Gotham Gazette

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Economy

After The Adopted Budget, Some Tinkering


The city's new adopted budget, which took effect July 1st, is comfortably balanced, according to the latest reports by several fiscal monitors, who see little fear that the budget will become unbalanced during this fiscal year. The general tone of these reports is positive and complimentary, though they do see some large problems further down the road, and they make several important suggestions about what needs to be done.

But the city budget never sleeps. It is a 12-month process and the key budget makers - the mayor's policy and budget staff - tinker every day. Sometimes they do much more. In the first few weeks of the new fiscal year they have made two big moves with unknown implications for the city's future financial condition. The mayor and his economic advisers want to spend at least $500 million to buy the development rights of the MTA's West Side rail yards. More significantly for the long term, they are about to offer $650 million of tax breaks for developers who take on the Hudson Yards development project.

The Adopted Budget for 2007

Reports from several fiscal monitors - the city comptroller's and the deputy state comptroller's and the state financial control board's - all say New York City's final budget for fiscal year 2007 improves the city's financial condition. Both the city and the deputy state comptroller's reports, for instance, like the retiree health benefits trust fund (which I've written about previously, with less enthusiasm.) The deputy state comptroller report approves of the increase in city reserve funds and the promise of pay-as-you-go capital funding (paying cash and thus avoiding interest costs from borrowing). The city comptroller singles out the hiring of 400 civilians in the police department to do jobs currently filled by higher-paid uniformed officers,

On the other hand, the reports aren't so optimistic for the longer term. There are the large budget deficits - the Bloomberg administration has projected $3.8 billion in 2008 and $4.6 billion in 2009, but the fiscal monitors think those numbers are low.

The state financial control board worries about a rapidly increasing capital budget: the city will enter into an "unprecedented" $12.5 billion of capital contracts in 2007 alone, and in just one year, from 2006 to 2007, debt service on city capital debt will grow by $743 million, or 18.1 percent, to reach $4.8 billion.

The control board also worries about the city's apparent failure to fund $2.5 billion of capital repairs identified by its own annual maintenance report. Such delayed maintenance creates unnecessary costs.

Other important suggestions come from the city comptroller's report, many of them about the way the city handles its contracts.

West Side Development and Financing

Bouncing back from last year's attempt to get the Jets a football stadium on land owned by the Metropolitan Transportation Authority, the mayor announced in early July that he wants to buy development rights to that same MTA site for $300 million -- the west rail yards leading into Penn Station -- and the air rights over the adjoining east yards for $200 million.

Such a purchase makes a lot of sense in terms of linking the sites to the larger Hudson Yards project (which covers, roughly, the West Side from Seventh to Twelfth Avenues between West 30th Street and West 42nd Street). The city would build a platform over the west rail yards as an initial step in developing the site; the city would sell the development air rights from the east rail yards to developers within the Hudson Yards project.

A second mayoral move in July regarding the Hudson Yards project is much more problematic. The city is authorizing across-the-board tax cuts for developers in the project area. This plan is intended to raise enough revenue, over time, to pay for the $3 billion in bonds that will be issued shortly to pay for the extension of the number 7 subway line to the Hudson Yards project area, new roadways, the purchase of the east rail yard air rights, and other infrastructure elements.

The city released the 19-page plan on Friday, July 28, and held a hearing on the plan, conducted by an arm of the mayor's Economic Development Corporation, entitled the Industrial Development Agency (a city financing agency controlled by the mayor), a few days later. The plan is oddly defensive in its introduction, noting that "development of Hudson Yards is not a foregone conclusion."

Not only does the project require rezoning (done) and the construction of the 7 line extension, but it requires "financial incentives…to make commercial development in this pioneering area feasible, particularly in the short run as the district matures."

The plan includes several kinds of tax breaks, but the heart of the proposal is the property tax breaks, through use of PILOTs, payments-in-lieu-of-taxes (Building Stadiums, Losing Revenue). The developers would pay these PILOTs, not to the city, but to the Hudson Yards Infrastructure Corporation. The corporation would use the payments to pay the debt service on the $3 billion of bonds it will issue. (The process is similar to the PILOTs that the Yankees and Mets will pay to another financing authority - instead of the city - to pay the debt service on their stadium construction bonds.)

The big question has always been: How big a discount on their property taxes would the developers in Hudson Yards be guaranteed? The Industrial Development Agency has a complicated answer. It depends on where and when construction takes place. Put simply, developers in areas of the Hudson Yards more to the east get smaller deals than those building to the west that presumably need a bigger incentive. Early developers get a better deal than later developers.

All these PILOT incentives add up to a $650 million cost (net present value) to the city over 30 years. The PILOT revenues would be approximately $1.8 billion during the same period. The overall Hudson Yards project, as projected in an earlier environmental impact statement for the whole project area, is expected to create 225,000 permanent jobs and $17.2 billion in private investment during the 30 years.

In testimony before the Industrial Development Agency on August 3, James Parrott, deputy director of the Fiscal Policy Institute and former chief economist for economic development for the city, said, "In my belief, the IDA does not make a compelling case that there is an economic rationale for across-the-board tax breaks that are needed to spur commercial development in the Hudson Yards area." He suggested that no recent market analysis has been presented to prove the need for committing significant tax breaks so well in advance of actual development.

Parrott said that what is really driving the Industrial Development Agency plan is not an inducement rationale for development, but a financing need: "I think this represents a perversion of the IDA purpose and authority. The city wants to move forward now with the off-budget financing for infrastructure improvements in the Hudson Yards area and is counting on a substantial amount of PILOT payments to secure that borrowing."

The proposal has one other interesting section: it describes the new city "development corporations" that will carry out the $3 billion Hudson Yards financing and development implementation. Both entities move decisions that will affect the city's future financial condition out of the normal budgeting process into less democratic institutions dominated by the mayor.

The Hudson Yards Infrastructure Corporation, for instance -- with five members: the mayor's budget director, two deputy mayors, the city comptroller and council speaker -- will approve and then carry out the financing. It is staffed by the mayor's budget office. The Hudson Yards Development Corporation, which will oversee the development itself, has 13 members, including the city comptroller and the council speaker, but is dominated by the mayor with eight seats.

One can support the general idea of developing the underutilized West Side of midtown and yet wonder why a financing plan needs to depend on thirty years of up-front, across-the-board property tax, sales tax, and other tax breaks. And wonder why the decision is being made in the middle of the summer, with only one public hearing and minimal public participation.

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001. 

Budget Offers Little That's New


The New York City budget for fiscal year 2007, which began July 1, is a remarkable document on several fronts. It makes creative use of the huge $5.5 billion surplus from fiscal year 2006. Its highlights have won approval from most fiscal monitors. And it garnered praise from the press, which loved the unusually cordial budget negotiations between the new City Council speaker, Christine Quinn, and Mayor Michael Bloomberg. The New York Observer called Quinn "the perfect partner" for the mayor and their work together a "class act."

From a policy and process perspective, however, the adopted budget is less remarkable and more familiar. Once again the council allocated tens of millions of dollars for discretionary grants - so-called "member items," or "pork." (See related article.) More broadly, the adopted budget shows little progress toward a long-term structurally balanced financial plan. While the budget may "strengthen [the city's] financial position," as one fiscal monitor phrased it, the picture for future years remains cloudy. In fact, the plan projects deficits averaging $3.8 billion from 2008 to 2010.

The Budget Numbers

Overall city agency spending remains essentially flat over the next four years, and the $52.9 billion budget for 2007 provides few new programs.

For example, the commitment to alleviating poverty announced in the mayor's January state of the city speechis backed up with little, if any, budget component. A private-public task force is meeting to prepare a plan, and the mayor has promised three pilot programs in high-need communities.

According to the Independent Budget Office's reporton the executive budget, social services other than Medicaid are slated to receive an average annual cut of 2.5 percent from 2006 to 2010. During the same period, Medicaid spending will increase an average of 4.0 percent a year, and children's services by 2.2 percent. But over four years, total health and social service spending, according to the executive budget, will increase by just one-tenth of one percent per year.

Similarly, the budget offers no major tax relief. It renews last year's $400 property tax rebate, but that goes to homeowners only, ignoring renters who pay a substantial part of a landlord's property tax through their rent. There is no move toward broader property tax reform.

The one big agency initiative is the hiring of 800 new cops and the transfer of 400 officers from civilian to uniformed jobs, a move many welcome as a sound management reform. Quinn added $10 million to the police department budget to provide bulletproof vests for officers.

Divvying Up the Surplus

In his report, the state deputy comptroller for New York City discussed how the mayor's Office of Management and Budget used the $5.5 billion surplus in 2006. The fund to provide health insurance for city retirees got $1 billion in the 2006 budget and will get $1 billion more in the 2007 budget. The Health and Hospitals Corporation received $385 million in 2006, which in a complicated exchange between the corporation and the city means the city will get back the money in future years, reducing deficits in those years.

The city placed in escrow $350 million it will owe the Transitional Finance Authority in 2008 for debt service on capital projects. This produced $16 million of interest in 2007 and will reduce debt service expenses in 2008 by that same $350 million.

Another $354 million of the surplus will go to pay 2006 and 2007 expenses that would otherwise be covered by money from the nationwide tobacco settlement. The delayed tobacco settlement revenues will then be available in 2008, reducing the projected deficit for that year.

Beyond 2007

These esoteric fiscal moves make for an interesting patchwork of budget-balancing that helps deal with fiscal problems over a one- or two-year period. They do little, though, to better match revenues and expenditures in the years beyond that.

In fact, according to the state deputy comptroller's report, the 2007 budget features its own "operating deficit" because the 2006 surplus paid billions in what would otherwise have been 2007 expenses. Without these prepayments, actual spending in 2007 would have exceeded revenues by $2.3 billion.

Fiscal analysts and monitors disagree about the scale of future budget deficits. The executive budget projected deficits from 2008 to 2010 of $3.6 billion, $4.2 billion, and $3.6 billion, respectively. The state deputy comptroller projected lower deficits: $3.1 billion, $3.8 billion, and $3.2 billion. And the Independent Budget Office was even more optimistic. In May it suggested figures for 2008 to 2010 of $2.5 billion, $2.9 billion and $2.6 billion - about $1 billion a year less than the city's figures.

There are some big uncertainties. The IBO, for example, noted that giving city workers wages increases to keep pace inflation would add $1 billion 2010 deficit. And the estimates do not include any contribution the city might have to make to a settlement in the Campaign for Fiscal Equity caseon school funding.

The Budget Process

Although Quinnhas said she wants the council to become a more active participant in the budget process, the mayor continues to dominate key decisions.

Quinn has highlighted the cordial negotiations with the mayor and pointed to the council's success in setting a baseline for funding three programs of special interest to council members: extra library hours, 7,000 summer jobs for teenagers, and more frequent trash pick-ups in the outer boroughs.

But as worthy as these programs might be, the $50 million or so they represent is only a fraction of the council-backed programs that the mayor annually cuts.

The city's Office of Management Budget considers these programs one-year efforts, instead of part of a four-year plan. As a result, every year the council and mayor engage in a "budget dance": The mayor makes cuts in the programs, and council seeks to restore those cuts. This year's restorations, totaling about $233 million, do not look much different from those of previous earlier years, despite the $5.5 billion surplus.

Although the budget does include the money wanted for the bulletproof vests, the council did not get much of what it asked for. It requested $45 million for full-day universal pre-kindergarten, but instead got 2,000 more spaces - at a cost of $7 million. A $7.5 million request for child advocacy centers became a $2 million program.

By moving money some of the surplus into the health fund, the mayor, according to the IBO, removed that money from the give and take of the budget process. This apparently did not bother Quinn: The fund, she said, demonstrates "sound fiscal responsibility in planning for future health care obligations." This may be true, but it does give the mayor more control over the budget.

Quinn faces a daunting task if she hopes to give the council a great role in formulating the budget. She has far fewer resources and less staff than the mayor, whose budget office has decades of experience. This year with the previous speaker forced out by term limits, the speaker and the council's new finance division director did not assume their posts until after the OMB essentially completed the January preliminary budget. This may have weakened the council's budget role.

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Building Stadiums, Losing Revenue


With the baseball season about a third over, New York fans can begin dreaming once again of a subway series. Certainly they have a lot to cheer about, with the Mets leading their division by several games and the Yankees neck and neck with their traditional rival, the Boston Red Sox.

Many fans (particularly those who frequent Shea Stadium) may also be applauding the new stadiums planned for both teams. But some of the financing arrangements for the new stadiums raise important questions.

One issue concerns the city’s recent reliance on so-called PILOTs (payments in lieu of taxes) to promote economic development projects such as the stadiums. The use of these payments raises questions about overall revenue projections for the city, Mayor Michael Bloomberg’s bold but curious priorities, and his ad hoc, unilateral style of executive budgeting. Further, the deals the city crafted to help the Mets and Yankees build new stadiums may be a model for the future, since PILOTs have been proposed as key to the city’s financing of West Side development.

What Are PILOTS?

The mayor certainly has the power to negotiate PILOTs with private developers and other property owners. But since such payments can cause the city to gain or lose hundreds of millions of dollars in potential tax revenues, critics believe the process needs a lot more discussion and transparency than it has yet received.

A payment-in-lieu-of-taxes is, at one level, a simple concept. To encourage economic development, the city agrees to accept a negotiated payment instead of the standard property tax. These payments are generally less than what the property's full value would normally dictate. The difference in payment -– the lost revenue to the city –- is technically called a “tax expenditure,” but most people would consider it a tax break.

Complex Deal With Yankees and Mets

Stadium financing in general -- and PILOTs in particular -- can be quite complex. Take the deals with the Yankees and Mets approved by the City Council in April. Although the teams will build the stadiums themselves, the taxpayers will pay for related items, such as parking lots and, at Yankee Stadium, new parks. According to the mayor, the city and state will spend about $235 million for the Yankees’ project and $180 million for the Mets’ stadium.

But the bill gets bigger when one adds in lost revenues. Up to now, the city owned the baseball stadiums and the land under them. The teams did not pay property taxes but did pay rent to the city. Good Jobs New York has said the Yankees rent totaled $26.43 million between 2000 and 2004, and the Mets paid $24.55 million in rent to the city over the same period. Admittedly much, though not all, of that was eaten up by maintenance costs, which the city paid under the old arrangement but will not have to pay under the new one. But now there will be no rent at all.

And there will not be a property tax either. While the mayor has objected strenuously to Madison Square Garden’s property tax exemption (which costs the city $12 million a year in lost revenues), the baseball teams also remain exempt from the property tax. The Yankees will therefore save -- and the city will lose in revenue -- $144 million over 40 years. The Mets will save $72 million. Such a major revenue decision deserved more debate than it got.

In addition, the Bloomberg administration's interpretation of federal law has led them to assert that the Yankees and Mets can use tax-exempt bonds to finance the building of the stadiums -- as long as they repay the bonds with PILOTS. Tax exempt bonds carry lower interest rates. And so qualifying for tax-exempt financing could save both teams a total of $216 million by one estimate, quoted in an explanation of this financing by Neil deMause in the Village Voice. For both teams, the Independent Budget Office has said the ability to use tax-exempt financing is the biggest single benefit in their stadium financing packages. Most of this cost, though, will be borne by the federal government, not the city or state.

But federal officials have yet to approve this tax-exempt financing. The IBO has told the City Council that allowing tax exempt financing “relies on an aggressive interpretation” of the federal internal revenue code. But it became clear at a City Council hearing this spring that, even if the federal government rejects the city’s argument -- which would require the Yankees and Mets to resort to more costly taxable financing -- the stadiums would nevertheless retain their property tax exemption.

Future West Side vs. Past Battery Park City Financing

Some see the stakes in these stadium deals dwarfed by those in the forthcoming West Side financing. The potential savings through the use of PILOTS to private developers –- and revenue losses to the city –- are vastly higher given the scope of that project’s residential and commercial goals.

As discussed in earlier columns , the city has proposed using an upfront, across-the-board PILOT for West Side developers, promising them they can pay some percentage (50 percent? 90 percent?) of their property tax bill.

A useful reference point here is the biggest PILOT deal in town -- the Battery Park City Authority. The authority has a 99-year lease on land owned by the city, and, as a state-authorized public authority, has the power to collect PILOTs from all commercial and residential owners in Battery Park City. These PILOTs are the equivalent of full property taxes that would otherwise be paid to the city. The city assesses all the Battery Park properties at full market value and the authority bills the owners for what they would owe.

The authority thus has a guaranteed revenue stream, which reached nearly $180 million in 2005, according to the city finance department. The authority uses the money primarily to pay the debt service on bonds that it has issued to pay for developing Battery Park’s infrastructure. After additional administrative and other costs have been paid, the authority sends the bulk of the surplus revenues to the city.

This annual payment to the city, which, rather disingenuously, is also called a PILOT -- but is a partial payment -- can vary substantially from year to year, depending on what the authority spends and saves in a given year. For instance, according to city tax expenditure reports, the PILOT from the authority to the city was $52 million in fiscal 2003 and $101 million in 2005.

The big difference between the Battery Park City Authority financing model and the proposed West Side model is that all Battery Park property owners pay full property taxes after certain time-limited abatements. And paying full freight has not slowed the enormous success of Battery Park City, even after the 9/11 attack.

Why then, based on the downtown record, would one structure West Side financing with a PILOT that is a fraction of full value?

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001. 

2007 Executive Budget -- The Mayor Expands His Budget Powers


The executive budget that Mayor Michael Bloomberg released this month shows a $3.4 billion surplus for the current fiscal year (which ends on June 30th). The real surplus is $5.2 billion; the mayor has already moved the rest off-budget in various ways for future use.

This is just one example of the mayor's ever-expanding domination of the budget process. Another example was his success with the stadium financing deal that the city council approved almost unanimously in April.The council, the city’s countervailing budget power, has been unusually accommodating in its responses to the mayor's initiatives.

But the council has very little to show for its cooperation. The executive budget, according to the New York Times, retains some $338 million in cuts to council-supported programs –- part of the so-called budget dance that keeps the council at bay.

The one new council suggestion that the mayor adopted, $12 million for police vests, is insignificant in a $53 billion budget. And the council request for a more transparent, more detailed budget presentation has translated into the weak promise of a pilot project in two agencies, one of which, the Department of Small Business Services, is among the city’s smallest agencies ($51 million in city funding).

$1.8 Billion Off The Table

The City Council has already approved the mayor's plan to take $1.8 billion of this year's surplus off the table:

  • $1 billion to a retiree health fund
  • $200 million paid in cash ("pay as you go") for capital projects
  • $232 million in tobacco-settlement funds saved for later use.
  • $350 million of debt service paid off early.

The remaining $3.4 billion surplus (which may in fact rise further in the several weeks left in this fiscal year) will be "rolled over" into 2007 by pre-paying certain expenses in 2006, such as debt service that would be otherwise due in 2007.

Cautious

The mayor has seemingly given up on additional federal aid. He has a long menu of requests from Washington -- $920 million worth, mostly for additional education aid – but he assumes only $50 million of new aid in the new budget plan.

As usual with Bloomberg budgets, there is very little mayoral text accompanying the budget documents. The general tone of the minimal prose remains cautious: Non-discretionary spending (pensions, health benefits, Medicaid, debt service) goes up 12.9 percent next year, but agency spending goes up only 1.8 percent. Budget deficits in later years remain high, averaging $3.8 billion from 2008 to 2010. (The fiscal monitors will review these numbers in the next few weeks.)

Budget Dance?

Thus, despite two years of enormous surpluses, there is surprisingly little discussion of alternatives to the mayor's choices. As the City Council moves to adopt the budget next month, the floor seems set for a re-staging of last year's budget dance -- the restoration of some $300 million that the mayor cut in council programs, and perhaps a few additional council initiatives. But in some ways the budget battle has already been won by the mayor.

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001. 

 

Job Seekers And Technology


New York City’s official unemployment rate was 5.4 percent as of last month . Although that is the lowest rate for any March since 2001, the city’s rate is still higher than the state and national average of 4.7 percent. This number translates into 209,000 unemployed city residents.

Unemployment is difficult to measure, as is insufficient employment. According to the Fiscal Policy Institute, 375,000 city residents are either unemployed or underemployed (meaning they work part time rather than full time), and 860,000 New Yorkers work at poverty level wages.

Several city agencies provide services to New Yorkers seeking jobs – and all could be helped with an increase in technological services.

That was the message of two New York City Council members, Gale Brewer (who is chair of the technology committee of the council) and David Yassky (chair of the Committee on Small Business) at a recent hearing. Brewer will soon introduce legislation to offer technological enhancements to the city’s Workforce 1 facilities, where city residents can learn about employment programs available at the federal, state, and local level. Every borough houses at least one of these "one-stop" centers. All city residents can visit the centers, including people with well-paying jobs who desire to improve their skills, but the target populations are unemployed city residents and people with low-wage jobs who desire stable and/or better-paying work.

New York City’s Department of Small Business Services operates the Workforce 1 centers, which share quarters with NYC Business Solutions Centers. These seek to provide businesses with a skilled labor force. This direct interface between job seekers and employers began in July 2003.

The level of computer training varies between Workforce 1 centers, and is sometimes extensive. For example, the Brooklyn location offers (in pdf format) computer skills assessments and a wide range of courses about Microsoft Office programs . The Department of Small Business Services has forged successful partnerships with technology companies as well. Last year IBM donated special software that makes job searching easier for elderly city residents, and residents with limited English proficiency, who attend a Workforce 1 center.

The centers are typically open only during business hours, which limits the ability of people with low-paying jobs to avail themselves of their services. From March 2005 to March 2006, every Workforce 1 facility combined served 81,300 city residents, which is a large number considering how few centers there are.

Brewer and others suggest several technological upgrades to make these centers more useful, such as creating a centralized Web site for all city job seekers. Another idea would be to tap into the New York State Department of Labor’s database of unemployed residents throughout the state, which includes a description of their skills and work history. The city’s Workforce 1 facilities do not currently have access to this database. With this information, facility workers would be able to match job seekers with appropriate employers more easily.

Another improvement would be personalized online job-seeking and resume-building tools, accessible with an ID and password. The State Department of Labor already provides such tools, and the city’s Department of Small Business Services is investigating how to establish them. The benefit of this approach is greater autonomy over the job-seeking process. One challenge in impoverished city neighborhoods will be establishing a level of Internet connectivity that would make this service useful.

Even if all of these ideas come to fruition, the likelihood is that city residents on public assistance will not receive as much benefit as others. As the Gazette has documented, the Workforce 1 centers typically serve city residents who are not on public assistance. Thus, despite the City Council’s desire to increase assistance to everyone seeking employment, upgrades to Workforce 1 services are likely to help some city residents more than others.

Federal job assistance funding priorities are a significant reason for the increased attention to Workforce 1 facilities; to some extent, this budgetary reality renders concerns about equity moot. In an analysis of the Bush administration’s 2006 budget proposals, the National Employment Law Project observes national momentum toward making Workforce 1-type facilities “the preferred delivery mode for a growing range of public services”. Hopefully the Workforce 1 facilities will soon offer an increased range of services, which will serve as a model of technological support for all city job seekers.

 

Brighter Budget = Unique Opportunity


Several new reports suggest that city budget news is not only good for the short term, but perhaps for the longer term as well. This year’s budget surplus –- well in excess of $4 billion –- makes for an easily balanced budget next year, and new economic and fiscal projections for subsequent years show lower budget deficits and some slowing of allegedly “uncontrollable” costs such as Medicaid and pensions. The result is that the city is closer to a structurally balanced budget than it has been in several years.

The mayor’s response to the good news is to control spending in the short run. He has expanded his own extraordinary budgetary powers by an unusually large mid-year budget modification, with minimal council and no public debate. The April 5 modification approved by the city council captures much of this year’s big surplus, parking $1 billion (nearly equivalent to the sanitation department’s total budget!) into a health retirees fund that – as one fiscal monitor observed – takes money “off the table” before the council can offer ideas about what to do with it.

The immediate result of this April modification and the city council’s own very modest proposals for next year will be little or no change in discretionary spending for next year. The mayor’s reluctance to review the huge tax cuts that will in 2007 be fully phased in – some $1.2 billion in cuts, with the largest benefits going to high-earning households – means that he will pursue budget balancing only by cutting spending.

Good News for the Short Term

The April 5 budget modification – approved in the shadow of the Yankee Stadium deal – obscures the extent of this year’s huge budget surplus. Various recent reports give different estimates of what this budget will wind up being:


State Comptroller’s Report -- $5 billion
State Financial Control Board -- $4.8 billion
City Comptroller -- $4.3 billion
Independent Budget Office-- $4.1 billion

All of these are above last year’s $3.5 billion.

The IBO report explains that the surplus stems from three basic sources:
1. Increased Revenue. There is $2.8 billion more in tax revenues than the $29.6 billion projected in June, primarily from income taxes and property transfer taxes. (This means that the mayor’s Office of Management and Budget underestimated city tax revenues by nearly ten percent in 2005 when this year’s budget was adopted.)
2. One-time Savings. There is $1.4 billion in one-time savings from accounting and actuarial changes in pension-fund contributions and Medicaid.
3. Delays In Payments. Some $200 million in payments are due from a tobacco-settlement fund.

The New Fund and Other Spending

The April modification – which also includes an unexpected payment of $575 million to the Health and Hospitals Corporation -- in effect spends down this year’s projected surplus, so that the actual end-of-fiscal-year (June) surplus will be much less than would otherwise be the case. As of April (and subject to further changes before June), the new surplus is projected by the IBO to be $3.1 billion. The IBO explains the rationale for the spending-down process:

“[T]he Bloomberg Administration has sought to take money ‘off the table’ through steps such as the creation of the retiree health insurance trust fund and the deferral of tobacco revenues. These are steps that manage the use of surplus prudently and can help to reduce the burden of rising health insurance costs or cyclical declines in the local economy in future years.”

The report goes on to say, “But these are not the only means for achieving those goals. For example, using more of the surplus for pay-as-you-go capital would not commit the city to recurring expenditures.” I have pointed out in past articles (such as Tax Reform In Bloomberg’s Second Term? And The Mayor’s Underwhelming Budget for 2007) that there are other prudent means available to address long-term budget stability. The elimination of the top two rates of the city ’s personal income tax took well over $500 million a year “off the table” ($541 million in fiscal 2005, says the IBO). And the homeowner property tax rebate will cost the city another $256 million in lost revenues. (Sales tax cuts, which primarily benefit lower-earning households, total about $400 million.)

Two of the recent reports question the transparency of the new $1 billion fund (projected to get another $1 billion in 2007). The city comptroller report suggests that if the mayor uses the health fund as a “rainy day fund” – drawing down from it in times of fiscal stress – “it would raise concerns about transparency” because “a portion of the city’s true obligations would be moved ‘off-budget.’” The business-supported Citizens Budget Commission’s March 22 report (The Analysis of Mayor's January Financial Plan) gives “strong support” to the new fund. But the CBC, too, has several reservations about the fund.

The CBC worries that fund money could be used for other than stated fund purposes, that transparency and accountability will be clouded by its off-budget structure, and that payments into the fund will not continue after 2007. (The CBC goes on to urge the mayor to pursue other ways to deal with budget surpluses, including creation of a real rainy day fund.)

The Council Response

A day after the council’s acceptance of the budget modification, Speaker Christine Quinn released the council’s formal response to the mayor’s preliminary budget . If the mayor intended with his new fund to take money off the table to restrict spending, he certainly succeeded. Quinn’s plan would add only $84.5 million in new programs and $154 million in tax credits to the mayor’s $53 billion budget.

Speaker Quinn’s plan, like her predecessors’, also restores the cuts made by the mayor to current programs established by the Council ($338 million this time) – cuts that every year have been mostly restored after what the speaker calls a “dance” between the mayor and council. Council-proposed cuts and higher revenue estimates would pay for these restorations and the new programs.

Given the questions about transparency and accountability with the $2 billion in transfers to the new health fund, it is a bit ironic that the speaker suggests that she and the mayor have now agreed to pursue transparency in the budget together and “reform the budget process once and for all and put an end to the annual dance”

Mixed News for the Longer-Term

The monitors’ reports allude to several promising trends for longer-term budget balance. For the fiscal years 2008 through 2010, for example, the Independent Budget Office projects deficits approximately $1 billion lower than the city projects. In 2010 the IBO estimates the deficit will be down to $1.7 billion, far below out-year deficit projections over the past several years.

The mayor’s preliminary budget devotes several pages to the fact that “non-controllable” (non-discretionary) spending is increasing much faster than “controllable” (discretionary). Discretionary spending in almost all service areas from education to police is essentially flat or near-flat for the next four years.

But the monitors note some improvements in controlling the non-controllable areas. For instance, the recent state cap on city Medicaid costs means a slowing of growth in one major non-discretionary spending area. In another “uncontrollable” area the city comptroller says, “Pension cost increases are expected to abate over the [the next four years] and costs will remain at a level comparable to that reached in the mid-1980s, when considered as a percentage of general fund revenues.”

But health care and other fringe benefits for the city workforce will continue to climb, from $5.5 billion in 2006 to $6.7 billion in 2010, according to the IBO. The mayor has indicated he wants future employees to contribute to their health insurance costs, a major cost-cutting proposal in the CBC report, but no big change seems imminent in this area.

The other big non-discretionary area – debt service on the city’s capital budget – is the fastest growing part of the budget, rising 10 percent a year over the next four years, to $6.2 billion in 2010. However, the IBO’s new report on the affordability of the debt (in pdf format) that finances the city’s ambitious 10-year, $62.4 billion capital plan suggests that there is “a generally positive outlook for the city’s debt affordability given the financing plan for the current” capital plan.

The study concludes, however, that growth in the non-discretionary areas will continue as a percentage of the whole budget and is projected to reach nearly half of city-funded spending by 2010. That means that future recessions “will put pressure on operational spending.”

All these reports add up to a unique opportunity for the mayor and council to design a longer-term budget plan and process that does away with the annual budget-negotiation angst and lack of transparency. The current cooperation between the mayor and council speaker could be a useful first step. However, the mayoral domination of the huge April budget modification and the obfuscation surrounding OMB’s new health fund suggest the council has a lot of work to do to catch up.

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001. 

New City Council Bills


As a regular feature, Searchlight on City Hall looks at some of the new bills in the New York City Council. At the most recent meeting on April 5, 2006, council members introduced 15 new bills, many of which may never be passed into a law. Still individual council members hope their bills will at least generate public discussion - and result in some action - on the issues that concern them.

REVISITING STREET ELECTROCUTIONS
In 2004, a woman named Jody Lane was electrocuted when she stepped on a manhole cover while walking her dog in the East Village. In response, the City Council passed Local Law 44, which requires Con Edison to conduct routine inspections of wires and electrical infrastructure and make repairs within 24 hours. In addition, the Department of Transportation instituted random tests of electrical boxes and manhole covers on the city’s streets and sidewalks.

However, the legislation has not solved the problem. In recent months, more people and dogs have been shocked by stray voltage and others have been injured by exploding manhole covers. So the City Council is introducing another bill - known as the "Street Utilities Safety Act" (Intro 252) - in an effort to address the issue.

It would institute new requirements that companies maintain electrical-related covers to ensure that pedestrians are not exposed to stray voltage. It would also impose new penalties of $1,000 to $5,000 for companies whose electrical infrastructure is found to be dangerous.

IMMIGRANT VOTING RIGHTS
While the City Council has no official role in the immigration debate going on in Washington, some city lawmakers are trying to weigh in on the subject at the local level.

Councilmember Charles Barron has introduced a bill (Intro 245) that would give non-citizen immigrants the right to vote in local elections. The bill would apply to immigrants who have applied for citizenship, have "green cards," and have lived in New York for at least six months.

"From 1770 to 1920 immigrants were allowed to vote and when the complexion of immigrants changed, then the rules changed," said Barron.

According to the Department of City Planning, the city is home to 1.3 million non-citizens of voting age. While non-citizens pay taxes and are subject to other city laws, they are not allowed to choose their local elected officials. New York has a history of allowing non-citizens to vote on local issues: before the Board of Education was disbanded, non-citizen immigrants could vote in school board elections.

The bill, however, is not likely to become law any time soon.

Speaker Christine Quinn, who controls much of the council's legislative agenda and can effectively decide if a bill ever comes up for a vote, is opposed to the measure.

"I am not in favor of non-citizen voting," Quinn said at a press conference when asked about the measure.

Mayor Michael Bloomberg has said that giving non-citizen immigrants the right to vote in local elections would require a change in the State Constitution and would have to be passed by voter referendum.

HOSPITAL CLOSURES
Many hospitals in New York are struggling financially, and as a result, some are shutting their doors. Last year, for example, two hospitals in Brooklyn - St. Mary's and the Caledonian Division of Brooklyn Hospital in Flatbush - both closed.

As a result, Councilmember Letitia James has introduced a bill (Intro 251) that would require the department of health and the Economic Development Corporation to conduct a study on health care quality in neighborhoods that have lost hospitals.

The study would examine the "disparities in health care" received by city residents, as well as look into the impact of private hospital closures on publicly funded hospitals.

BANNING MILITARY RECRUITERS IN SCHOOLS
As the war in Iraq stretches on, military recruiters are struggling to find new applicants for military service. Councilmember Charles Barron, who is opposed to the war, wants to make it even more difficult. He has introduced a bill (Intro 246), which would prohibit military recruitment in New York City public schools and the City University of New York.

"Our black and Latino youth do not join the military for patriotic reasons," said Barron. "They go in for economic reasons to be cannon fodder for unjust wars. Let's opt the military out from our public schools."

Military recruiters target communities of color where students may see a military career as their best option, argues Barron.

Parents are often unaware that the under President George W. Bush's No Child Left Behind Act, schools must provide the military with names and addresses of all students, except for those who expressly request that their names be withheld from recruiting lists. The bill would also prohibit schools from providing information about students without the consent of a parent or guardian.

POSTAL STICKERS
When a postal delivery person is unable to deliver a package, they often leave a sticker on the door to notify the tenant. This practice is an invitation to criminals, argues Councilmember Simcha Felder.

"Anyone who is a thief knows that the best house to rob is one with a sticker on it [because no one is home]," said Felder.

In an effort to address the issue, Felder has introduced a bill (Intro 247) that would prevent mail delivery personnel from placing "notification stickers" on the front doors of residences where no one is home. The bill would require delivery people to notify residents in a more discreet manner, perhaps with a note in a mailbox.

Felder and several colleagues introduced an identical bill in 2003, but it was never granted a hearing by the council.

PAINTING APARTMENTS
According to city law, a landlord must repaint or re-wallpaper the walls and ceilings of an apartment at least once every three years. However, some tenants complain that this never happens or, if it does, the landlord does not give sufficient notice of when the painting will be scheduled.

To address the issue, Councilmember Miguel Martinez has introduced a bill (Intro 0254) that would require that landlords who wish to repaint an apartment must inform the tenant at least one month in advance.

 

New York City Council Budget Response


Remarks delivered by Speaker Christine Quinn

Spring is in the air.

March Madness is over.

The Mets and Yankees are playing for keeps.

And the Knicks...well...not so much...

As we look at neighborhoods and communities across New York, one cannot help but feel optimistic about how far we’ve come and where we are headed as a city.

Crime is down to record lows. The unemployment rate is the lowest it's been since before 9/11 and more New Yorkers have jobs than ever before. We still have a long way to go, but our schools are getting better. On housing, we are beginning to deal with the crisis that affects so many across the economic spectrum. And we are budgeting wisely and responsibly for the future.

Now, the folks on the other side of City Hall certainly deserve a lot of credit for these gains. But so does every one of the fifty-one members of the City Council here today. We should be proud of how we've helped lead New York through difficult times - from recession and budget deficits to economic boom and record surpluses.

We are the People's House and we work hard everyday to meet our constituents' needs and concerns...in all five boroughs...in every community from Stapleton to Mott Haven. That's why, proud as we are of our achievements, we are not satisfied. Make no mistake, we have a lot more work to do.

For too many New Yorkers, the City is simply not affordable...Hard working, taxpaying, middle-class families are being squeezed out. The unemployment rate in many communities—especially among African-American and Latino men—remains unacceptably high. And the least fortunate among us worry every day about getting the basic necessities - food, shelter and health care.

President Kennedy said that the time to repair the roof is when the sun is shining. So now, while the sun is shining, we have the opportunity and the responsibility to make government better serve the people's needs.

We can - we must - make City Hall work even more effectively for our constituents. We can listen harder and make government smarter. We can expand programs that work and still demand accountability and results. We can end the dysfunctional budget practices of the past and begin real oversight of City finances. And, most importantly, we can learn from government's mistakes - and from tragedies - so that we do not repeat them.

Yes, we can be proud of achievements but we must not be satisfied.

That's why today in this speech and in the Council's formal budget response, we are outlining an ambitious, forward-looking agenda for kids, parents and seniors...to help businesses and to reform government...and to make all of us better Council Members for our constituents.

Full Day Pre-K
Study after study show how important it is for our kids to enter school ready to learn...that early childhood education is one of the most important factors in determining future success...it leads to higher math and reading scores and better school attendance - especially for children of low-income families.

In 1997, under the leadership of Assembly Speaker Sheldon Silver, New York passed the New York State Universal Pre-Kindergarten Law with the goal of providing access to pre-k for every four-year-old.

Today, approximately 40,000 children are enrolled in the Department of Education's universal pre-k program. A vast majority of these, however, are only half-day programs. For many single-parent families, or for families in which both parents work, this half-day approach falls short.

To truly give young children the opportunities they deserve, we must offer as many four-year-olds as possible access to full-day pre-k.

Over the next three years, we propose making all half-day pre-k slots a full-day, at a cost $45 million a year.

Universal full-day pre-kindergarten is an attainable goal that will have a dramatic impact on the lives of our kids and assist our city's working families.

311 Education Hotline
To truly make all schools work, we must also increase parental involvement. Having parents play an active role in their children's education is key...and government must do everything it can to help them get involved and make it easy for them to get answers to critical questions.

How can my child transfer if they are unhappy with their school? What middle schools are in my neighborhood?

As council members, we hear from parents all the time...mothers and fathers who are looking for information that will affect their kid's futures.

This is one of the most crucial - and personally important - interactions between citizens and city government... and it is often one of the most frustrating.

Today, we propose adding $1 million to help 311 so we can hire education specialists who will be able to help parents get answers and navigate the education bureaucracy.

311 is a terrific program...But 311 operators are not currently trained to answer parents' detailed questions. We need to change that.

Feeding Hungry Children
To give every single New York City child a fair shot at success, however, we must make sure that every single New York City child has enough food to eat. In this City of real estate booms and Wall Street bonuses too many children go to bed hungry. And too many wake up hungry...And too many go from one day to the next not knowing where their next meal will come from.

In 2004, an estimated 1.2 million New Yorkers—including more than 400,000 children—lived in hunger or in households where having food was always in question. In this City of such extraordinary wealth that is simply unacceptable. We, the richest City in the world, must be able to feed our people.

The first step is to make it easier for eligible New Yorkers to enroll in the Food Stamp program.

Right now, 600,000 people in the City qualify for food stamps but don't get them. The Administration has worked hard to enroll more families but we are still leaving nearly $1 billion in federal aid on the table in Washington and not doing nearly enough to help hungry families put food on the table right here in New York.

So, today, we're setting a goal of reducing the number of hungry New Yorkers by more than half. Over the next four years, we'll work to enroll 350,000 people in food stamps who already qualify but aren't getting them. We're going to draw on some ideas from Council Member Eric Gioia and the Investigations Committee.

Let's allow people to apply for food stamps on-line, reduce the number of office visits, and get applications at every City funded food pantry and soup kitchen.

When parents sign their children up for free school meals we're going to make sure they know that they could qualify for food stamps, too, because the income requirements are exactly the same. We're going to let them know where and how they can apply. And we're going to do the same for Medicaid eligible New Yorkers whenever they walk into one of the city's public hospitals.

Office of Hunger and Nutrition
To help implement these initiatives, we're allocating funds for a new city Office of Hunger and Nutrition to coordinate anti-hunger efforts.

By working across agencies, this office will also find solutions to the high rates of obesity that are plaguing our City, in particular low-income communities and children. This Office will work to bring healthier foods to all New Yorkers-- through increasing the number of farmers' markets and making sure they can accept food stamps—and support programs that encourage physical activity for our children.

In the Bible, Luke tells us "to whom much is given, much is required." In this City..in this day...every New Yorker must have access to three square meals, seven days a week..We can make this a reality.

Reforming Children's Services
It is our solemn duty as lawmakers to analyze and correct government's mistakes, shortcomings and sins of omission. These too often lead to human tragedies like hungry children....or like the death of seven-year-old Nixzmary Brown.

Mayor Bloomberg, Council Member Helen Foster and General Welfare Chair Bill DeBlasio have recommended smart and thoughtful changes in training and in the way the City treats high-risk cases like this one.

Today, we are proposing three initiatives that will help the City move faster and more effectively against child abuse.

First, we propose increased funding for child abuse units in the five District Attorney's offices. More resources will mean more thorough investigations and more rigorous prosecutions, and that means fewer at-risk kids.

Second, we propose expanded office hours at child advocacy centers in all five boroughs. These centers are at the front lines of investigating abuse cases...ACS, the NYPD, prosecutors, doctors and nurses are all located within these facilities so that the abused can be treated and abusers brought to justice.

Finally, we propose adding preventive services programs at 21 more Beacons schools to provide a better link between social services and at risk families.

By taking these sensible steps, we can improve communications, investigations and prosecutions...and we can save lives.

Bulletproof Vests for Police
Just as the Nixzmary Brown case tragically illustrated the need to constantly reevaluate and improve the way government works so did the murder of Brooklyn Police Officer Dillon Stewart.

Had he been wearing an up-to-date bulletproof vests...Dillon Stewart might still be alive today.

Council Members Maria Baez and Vinnie Gentile have been vocal advocates of giving our officers the equipment they need to do their jobs safely. Today, we are proposing to spend $9.9 million so that our officers can have up-to-date, secure protective vests. Vests that may save their lives one day.

Funding for District Attorneys
I know I speak for a vast majority of New Yorkers in praising the Mayor's call to hire more police officers. Crime is down thanks in large part to the courage of the cops on the beat.

But as we all now know "In the criminal justice system, the people are represented by two separate yet equally important groups: the police, who investigate crime...and the district attorneys, who prosecute the offenders."

The district attorneys, and thousands of ADAs who work for the public good everyday, deserve a lot of credit for making this a city of law and order. And I'd like to recognize and applaud Queens District Attorney Richard Brown and Manhattan DA Bob Morgenthau - the real Adam Schiff.

We need to make sure they and all the city's district attorneys have the resources they need to do their jobs. This cause has been championed by Public Safety Chair Peter Vallone, and you know what, he's right.

That's why, today, we are calling for restoring $17 million to the City's five district attorneys to begin to bring their funding back to pre 9/11 levels. There's simply no point in arresting more suspects if our district attorneys don't have the resources they need to fully and quickly prosecute them.

Tax Cuts for Small Businesses
Making government work better for people means making it work smarter...it means learning from our mistakes...it means expanding programs that work... And, yes, it means cutting taxes for individuals who need help most and companies that create jobs so that this City can continue to boom.

The Council has long advocated for property tax relief for seniors on fixed incomes. This year, Comptroller Bill Thompson, Council Members Leroy Comrie and Lew Fidler have proposed a rebate for low and middle-income seniors - a goal we all support.

The companies that need relief most -- the businesses that are the engine of our economic growth - aren't giant corporations, but small businesses in every borough and in every community. To help these small businesses grow and thrive, the state and federal governments have long exempted them from corporate income and franchise taxes. But in New York City, residents who own unincorporated businesses or S-corporations - many of these small companies - are taxed not once but twice.

For almost ten years, the Council has fought to correct this by providing a partial personal income tax credit for unincorporated business owners. Next year, we're proposing to expand it.

And we propose the creation of a new credit to S-Corporation owners who currently get no tax relief at all. These tax credits will give business owners another reason to locate here...to grow here...and to create good jobs here.

Manufacturing Jobs
While we pay special attention to small companies, we also need to take steps to promote and protect our manufacturing jobs. We don't assemble cars or airplanes, but in New York City there is a place for manufacturing in niche markets—like couture fashion, high-end furniture and printing.

This year, we're introducing a multi-faceted approach to strengthen New York City's manufacturing base:
- Creating investment tax credits for manufacturers that purchase new equipment;
-Expanding the Relocation Employment Assistance Program to include moves from areas recently rezoned for residential use;
-And increasing the Industrial Business Zone credit to $3,000 per employee to encourage manufacturers to move into industrial areas.

Manufacturing jobs are good jobs that provide stable incomes and career paths for thousands of New Yorkers. We need to do everything we can to keep them here.

Ending "Budget Dance"
This year, the City faces a healthy surplus. It might be tempting to propose these tax credits and policy initiatives without regard to the bottom line. But it wouldn't be fiscally responsible.

That's why we have identified more than $180 million dollars in the Mayor's budget that can be eliminated - including removing projected surplus funds associated with judgments and claims, delayed capital projects and the City's energy budget. We are committed to making responsible choices on both sides of the budget ledger—every year.

Finally, I want to end my remarks today by calling once again for a reform proposal that I believe will have a tremendous long-term impact in making government work better for people.

My colleagues, we must reform the budget process once and for all and put an end to the annual budget dance...this is the only way that we can truly end the culture of lobbying at City Hall and bring real accountability to government.

The annual budget dance has two partners and two steps.

The Mayor leads with an executive budget and proposed cuts. The Council follows with a response and proposed restorations. The list of cuts changes a bit from one year to the next and the amount swings with the City's economic fortunes. But the roles and the steps are the same year after year after year.

The whole thing feels a lot like the movie Groundhog Day.

The truth is, we end up fighting over only a tiny fraction of the City's budget. The City Charter, when it was rewritten in 1989, envisioned something very different.

The Charter Revision Commission envisioned an expense budget in which every agency budget is broken out by particular program, purpose or activity, accompanied by statements of the goals each was designed to accomplish and the amount of funds allocated. The Administration was supposed to provide the City Council with explanations of the impact a proposed level of funding would have on those individual programs. But that has never happened. The budget process today is virtually identical to the one the 1989 commission sought to reform.

For the most part, agency budgets are overly broad and don't detail individual programs. In many agencies, all personnel funding is stuffed into a single budget line - instead of being broken out into individual units of appropriation. The descriptions of programmatic objectives are often nothing more than a list of the programs themselves.

So there's no transparency, no way for us to tell exactly how taxpayer dollars are being spent, and no way to ensure that we're doing all we can to meet New Yorkers current needs.

If agency budgets were presented in the way the charter mandates, the budget debate could truly be one about priorities. And Council committees could do a better job of oversight and more effectively evaluate programs throughout the year.

Instead, we just go back to the same old budget dance. Well, starting this year, under the leadership of Finance Chair David Weprin and together with Mayor Bloomberg we are going to end the dance.

We're going to reform the process and start clearing up the unit of appropriation muddle so that we can start evaluating every program and base funding decisions on these criteria:
-Does the program fill a real need?
-Is it serving people effectively?
-Is there better way to help New Yorkers?
-Has the program already served its purpose?
-Given the City's fiscal situation and the array of competing priorities, can we still afford the program? And at what level?

We're going to make spending decisions not based on who has the most connected lobbyist...but based on whether the program truly works.

 

Ending the budget dance is absolutely critical to bringing transparency to the budget itself...to protecting taxpayers and eliminating waste...and to better serving the New Yorkers we're elected to represent.

Yeah there were a few snowflakes yesterday but spring is in the air today... Optimism abounds in the streets of our City and in this chamber. New York has come a long way back but we won't rest until we bring it a lot further.

Now that the sun is shining, let us work together to repair the roofs of all New Yorkers.

 

 

 

 

 

Education, Housing, Health...And The 2007 Budget


Last year, one million New Yorkers - one out of every eight people in the city - visited a soup kitchenor food pantry because they were hungry. So it seemed like a reasonable question to ask why Mayor Michael Bloomberg cut $2 million in funding for these programs in a year when the city government has a $3 billion surplus.

The response from the Bloomberg administration to this question asked by City Councilmember Bill DeBlasio at one of the budget hearings completed last week, however, wasn't so straightforward.

Human Resources Administration Commissioner Verna Eggleston argued that it wasn't really a "cut." If the City Council wanted to allocate additional money like it did the year before, she said, it was welcome to.

Then, Eggleston said others - the state and federal governments and private charities - could pitch in money to feed hungry New Yorkers.

Finally, she argued that providing meals is just a small part of a larger fight. "I have found no scientific correlation between feeding someone and reducing poverty," she said.

DeBlasio never did get his answer, and the real issue was never addressed.

The number of people seeking food from soup kitchens and food pantries is up 40 percent from five years ago. But funding for these programs has remained the same. In the city's $52 billion budget, less than .01 percent ($12 million) is allocated to fund emergency food programs.

In the last few weeks, New Yorkers have heard and read much about new initiatives in the city budget:
• The mayor plans to hire 800 more police officers
• The State Legislature wants to authorize $11 billion for the city to build new schools
• And the city is hiring more caseworkers in the hope of preventing the death of another child like Nixzmary Brown, the 7-year-old who was killed by her stepfather.

How do the budget priorities match up to the concerns of everyday New Yorkers?

Children
Education
Crime
Health
Housing
Sanitation
Poverty

CHILDREN

In early January, the local news was dominated by the story of a seven-year-old girl named Nixzmary Brown, who was allegedly beaten, tortured and killed in her home by her stepfather.

In his preliminary budgetpresented in January, Mayor Bloomberg responded to criticism of the Administration for Children's Services by boosting funding for the agency's efforts to investigate allegations of child abuse and neglect.

The mayor committed increase spending by 20 percent - hiring 250 new case workers and creating a new system of tracking cases of abuse and neglect.

But even the mayor admitted that the changes and the additional funding may not be enough to prevent future incidents.

"What really happened with Nixzmary Brown is, her parents killed her," he said. "We as a society didn't recognize the danger the child was in and respond fast enough, obviously."

While child advocates have generally praised the decision to increase funding for this and other programs, like new foster care initiatives, they are concerned about cuts to other areas that they say will hurt children.

Overall, the budget cuts a total of $100 million for children's services including a decrease of $75 million in funding for day care - equal to about 9,000 slots - due to expectations of less state and federal aid, according to an analysisby the Citizens Committee for Children.

EDUCATION

For years Brooklyn's Midwood High Schoolhas had the dubious distinction of being one of the city's most crowded schools. About 4,000 kids jam into a building intended for 2,300. To accommodate the hordes, the school employs a complicated schedule with some kids arriving as early as 7 a.m. while other don't start school until late morning. For years, the city has promised "relief" in the form of an annex with science labs, libraries and other facilities that would free up space for classrooms in the main building. But relief has never arrived.

This year the city once again declared its intentionto build the annex - part of its five-year capital plan for schools. But the approximately $30 million project became enmeshed in the battle between the city and the state over how much money Albany should give the city to build, maintain and operate schools.

Since the Giuliani administration, the battleground for the education budget has shifted. In the 1990s, many education advocates saw City Hall as the villain. But even in tight times, the Bloomberg administration has cut deeper into the budgets of other agencies in order to spare schools. And this year the administration proposed a small increase. City Council members and education advocates would still like the city schools to have more money for smaller class size, universal pre-Kand improved school facilities.

Most lawmakers and education advocates expect the majority of the money to come from Albany, not from City Hall.

Despite the problems in the schools - high dropout rates, low achievement in middle schools and thousands of elementary school students who struggle with the most basic reading and arithmetic - this year's proposed operating budget for the city's more than 1,100 public schools offers no major new programs, cuts - or major controversies.

The mayor's preliminary budget for the 2007 fiscal year includes a $14.9 billion operating budget for the nation's largest public school system, about $148 million more than the current budget. Much of it will go to benefits for teachers as part of the contract with the teachers union. Other increases go to:


• school safety as the department hopes to hire an additional 286 school safety agents
• special education, where more early diagnoses of children with autism is contributing to a rise in costs
• and planning for more new small schools.

"Overall," Chancellor Joel Klein said at recent hearing on the education budget, "we expect schools to receive about the same level of funding as last year, unless they experienced changes to their registers, average teacher salaries, or special education enrollment."

The council seemed to accept this business as usual budget. At the hearings, no council member voiced strong objections, with most using the forum to express support for their favorite causes: Lewis Fidler calling for more gifted and talented programs, for example, and Simcha Felder asking the chancellor to consider selling off what the council member considers excess school buildings.

Although it seems unlikely, things could change before the adoption of the final budget on June 30. An analysis (in pdf format) of the Department of Education budget by the Independent Budget Office notes that the department has instituted a number of policy changes that could boost costs. These include the extension of the school day, generally for students needing additional help, as well as the opening of 36 new small junior and senior high schools and the expansionof translation services for parents who do not speak English.

The state legislature's proposed budget averted a possible showdown on the capital budget by setting up a plan to borrow $11.2 billion in funding for school construction and improvements over the next five years. The funding - if it materializes -- should allow the city to proceed with its five-year $13 billion plan(in pdf format) to build new schools and improve existing ones.

CRIME

The crime rate in New York City is at an all time low. The number of crimes has fallen nearly 25 percent since 2001; the number of murders, subway crime, and robberies are all down.

Keeping crime down is a priority for Mayor Bloomberg - and he is demonstrating that this year in his budget.

The mayorannounced that New York City will add 800 police officers and 400 civilians to the police department, which currently has 36,450 officers. It is the largest expansion of the force since 1993.

Bloomberg said the new officers are needed because the city is growing: 125,000 new residents have moved in since 2001 and an additional 200,000 new residents are expected over the next five years.

The addition of 1,200 employees will cost the city $33.8 million in the next fiscal year, doubling by the next fiscal year, and nearly tripling by 2010. The mayor also argues that hiring new police officers will help reduce overtime costs, which now total about $250 million a year.

But some question if hiring the new officers will affect the crime rate - more cops do not necessarily translate into less crime. New York City already has almost twice as many cops per resident as Los Angeles and almost six times the officers per square mile. And Washington DC has far more cops per resident than New York, but one of the highest crime rates of any large city. (For more, read Gotham Gazette's crime topic page)

And adding more police officers is not even guaranteed to reduce the cost of overtime. At City Council hearings, Commissioner Ray Kellytestified that hiring new officers does not mean that overtime costs will go down.

The mayor's critics say that the police department will have troubleattracting new recruits when the starting salary is only $25,100 a year. The number of applicants who signed up to take the February 2006 test dropped by 31 percent over last year.

And hiring more police won't change how many New Yorkers feel about the cops who patrol their neighborhood.

This year, the mayor wants to cut the budget of the Civilian Complaint Review Board, an independent agency that investigates police misconduct. The agency would lose 24 of its 184 investigators under the mayor's proposed budget.

This marks the third straight year that the Bloomberg administration has proposed such a cut in investigator staffing, but the City Council has stepped in and funded the 24 positions each year.

The numbers of complaints about police misconduct in the first few months of this year are up 14 percent. At the same time, it is taking longer to investigate claims of misconduct. In 2005, it took an average of 293 days to investigate a claim, up from 243 days in 2003. Police officers cannot be disciplined if more than 18 months have elapsed from the date a substantiated incident occurred.

HEALTH

In his budget two years ago, Mayor Bloomberg significantly increased the funding that the city dedicates to its 11 public hospitals. As part of that plan, there is $150 million in additional aid in this year's budget.

Still, the Health and Hospitals Corporation, which manages the public hospitals, ran a deficit of $573 million this year. It is expected to grow to $889 million by 2010.

Many hospitals in New York are struggling, and there are differing opinions about how to solve this problem. The public hospitals say the problem is the 435,000 uninsured patientsthey serve each year, knowing that if these patients do not pay, the hospitals themselves must absorb the cost of the care they provide them.

Within the hospital system and across the state, aggressive efforts to enroll people without health insurance have been successful. Still, the Health and Hospitals Corporation is hoping for a lot of help from elsewhere - it estimates that it will need $382 million in combined state and federal aid.

If the hospitals do not get the aid they are counting on, they will soon be unable to cover their expenses. This would mean the city might have to bail them out - or patients would have to deal with service cuts.

Also in the proposed health budget is the mayor's major new initiative to treat diabetes. He has allocated $1.2 million each year for the next five years to better track people with the disease and get them the help they need.

But critics say the mayor may be undermining his efforts in other areas of the budget.

In the parks budget, for example, the mayor wants to charge fees at six public recreation centers. However, a recent studyby the Independent Budget Office found that the fees discouraged New Yorkers from using the recreation centers. At 20 centers where the city instituted fees in 2002, membership fell by 13 percent in the first year after fees were imposed. The drop was steepest at the centers with pools, which now charge $75 a year; membership there fell by 22 percent.

The six centers where the new fees would be imposed are all in neighborhoods with high rates of obesity and diabetes, prompting some to question the mayor's priorities.

"We're all very interested in people's health, well-being and quality of life," Public Advocate Betsy Gotbaumtold the New York Times. "The city may see the fees as a way of increasing the revenue, but I don't think it's worth the price you pay to people's health."

HOUSING

A recent surveyfound that there are 62,773 millionaires in Manhattan, which sounds like a lot until it is compared to another statistic: the average price of an apartment in Manhattan is nearly $1 million.

So where do the 8.03 million other New Yorkers live?

The cost of housing is one of the primary concerns for city residents. Half of New York City renters pay more than 30 percent of their incomes for housing, and nearly a quarter pay more than half of their incomes for housing.

The city's housing crunch is particularly difficult for low-income New Yorkers who are finding that they have fewer options. As of April 2005, more than 128,000 were on a waiting list for federal Section 8 housing vouchers, the federal housing subsidy that helps thousands of low-income New Yorkers pay their monthly rent, and nearly 150,000 were on the waiting list for public housing.

Since he took office in 2002, Mayor Bloomberg has committed to building and preserving 165,000 new affordable homes and apartments by the year 2013 - what he bills as "the largest municipal affordable housing plan in the nation's history." The mayor has also made efforts to address homelessness and has created a rent subsidy program called Housing Stability Plus. In the last few years, Bloomberg has also offered homeowners a $400 rebate.

But criticssay the mayor is ignoring other critical housing issues.

For every new affordable apartment built, the city loses others as rent-stabilized apartmentsdrop out of the state-controlled system.

Bloomberg has not fought in Albany for the repeal of the Urstadt Law, which gives the state power over rent regulations, arguing that the city can not afford to administer the system.

"Bloomberg seems perfectly content to preside over the demise of the rent regulation system," Michael McKee of Tenants and Neighbors, a statewide tenants' coalitiontold Gotham Gazette. "I don't think he has any inkling of how important it is to the future of the city. And his failure to fight to reverse the phase-out of rent regulation is going to prove deadly to the city."

SANITATION

Few New Yorkers think about garbage in the city except when their street or sidewalk is littered with it, or they get a ticket for not separating out their recycling.

But each year the cost of dealing with the 50,000 tons of trash the city produces each day increases - and it adds up to hundreds of millions of dollars that could be spent on things like education, health care, housing - or even returned to residents in tax cuts.

This year the mayor and the City Council are supposed to agree on a new plan for disposing of the city's garbage. So far the debatehas focused on how to get it out of the city (barge vs. truck), which neighborhoods should handle the trash (ie, South Bronx vs. Upper East Side), but it looks like dealing with the garbage will only get more expensive.

In 2007, the city has budgeted $294 million for waste export, $16 million more than last year.

POVERTY

Twenty percent of all city residents - 1.8 million people - live below the poverty level. And there are signs that poverty is growing worse every year.

There are dozens of government programs - job programs, food stamps, homeless shelters, and public health insurance - that all meant to address this issue. But overall funding for services for the poor is not increasing.

When city government officials talk about poverty, they often focus on one statistic - how many people are on the welfare rolls. By that measure alone, things are getting better in the city. The number of people receiving public assistance in New York continues to drop. Currently, about 405,000 people receive benefits, down from 462,000 in 2002.

However, this doesn't mean more people are getting jobs or making enough to live day to day.

New federal welfare to work requirements could present additional problems for New York City this year.

The Department of Human Resources Administration estimates that the state could be fined up to $237 million for failure to meet welfare-to-work requirements; New York City would have to pay up to two-thirds of this amount.

Another challenge is getting people to use the food stamp benefits they are entitled to. Currently, 1.1 million New Yorkers are on food stamps, up 37 percent since 2002. However, the United States Department of Agriculture estimates that another 300,000 people are eligible.

"These numbers do not mean that New York has widespread starvation as now exists in places like Ethiopia or North Korea," said John Charles Dwyer of the New York City Coalition Against Hunger. "But it does mean that 1.2 million New Yorkers are skipping meals, reducing portion sizes, choosing between food, rent, utilities, and health care."

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Hiding Behind the Numbers


New Yorkers recently learned that the syphilis infection rate is down nine percent in the city, while the cost of asphalt is up $6.82 a ton. It takes 2.4 minutes less now than it used to for the average person to get help on the phone for a parking ticket. The Staten Island Ferry is increasingly late.

They learned all this from newspaper reports in the Staten Island Advance and the New York Times about a document called the Preliminary Mayor’s Management Report.

But what New Yorkers did not learn is that it costs $278 million more a year to dispose of the city’s garbage because the Fresh Kills landfill closed – bolstering the argument by critics who questioned the wisdom of closing it in the first place.

They also did not learn why it is taking longer for the fire department to respond to fires, why more people are dying in fires, or how the mayor plans to address the problem.

And they did not learn why the police department is spending more money (nearly $4 billion a year) and paying more in overtime ($400 million a year) even though there are fewer police officers on the force.

The mayor's management report is supposed to be one of the central ways to measure the performance of city government. And, by law, the report is supposed to be a tool to help lawmakers decide how to spend the city’s $50 billion annual budget.

While Mayor Michael Bloomberg has been praised for bringing new technologies and a business-like approach to city government, his administration is particularly stingy when it comes to sharing vital information with the public, and his approach to the mayor's management report is a prime example.

For all of the numbers and data that do come out of the mayor’s office, much of the most important information is not available, making it difficult for New Yorkers to assess how well the government is doing its job, and the direction it is setting for the future.

MEASURING THE CITY

Since 1977, the mayor has been required by the City Charter to issue two reports each year designed to measure how responsive city government is to the people it serves:

• The Preliminary Mayor’s Management Report (released in February) evaluates each city agency’s performance over the first four months of the fiscal year and presents goals for the future.

• The Mayor’s Management Report (issued in September) examines how each agency actually performed over the fiscal year.

Each mayor has used these reports in differing ways.



A new approach to government accountability -- officially called "performance assessment" but more colloquially, compstatmania -- compiles, analyzes and interprets statistics in order to spot trends, gaps and overlaps in city services. It's not magic -- it's hard work, and follow-up. In this series, Gotham Gazette looks at this approach to improving city services.

Ed Koch used it as a kind of report card, issuing “C’s” to commissioners that he did not think measured up. David Dinkins painted a picture of New York City's growing social problems in an effort to win state and federal aid. Rudolph Giuliani made a grand show of his presentations, describing with dozens of graphs and charts how the city had become a better place under his leadership.

Mayor Michael Bloomberg, by contrast, has trimmed the report to about a third of its previous size, put information online rather than in a large print book, and spends little effort on drawing attention to it.

In February, when he released his most recent Preliminary Management Report -– which provides information from July to October of 2005 -- Mayor Bloomberg said that his administration has an “excellent record of achievement” and “continued strong performance in the delivery of city services.”

In other words, he highlighted the good news and downplayed the bad news.

The good news in the report is that:

•The number of murders is the lowest since 1963
• Felony crimes are down 4 percent
• The average police response time is six seconds faster
• 93 percent of city streets are “acceptably clean”
• The number of pothole repairs increased by 5 percent
• 97 percent of troublesome trees were removed in 30 days
• New cases of childhood lead poisoning declined by 9 percent
• And the number of children in foster care is at the lowest point since 1987.

The bad news is that:

• Only 53 percent of high school students graduate in four years
• The average fire department response time is 14 seconds slower
• 22 people died in fires, eight more than the same period last year
• 54 people died in traffic accident, six more than in the same period last year
• It took more than 6 hours on average to respond to a broken elevator complaint in public housing, 1 hour more than last year
• The Staten Island Ferry is slower
•And lawsuits against the city are up.

One of the most important statistics, Bloomberg said, is that citizens have unprecedented access to government through the 311-call line, which is being used by more New Yorkers every month. During the four months time examined by the report, the city received 4.2 million calls, three quarters of which were answered in 30 seconds or less.

While the 311 data is a potentially valuable source of information on city services, the Bloomberg administration fails to share the information with other elected officials, the City Council, or local community boards, which are charged with monitoring the well-being of their particular neighborhoods.

Overall, the Bloomberg administration has cut agency budget and performance data to the bone, arguing that less is better. Sometimes less is simply a lot less.

USEFUL INFORMATION OR OUTDATED EXERCISE?

So what are average New Yorkers to make of all of this data? And is it an accurate and helpful snapshot of the city government?

In the past, Mayor Bloomberg has argued that the report is not very useful.

In 2003, he even asked his charter revision commission to look into whether or not it should be eliminated. After a series of hearings, the mayoral commission came to the conclusion that the Preliminary Management Report is:

• Outdated and rooted in “mid-1970s thinking”
• Not an effective means of assessing or improving performance
• And a waste of money.

The commission placed an initiative on the ballot to eliminate it.

Opponents of the plan to kill the report, like the New York City Council, argued that it was one of the few ways to hold city agencies accountable.

On Election Day, voters rejected the measure -– and so Mayor Bloomberg continues to issue the report begrudgingly.

“Although at one time the city was a trailblazer in performance reporting,” a recent report from the Independent Budget Office states, “the lack of linkage between performance data reported in the [preliminary mayor's management report] and elsewhere, and clear spending information, makes it difficult for citizens, elected officials, and even agency mangers to know what they are getting for their money and to evaluate alternatives.”

CRITIQUING THE MAYOR’S NUMBERS

There are a number of problems with the Preliminary Mayor’s Management Report in its current form.

1. Missing Numbers – Millions for Garbage

One problem of the report is that it does not break down budget figures to show how each agency spends its money.

For example, the Department of Education section reports that between July and October of 2005 the agency spent $4.3 billion on education, about $422 million more than the same time last year. Overtime costs are also up from $1.5 billion to $2.2 billion for the same period.

But the report makes no effort to explain how the money is being spent, why overtime costs have increased, or if there are plans to spend more or less over the rest of the fiscal year.

In other places, the mayor’s report simply omits some crucial financial information.

For example, in the current report the Department of Sanitation section does not say that roughly 25 percent of the sanitation budget goes to contractors since the closing of the Fresh Kills landfill by the Giuliani administration. According to the Independent Budget Office’s analysis, $278 million goes to seven private vendors through waste-export contracts that move the waste out of town.

The administration does not provide this information because the money is paid to private contractors – and that kind of information is reported in another document called “Agency Procurement” that comes out once a year.

The mayor’s report also does not say a word about the administration’s long-term plans to deal with the rising costs of the current waste disposal system even though the mayor and City Council are supposed to agree to such a plan this summer and even though the charter mandates that each agency present goals for the next year.

2. Confusing Measurements – Graduation Rates

In other area’s, the administration presents a dizzying array of categories of measurement – or “indicators” - that obscure what is really happening.

For example, the Department of Education reports that only 53.2 percent of high school students graduate in four years, which is down from 54.3 percent the year before. The number of students that graduate in seven years (67.6 percent) is also down from the previous year.

But this year, the Department of Education has now added a third category: “Students Graduating High School Within 4 years OR Still Enrolled in School for a Fifth Year.”

By combining two groups of students into one category, the administration can claim that 84.8 percent of students are “on track” to graduate or earn their Regent’s diploma.

“This indicates that more students are opting to stay in school at least an additional year to work towards graduation,” the report states.

Some experts disagree.

“This misinformation is devastating,” writes Daniel Losen of the Civil Rights Project at Harvard Law School in an article for Gotham Gazette. “How can we know if we are doing better if we do not get an accurate reading of where the issues lies? It also affects where resources are allocated. We are not going to spend enough if our focus on the problem isn’t sharp, and we can’t see what’s really going on.”

3. Few Answers – Unexplained Fire Deaths

The Preliminary Mayor’s Management Report also offers few explanations for why certain things may occur.

For example, 22 people died in fires between July and October, eight more than in the same time last year. The fire department’s response time is also 14 seconds slower; it takes an average of 4 minutes and 37 seconds for the department to get to a scene.

The mayor said the response time was due in part to an increase in house fires. And the report states only that the department “has taken steps to reduce the key components of response time.”

The information raises more questions than it answers.

What has led to the increase in response times? Were the deaths concentrated in specific boroughs or neighborhoods? Are slower response time linked to the six firehouses that the Mayor Bloomberg closed in 2003? Does new fire equipment that needs to be purchased? Does the department need to hire more firefighters?

In previous reports, at least the administration attempted to answer some of these questions.

“There used to be footnotes that offered explanation of why an indicator may have gone up or down,” said Preston Niblack of the Independent Budget Office. “We lost some of that when it was reorganized [under Bloomberg].”

A NEW APPROACH

Instead of scrapping the report or continuing the annual exercise in its current form, some experts are pointing to ways that the Preliminary Mayor’s Management Report can be made into a useful tool.

One idea is to return to one of the original goals of the report, which was to link the data from each agency to help make decisions about how to allocate funds. The Independent Budget Office recently issued a budget analysis that tries to create more clear connections between how the city spends money and the results that it gets in return.

For example, in the Independent Budget Office’s report on the Department of Health, one can see that the mayoral administration has spent more money for the prevention and treatment of tuberculosis, an increase from $32.1 million in 2005 to $43.5 million in 2006. And in turn, the number of cases of tuberculosis is down (from 124,695 in 2005 to 122,239 in 2006), and the Department of Health is treating a higher percentage of the confirmed cases in the city.

While it is tricky to draw clear connections between the amount of money the city government spends on a particular effort and the results, the approach can be a productive look further into what government is – or is not – doing well.

“You have to be careful and dig deeper before you make conclusions,” said Niblack. “But it should help people to start asking the right questions.”

The Independent Budget Office has also shown just what can be done to create clear, accountable budgeting, using the city’s own data.

Another suggestion is to require the administration to conduct “citizen satisfaction surveys” as part of the Preliminary Mayor’s Management Report. These surveys, which could track different responses by age, race, gender, and other socio-economic categories, could help bring a more customer service-oriented approach to city government. Last year, City Council considered legislation that would institute this change – and is likely to revisit the issue again in the future.

A third suggestion – which has been adopted by other cities and states - is to combine the two management reports with the mayor’s budget proposal into one document that would clearly lay out the mayor’s financial requests for each agency in terms of past and current performance and future goals.

This would allow the City Council, which is charged with holding public hearings on the budget, to monitor more carefully how taxpayer dollars are being spent.

"The Charter clearly intends the [preliminary mayor's management report] to relate performance measures to proposed budget appropriations so that the council… can consider what agencies have accomplished or produced with the resources allocated, and the effect of budget proposals, during the budget process,” a City Council report on the issue concluded. “Otherwise it falls far short of achieving its intended purpose.”

Mayor Bloomberg could break down agency budget information by program and provides sufficient new performance data that would enable an analyst -- or any interested New Yorker-- to measure results. Until that happens, this administration remains a $50 billion operation apparently unwilling to address management accountability.

RELATED ARTICLES:

Mayor’s Management Report for 2005: Thinner, Less Useful (October 2005)

The Mayor’s Management Report Skimps On Information About Education And Everything Else (October 2004)

Shrinking Accountability: Proposed Changes To The Mayor's Management Report (October 2003)

Editing Out the Facts (October 2002)

Guide To The Mayor's Management Report (October 2002)

Glenn Pasanen, who teaches political science at Lehman College, has been in charge of Gotham Gazette's finance topic page since 2001.  

 

Proposed Arts Budget, A Destabilizing Deja Vu Dance


City Hall counts on the cultural sector to attract tourists, provide arts education, stabilize neighborhoods, and to make New York City an attractive place for creative people who work in industries as diverse as fashion and Web design. Mayors are often the first to trumpet the cultural attractions as one of the unique attributes of the city.

It would be great to say the opposite is true as well –- that cultural organizations count on City Hall as a reliable partner in its funding process. Unfortunately, yet again, that is not the case. Instead we are being treated to a destabilizing, deja vu dance.

The Bloomberg administration is once again proposing a decrease in funding for the Department of Cultural Affairs next year -– a reduction of more than $37 million from the current year, to $102.2 million, according to the Independent Budget Office. This represents the largest proposed cut in two decades.

This latest budget leaves the members of the Cultural Institutions Group or CIGs (the 34 cultural groups in city owned buildings) with cash subsidies roughly equivalent to 1989. The remaining arts groups are getting funding slightly above 1987 levels.

One of the mysteries of this administration is the steady decline in cultural affairs budgets proposed by Mayor Michael Bloomberg. In his first budget, he recommended $110.4 million. Some in the cultural sector have interpreted this downward pattern to mean that Mayor Bloomberg is not convinced that public dollars should be used to fund cultural programming.

Capital funding plans show a slightly different pattern, but are heavily influenced by both Borough President and City Council commitments and by projects that are often not completed within a single budget year. Actual spending from the city funds in 2004 was $98.5 million. That increased to $140 million in 2005, and is projected at $130.5 million for the forthcoming budget. Future projections decrease this funding, however, to only $10 million by 2010.

More telling than future projections in this instance is the reality that in 2002, city funds for capital expenditures for cultural affairs was the far higher $208 million.

Experienced budget watchers tell the cultural groups that these administration proposals mean little, since the City Council has almost always restored the cuts. Unfortunately, that “almost always” is not grounds for fiscal planning by cultural groups, and in fact, restoration to the non-Cultural Institution Groups has not always taken place. This pattern of proposed decreases, followed by budget negotiations that restore some or all of the cuts, destabilizes the cultural sector more than any other activity under the control of elected officials.

A loss of funding due to a sudden economic blow, such as September 11, is also destabilizing, but a deliberate continued pattern of proposing cuts only to agree to last-minute restorations as the fiscal year ends is an entirely different matter. It is clear that cultural funding is simply a pawn in the ritual budget dance of Mayor versus City Council.

It is for that reason that so many in the cultural field are angry, not only at the current mayorÂąs treatment of cultural funding, but at both his predecessors. The rhetoric about the value of the arts to the city is not matched by the budget reality.

Under the Bloomberg administration, this destabilizing impact has been carried even further, however, by a re-definition of what budget watchers refer to as baseline funding. Simply put, baseline is the amount of money an organization had before the Mayor, Borough President, or City Council added any special one-time initiatives.

The Bloomberg administration now characterizes all funding added to its proposed budget as one-time initiatives, and has defined baseline as whatever it proposes regardless of prior commitments. In the past, if baseline was cut in a mayoral budget, the restoration of those funds was treated as ongoing, not one-time funding. For example, an organization that was baselined at $7500 when Mayor Bloomberg took office was first reduced to just over $6000, then increased slightly, then decreased again slightly, and is now looking at an another decrease. Any money the council puts in the budget for that organization is entirely a one year effort. The notion of a restoration process is essentially gone.

For the majority of cultural groups in the city, this budget dance has produced a steady decrease in funding over several years. For the 34 members of the Cultural Institutions Group, the unique partnership they felt they had with the city is deeply eroded as their funding levels become increasingly erratic.

The question is why if the cultural sector is so valuable, this budget dance goes on? Budget deficits are not the reason; the Bloomberg administration is projecting a very large surplus this year. The only logical conclusion is that cultural activity really does not matter all that much to mayors, regardless of the speeches, which leaves the City Council increasingly taking on the mantle of leadership in cultural funding.

Related Article

Independent Budget Office Review Of The 2007 Preliminary Budget For The Department of Cultural Affairs Norma Munn is chair of the New York City Arts Coalition



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