 million from some accelerated state revenue payments. The Independent Budget Office report shows how $2.3 billion of the $2.9 billion in state aid represents gap-filling, and the rest restoration of services that the city would not have provided itself. The restorations of health, education, and social services were made possible by the State Legislature’s own progressive enactment of state personal income tax surcharges for high earners – an idea pushed effectively by a statewide coalition of community, labor, and human service advocates.

The Politics of State Aid

From a fiscal and political perspective, the “state aid package” is a misnomer. After all, more than $1.2 billion of the package – the city’s new personal income and sales taxes – is simply the state giving the city authority to tax itself. And the state’s assumption of $2.5 billion in city MAC debt adds another dubious instance of borrowing money to pay for current operations (the state budget includes $4.2 billion in tobacco bond revenues to be used for state budget balancing).

The politics of the state package are especially interesting. As the city comptroller’s report points out, its “components…are significantly different than those assumed in the [mayor’s] executive budget.” The mayor’s revenue request to the state, beginning in November 2002, was for a commuter tax, and the city council’s alternative revenue proposal in April also focused on a (different) commuter tax. But those commuter taxes never had a chance in Albany politics. The proposed commuter tax thus worked only as a revenue “placeholder.” The last-minute shift to city taxes had political advantages: the authorship of the taxes was shrouded and any need to have a public debate was minimized. A clever if disingenuous strategy.

The Downside of the FY 2004 Budget

The state comptroller’s June report on the executive budget (and state and federal actions subsequent to its release) says, “the change in the city’s short-term fiscal outlook is dramatic and fiscal year 2004 budget balance would be achieved without draconian cuts to core municipal services – although the current plan does entail layoffs and painful service reductions.” The pain level will likely be eased somewhat by last-minute council/mayoral negotiations – also shrouded in secrecy – over several hundred million dollars of council demands.

The state comptroller also notes that the city will get some additional help from Washington from provisions in the recent federal tax cut law. States will get $20 billion from two new programs: higher federal Medicaid payments to the states and a new federal revenue sharing program. The city could receive as much as $290 million in new Medicaid funding over 15 months ending June 30, 2004. In addition, New York State will get about $650 million from the revenue sharing program, but it is not clear if the city and other localities will share in that new money.

But if the 2004 budget looks solidly balanced, it is not clear what its real impact will be.

The city comptroller’s report points out the new Department of Education’s $12.2 billion budget is nearly $400 million less than projected 2003 spending. This three percent decline is the first reduction since fiscal year 1996 and occurs as new state and federal mandates on school standards unfold. City funding is $4.9 billion, which represents only the minimum required by the June 2002 education law that gave the mayor authority over public education.

The impact of workforce reductions on services is also not clear (and also subject to last-minute adjustments before adoption). Currently, it is clear that over 50 percent of the layoffs hit two of the largest agencies working with children. The city comptroller says that 4,483 city employees will lose their jobs by June 30, 2003. Forty percent of them (1,813) are education employees. Another 12 percent (528) are children’s services workers.

Moreover, the workforce cuts are a reflection of a major shift in city spending priorities. Although the executive budget anticipates a no-growth 2004 budget of $44.7 billion --only $70 million higher than 2003’s -- the city comptroller points out that this masks dramatic changes. The 2004 budget will actually see over 23 percent growth -- $2.7 billion -- in just five non-service areas: pensions, health insurance, Medicaid, debt service, and judgments and claims. At the same time, all other city spending will decline by nearly $3 billion, or 8.7 percent. That is a worrisome sign for future city services.

The city comptroller is also more pessimistic about the city economy than the mayor. He sees job losses of 63,500 in 2003 and a gain of only 5,100 jobs in 2004, whereas the mayor sees losses of 75,000 jobs in 2003 but a gain of 20,000 jobs in 2004. The comptroller sees gross city product rising only 0.8 percent in 2004; the mayor projects it rising 2.9 percent. And the state comptroller projects that the three years beginning with fiscal year 2005 will face budget deficits ranging from $3.5 billion to $4.0 billion a year.

In other words, there is plenty to worry about in the future. But in the meantime – and absent any surprises from the governor or from the adopted-budget negotiations – it may be time to commend the mayor for a bold and successful budget strategy that stabilizes the city’s fiscal condition and maintains most city services.

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

The New Newcomers


 

When Emily Arsenault moved to New York from Minneapolis in March to try to break into the theater, she knew that getting auditions and landing a part would be tough. What the 25-year-old didn't realize was that it would be almost as hard to find a job waiting tables so that she could support herself while pursuing her acting career.

"People actually advised me to lie on my resume or they said I'd never get a waitressing job, that's how competitive it is," said Arsenault, who was eventually hired by a Manhattan restaurant. "They told me that if you're going to wait tables in New York, you'd better know how to wait tables like a professional."

More than half a century ago, in his famous essay “Here Is New York,” E.B. White wrote that New Yorkers born elsewhere who move here “in quest of something” are what give the city its passion – as well as its “high-strung disposition, its poetical deportment, its dedication to the arts, and its incomparable achievements.” No matter what these newcomers are seeking, he said, “each embraces New York with the intense excitement of first love, each absorbs New York with the fresh eyes of an adventurer, each generates heat and light to dwarf the Consolidated Edison Company.”

But what if each can no longer afford to pay the electricity bill?

The promise of the big city seems to have dimmed since September 11, 2001, with a slumping economy that has caused a surge in unemployment and an increase in costs. All this raises uncomfortable reminders of the problems that scared people away from New York in the 1970s – and are frightening even those people most intent on becoming New Yorkers.

“I stare at my walls worrying about the future,” writes Maria Luisa Tucker in Gotham Gazette’s new Newcomers Weblog. Now living in New Mexico, she is moving to New York City later this month. “The economy has soured and jobs are scarce. I have yet to figure out how I will make rent once my meager savings run out. I have only two acquaintances in the city, no job, and I’m beginning to freak out.”

WORRIED

The mix of worry, confusion, hopefulness and excitement with which newcomers arrive in the city is a very old story that keeps on being retold. A new musical that is scheduled to open on Broadway this summer imagines a kind of “Sesame Street” for recent college graduates who have braved their way to the big city. It is entitled “Avenue Q,” named after the (imaginary) street in the outer boroughs cheap enough for a young person to afford.

Characters from Avenue Q
(Photos courtesy Rick Lyon)

One puppet-character sings:
“I wish I could go back to college
Life was so simple back then…
I need an academic advisor to point the way.”

Another sings:
“I can’t pay the bills yet
‘Cause I have no skills yet
The world is a big scary place.
But somehow I can’t shake
The feeling I might make
A difference to the human race.”

But newcomers do seem more worried than usual, and they are joined by other New Yorkers. Saskia Sassen understands why.

"There does hang over New York the horror of September 11 and a gloomy picture for the global economy, etc.," says Sassen, a University of Chicago sociologist who is the author of the book, The Global City. “People are constantly asking, have we really reached the point where this old magnet function of a city like New York is dying?"

Jobs that newcomers covet are in fact getting scarcer. “It’s the industries on life support—music, publishing, the Internet, take your pick—that cloud much of the optimism for the young and unemployed in New York,” Ethan Brown wrote in New York Magazine.“These are the jobs that shape our sense of possibility, our sense that what we’re doing can be done here and only here. And they’re fast disappearing from the city’s landscape.”

"I've been discouraging inexperienced people from coming here," says Laurel Touby, the founder of Mediabistro, an online community for people in journalism and other media-related fields. "There are a lot of people who are coming here even if there is no work for them and they are just scraping by."

New York counts on an influx of newcomers because, as cities from Detroit to Philadelphia to St. Louis have learned firsthand, a stagnant or falling population destabilizes neighborhoods and school systems, drives away employers seeking large pools of labor, and leads to reductions in the tax base. It also means smaller allocations of federal dollars.

"The growth and development of great cities come from their ability to harness diversity and welcome newcomers' energy and wealth," the Pennsylvania Economy League says in a report that was in part the basis for a plan to attract people to Philadelphia.

In addition, the American Planning Association has noted, newcomers often bring with them an entrepreneurial spirit that lead to the establishment of thriving businesses and more jobs.

Over the years, New York has thrived thanks to its willingness to embrace wave after wave of newcomers, whether immigrants revitalizing neighborhoods from Brighton Beach to Belmont in the Bronx, or young people from elsewhere in the United States helping to create new industries and elevate the city's cultural life.

That seemed to change in the 1970s, when the fiscal crisis gripped New York, accelerating the flight of corporations and residents. From 1970 to 1980, the city lost 824,000 residents.

Today, the city has gained its population back. The 2000 Census counted about eight million residents, and, since then, according to Census Bureau estimates, foreign immigrants have continued to flock here -- net migration from abroad was 251,000 from April 1, 2000 to July 1, 2002 -- though among people moving within the United States, the city lost 319,000 more people than it gained.

But some sense a creep back to past troubles. As the New York City Partnership pointed out in a report (in pdf format) last fall on the anniversary of the World Trade Center attack, incomes in New York have been depressed by a total of $4.5 billion since 9/11 and the slump has destroyed as many as 32,000 jobs and $1.2 billion in income at hotels, airlines, restaurants, performing arts venues and sports organizations. In addition, there has been a dramatic reduction in the number of tourists visiting the city, especially big-spenders from abroad.

And despite some signs of economic recovery, the state Department of Labor says total private sector employment fell 1.7 percent in the city from March 2002 to March 2003. Looking at the sectors that tend to attract many newcomers, the picture is at best mixed. Jobs in the arts are actually up slightly, 0.7 percent, but media jobs are off eight percent and food service jobs have slipped as well.

For people such as Arsenault, that means there are obstacles wherever they turn. Reduced tourism and higher unemployment cut into support for arts and theater. Less support for the arts means fewer jobs and more people turning to stopgaps, such as waiting tables. Meanwhile, the demand for restaurant jobs has heated up just as the recession began cutting into business at bars and eateries, reducing the need for waiters and bartenders. The city's smoking ban, some contend, has made the situation worse.

"I'm finding that all these theaters and places that I could be auditioning are canceling shows," Arsenault noted. "People are needing to work more and they are enjoying theater and movies less because they're worried about their finances."

MEDIA SLUMP

Over the past decade media jobs enticed many young people to move to the city but lately, those positions have disappeared at a rapid clip.

Television and radio employment is actually up in the past 12 months but the number of jobs in print periodicals fell by about 6,000 in the past two years as magazines and newspapers slashed costs to cope with a severe advertising drought and some titles folded. The end of the dot-com bubble also meant the demise of several publications that covered Silicon Alley.

Touby, of Mediabistro, says the entry-level media jobs that still exist are being filled by experienced people who cannot find better opportunities.

"I have three interns coming in here to Mediabistro who have masters and other advanced degrees," says Touby, whose Web site brings together media professionals interested in improving their skills, socializing and finding out about job opportunities. "I've got a lawyer here interning for me."

Still, people keep coming, if only because the situation for media professionals in other cities, such as San Francisco, is even worse. "People are coming back to New York from other cities because they have no other options," Touby says. "They're coming here even if there is no work and scraping by."

EMPLOYERS' MARKET

Gerard Hammink, a 34-year-old television news producer from Minneapolis, came to New York last year and spent two or three months job-hunting before finally landing a gig with CNBC. He is happy with the job, but it is a temporary freelance position that doesn't include benefits. Permanent work that pays well is still scarce.

"I'm working but I feel like I'm still looking for a job in a way," says Hammink. "I'm not really financially secure or anything like that."

With so many New Yorkers and would-be New Yorkers competing for jobs in media-related fields, publishers are starting to look at the city as a good source of cheap labor.

Inc. magazine, which covers small business, moved to Manhattan from Boston in January, in part because of the talent pool, and the publication's owner, Gruner + Jahr USA Publishing, plans to move another of its titles, Fast Company, to New York later this year.

"It's not more expensive right now to operate an editorial staff out of New York than it is out of Chicago or Boston because there are so many talented people looking for work," John Koten, the editor of Inc., recently told Newsday.

RENTS DOWN AND UP

If there was any good news during the slump, it was word that Manhattan rents had begun to fall. Several recent studies indicated that since the housing market peaked in March 2001, rents have slipped 20 percent. Many new buildings are now offering incentives, such as a month or two rent-free and complimentary gym memberships.

Still, prices are high. In late April, the Daily News reported that the average one-bedroom Manhattan apartment below 100th Street was renting for $2,260 a month, down from $2,412 six months earlier.

"I found out that if you don't mind living in what would be considered a crack house anywhere else but Manhattan, finding an apartment in this horrible economy is easy," Patrick Richardson, a recent graduate of Louisiana State University in Baton Rouge, writes in his first entry in Gotham Gazette’s Newcomers Weblog, before moving to New York last week. "It's finding a job to pay for it that's difficult."

In some areas, rents are rebounding even though the job market doesn't seem to be, according to the News, which obtained its figures from the brokerage CitiHabitats. On the upper West Side, the average one-bedroom rents for $2,229 a month, up from $2,197 in October. Areas such as Chelsea and Murray Hill have also seen rents increase.

Outside Manhattan, rents have either stabilized or continued to fall and apartments are remaining on the market longer before they are leased.

For someone on a tight budget, even reduced rents remain too high. Arsenault, for one, resorted to a solution that many new New Yorkers adopt: tripling up in a two-bedroom apartment, in her case, in Washington Heights.

NEW YORK, RESILIENT

Despite all the problems the city faces, Sassen the sociologist says the doom-and-gloom is misplaced, at least over the long term. New York has weathered crises in the past and shown a remarkable capacity to reinvent itself in ways that are virtually impossible to foresee.

In the 1970s, even as people declared the city dead and major corporations and insurance companies fled, seeds were being planted for new businesses, such as specialized financial companies and media concerns, that would help carry New York back to prosperity.

She notes that although the city's traditional magnets, the arts and financial services, are battered, they remain in place and the city is full of young, innovative companies such as software firms and other technology businesses that will thrive in the coming years.

"I'm an optimist," Sassen says. "It's far more difficult to kill a complex city like New York than it is to keep it going and reinventing itself."

Mitchell Moss agrees. "It's a place that people come to for all sorts of reasons," said Moss, who heads NYU’s Taub Urban Research Center. "If you want to make a name for yourself in the arts, a fortune in finance or to make a difference in the non-profit world, you have to come to New York. And if you are poor from other parts of the world, New York is still the most open economy, the most accessible."

People, in other words, still feel compelled to become New Yorkers.

“I have wanted to move to the city since I wrote a short story about it in eighth grade that made my teacher nervous,” Maria Luisa Tucker writes in her weblog. “I had never been to New York…More than a decade later, after traveling five of the seven continents [and] visiting NYC three times…I still crave a life in New York.”



Print Friendly and PDF

Editor's Choice


Gotham Gazette: New York Voters Approve $4.2 Billion Environmental Bond Act
New York Voters Approve $4.2 Billion Environmental Bond Act
Gotham Gazette: 
New York City Voters Approve Racial Justice Ballot Measures
New York City Voters Approve Racial Justice Ballot Measures
Gotham Gazette: 
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Housing Development in New York City Slows to a Crawl as Officials Debate Tax Incentives
Gotham Gazette: 
City Council Examines Low Voter Turnout, Moving Local Elections to Even Years City Council Examines Low Voter Turnout, Moving Local Elections to Even Years