Gotham Gazette

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Fiscal Monitors Check And Balance The Mayor

Despite projected deficits of $3.7 billion, the mayor and the city council were not deterred from a $300 million tax-cut program (primarily a $250 property tax rebate to each residential owner). Tellingly, that exact same amount, $300 million, is what the mayor has quietly asked city agencies to cut during this fiscal year.

It is only one of the questionable actions taken by this mayor, using his extraordinary budget power under the city charter. But the mayor’s power is not absolute. The democratic checks and balances embedded in the charter and state law have actually been working in recent weeks.

The West Side Plan

The city comptroller has raised serious questions about the fiscal wisdom and the decision process of the mayor's West Side plan, calling the Hudson Yards part of the plan (the #7 subway extension and other infrastructure) "a backdoor financing schemethat not only is fiscally imprudent, but also flouts the principles of responsible government." It sets a precedent that any mayor could "divert funds from the city's operation without City Council consent."

At the same time, a combination of local activists and elected city and state officials has apparently blocked the use of Battery Park City Authority revenues for part of the plan. (See a report by State Comptroller Alan Hevesi, in pdf format, for details) The mayor will presumably come up with an alternative borrowing plan for the Javits part of the plan, but the decision re-opens questions raised by housing advocates about the use of Battery Park City Authority revenues.

Contracting Procedure Questioned

The consequences of cutting back on informationin recent mayor's management reports are evident again in recent questions about city contracting.

The contracting information -- much of which is now handled separately, for a much smaller audience, at the mayor's office of contract services -- is itself now suspect. At an October 18 city council hearing of the contract committee, Deputy City Comptroller Greg Brooks testified that the mayor's office of contract services September report on agency procurement indicators is inaccurate(in pdf format). He challenged its claims of "substantial improvement" in getting contracts registered faster.

On the number of contracts and transactions registered in 2004, the deputy comptroller testified that in fiscal year 2004 there were 3,978 contracts registered, as well as 8,210 transactions below the small purchase limits, totaling almost $10.3 billion. That is almost three quarters of a billion dollars more than the mayor's office reports.

On the old problem of "retroactive contracts" -- contracts registered after services have begun -- the deputy comptroller said that in the last fiscal year the city registered 1,748 human services contracts totaling $3.8 billion. (Contractors don't get paid until contracts are registered.) Of these, 55 percent were over 30 days late. But the mayor's office says that only 25 percent of such contracts were over 30 days late. Finally, the deputy comptroller said the mayor's data on the comptroller's own timeliness in registering contracts are "grossly inaccurate."

Less Money For Schools

The other city checks-and-balances institution that helps monitor the strong mayoral power over budgets is the Independent Budget Office, now approaching its 10th year of charter-defined budget analysis. Illustrating its independent role, two new IBO reports help fill the vacuum created by a skeletal mayor's management report and a general reluctance to share important budget information.

The October 26 IBO study, "Go Figure: How a Bigger Education Budget Became Less Money for Schools"(in pdf format), shows how an increase of $570 million in this year's education budget translates - because of "rising costs and a complex allocation process" - into less money to individual schools. At a time when the mayor and council, like the state legislature and the governor, are dodging the future new education costs associated with the Campaign for Fiscal Equity case, the IBO study shows how state/city budget politics and city bureaucratic procedures delay and obfuscate school services and planning.

Transit Riders Shouldering More Of The Budget Burden

The other IBO study, the November fiscal brief, "Running on Empty: The MTA's 2005 Budget and Financial Plan"(in pdf format), helps explain the connections among the Metropolitan Transportation Authority’s current fiscal crisis, the mayor's West Side plan, and the city's own fiscal condition. The MTA's capital plan, for example, includes the mayor's $2 billion Hudson Yards funding plan for the #7 subway extension.

The study points out that the eastern and western rail yards at the heart of the mayor's west side plan, as well as their development rights, are owned by the MTA and the cost of their sale to the city is currently unknown. What's good for the MTA here is not automatically good for the city and vice versa. The closed negotiations in such authority-based discussions only add to the unknown consequences of the West Side plan.

The IBO fiscal brief shows how the average transit rider is paying an increasing share of the MTA budget and points out that one option to ease that burden would be using new revenue sources for the MTA, including a reinstatement of the city's commuter tax and tolling the East and Harlem River bridges.

The IBO estimates the commuter tax (with its old basic 0.45 percent rate) would raise $550 million a year by 2008 and the tolls nearly $700 million a year. These two sources together would wipe out the MTA's projected budget gap in 2006. But both these revenue sources, of course, have at various times been on the mayor's list of proposed city revenues. The city currently provides only about $190 million a year to the MTA's operating budget, so giving up these revenue sources to the MTA would substantially add to the city's long-term structural budget problems.

All this monitoring offers some hope of limiting, or at least highlighting, the mayor's fiscal powers. But then there is the recent news that the city has agreed to assume the state’s $300 million contribution for the Jets stadium deal, if necessary -- yet another reminder how much the governor and mayor use state and city authorities to get their way without any public participation.

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

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