Gotham Gazette

The Place for New York Policy and politics


Economic Impact

Three Years of Rebuilding:
Ground Zero
Economic Impact
Federal Aid
Health and Environment

New York's economy had already been in recession for nine months by the time the Twin Towers were attacked. While it is difficult to separate the economic impact of the attack itself from the wider economic downturn, it is clear that 9/11 had a serious effect on the city's economy.

The Partnership for New York City, a business organization in the city, recently estimated that the city suffered an $87 billion economic loss because of the attacks.

In total, the city's tax revenue dropped $1.5 billion, or about 6.4 percent between fiscal years 2001 and 2002; personal income tax revenues dropped $1.2 billion, or about 26 percent over the same period. New Yorkers lost $2.8 billion in wages. And when the city's tax revenue rose above pre 9/11 levels in fiscal 2003, it had as much to do with the mayor's property tax hike in November 2002 as it did with a general economic recovery.

Lower Manhattan suffered most severely. Small retail businesses, which lost customers as foot traffic in the area declined and generally have more trouble than larger businesses taking losses, were hit especially hard. But the impact of the attack spread across the city. The outer boroughs, especially Queens with its heavy reliance on its airports, all lost jobs in the wake of the attacks.

In late 2003, the city pulled out of a two-and-a-half year recession but signs of recovery remain mixed. Eighty percent of jobs lost due to 9/11 have returned to the city, but the unemployment rate remains above pre 9/11 levels. According to the city's tourism bureau, in 2003 more visitors came to New York than ever before, even as the number of international visitors was the lowest number since records have been kept.

Many feared that after 9/11 businesses would be eager to leave Manhattan, or at least reluctant to start large new operations in the city. Indeed, few companies have expressed interest in the Freedom Tower on the World Trade Center site. But across the street, buoyed by federal Liberty Bonds designed to encourage development in the city, Goldman Saks is planning a new office tower. The New York Times and Bank of America are also using Liberty Bonds to construct office towers in midtown.

But the flow of jobs to New Jersey, one that existed before 9/11, has not ceased. Since the attacks, JP Morgan Chase, UBS Financial Services, and Citigroup, are among the companies that have crossed the river. While this has arguably made the financial system less vulnerable to terrorist attacks, it has also taken a significant amount of tax revenue from the city's coffers.

Meanwhile, the ongoing threat of terrorism has made doing business in the city more expensive. The Partnership for New York City estimates that major downtown businesses are spending up to ten times as much on insurance and security than they were before 9/11, even if, as a New York Times article recently reported, many companies are not actually paying for the plans that they draw up.

For more, see the Economic Rebuilding section of Rebuilding

Next Page: Federal Aid

Budget Dollars for the Neighborhoods: Community Development or Political Pork?

Last year, organizers of the West Indian-American Day Parade invited five New York City Council members on a "fact-finding" mission to Trinidad and Tobago's carnival to study what makes the event so popular and profitable. Based on New York City's annual budget, it appears the trip paid off — at least for the organizers.

Buried deep in the city's budget documents is a $100,000 allocation for the Brooklyn parade, twice as much as the group received last year.

While many New Yorkers would agree that events like the West Indian Day Parade, the city's largest ethnic celebration, are worthy of some funding from the city's $47 billion budget, the City Council is not exactly forthcoming about the details of such decisions and how members benefit from them.

Each year as part of the annual budget, the New York City Council doles out millions of dollars to community groups, arts organizations, Little League teams, and parades. (For a list of what more than a dozen council members say they received from the budget see related article.)

But when it comes to these initiatives, the City Council:

  • Negotiates the grants behind closed doors.
  • Does not disclose which officials requested the money.
  • Gives little explanation about how the money will be used.
  • And refuses to add up how much all of these efforts cost taxpayers.


And most council members defend the practice, arguing that the money goes to needy causes in their districts.

"They call pork the other white meat," East Harlem City Councilmember Philip Reed told the Daily News. "Meaning, it's good for you."

Where does the money come from? Who decides where it goes? And do these grants really help a neighborhood and its residents, or are they just taxpayer-funded efforts to help get officials re-elected?


At all levels of government, elected officials lobby for funding for projects in their home districts. For New York City Council members, who have less power to set policy than lawmakers in Albany or Washington, these budget allocations represent some of the most tangible evidence of what they have done for their constituents.

City Council members obtain money for their districts in four primary ways.

1. Member Items

Each of the 51 City Council members is given a sum of money — often called "member items" or "discretionary funds" — to spend in their districts.

This year, each member received a total of $240,000, of which $60,000 must go to programs for the elderly and $100,000 must go to youth programs. Officials allocate the remaining $80,000 in their districts as they wish.

Although each City Council member is given that same amount of money, many members take credit for obtaining these grants as a way of bolstering their accomplishments.

Riverdale City Councilmember G. Oliver Koppell, for example, recently sent out a press release announcing that he had "obtained an increased amount of funding" for senior programs. "The programs I am helping to fund provide much needed services to our most vulnerable citizens and add to the quality of life," Koppell said in the statement.

Koppell, however, did not mention that each of the other 50 City Council members also received the same amount of money. But when it comes to the specifics of how an individual council member divides his or her discretionary funds, elected officials often are less forthcoming.

When asked how he doled out his $80,000 in member items, Canarsie Councilmember Lew Fidler said he did not feel comfortable giving all of the details because community groups that did not receive funds may feel left out.

And Flushing Councilmember John Liu even rejected the idea that member items really exist, arguing that the council arrives at a budget as a body.

"I don't have anything that's called a member item," said Liu. "There are local initiatives that are suggested strongly by a council member."

2. Borough Delegation Money

In addition, each borough delegation — the group of council members representing each borough — is given a pot of money. For example, this year the Queens delegation received $250,000, which was split among the 14 Queens council members. With their money, Queens council members funded projects like the Queens Symphony Orchestra, which received $78,000.

To decide who is worthy of funding, borough delegations hold open meetings where individual non-profit groups come and "testify" as to how much money they need. These meetings are not widely advertised, and a group must know when and where these meetings occur.

3. The Speaker's Money

Another large sum of money belongs to City Council Speaker Gifford Millerwho, along with Mayor Michael Bloomberg, has the largest influence over what goes into the city budget. Miller can also dispense large grants on behalf of the legislative body.

For example, the New York Junior Tennis League, which offers free lessons to kids, received $486,500 from the city budget this year. And while the budget documents don't say that the money came from the speaker, the tennis organization's web site does: "Funded By Council Speaker Gifford Miller" the web site states prominently.

Miller's office refused to say how much money the speaker allocated this year, saying only that the grants "represent the City Council's priorities."

To get the speaker's support for projects within their district, individual council members must convince him that they have worthy projects. Politics also comes into play; the speaker can use his power to reward or punish certain council members based on their support for him in other matters.

"Some of us are good at this and some of us aren't," said one council member who did not want to be named. "Those of us who are good at it are supposed to keep our mouths shut."

4.Capital Budget

In addition to funds in the city's annual operating budget, each council member also lobbies for projects in the separate $6 billion capital budget, which covers the purchase, repair, or construction of physical items that cost over $35,000 and that last for at least five years.

These are often big ticket items, like computer equipment for schools, improvements to parks, or expansion of local libraries. It is also what City Council members often take the most credit for, since the projects cost millions of dollars and voters can see some tangible results.

But there are other factors that lead to funding beyond a council member's lobbying. For example, Brooklyn City Councilmember Diana Reyna said she obtained $1.6 million toward the development of almost 200 affordable apartments, but that project largely resulted from Mayor Michael Bloomberg's citywide effort to build more housing over the next five years.


The argument for giving City Council members a substantial role in allocating money in their districts is that they know the community's needs.

"You elect council members locally because they know what is needed in their district," said Doug Turetsky of the Independent Budget Office, a watchdog group that monitors the city budget.

But the process of distributing this money is largely obscured from the public.

Most of the lobbying and negotiations takes place behind closed doors. This forces non-profit groups and arts groups into the role of lobbyists, writing letters to their council members, meeting council members in person, and even making trips to City Hall to make sure they are not forgotten.

Budget documents also do not say which City Council member requested which item, which can lead to confusion over who exactly should take credit for obtaining the funding.

The head of one Brooklyn community center, who asked not to be named, said that after receiving a grant for $30,000 this year, he received letters from three different council members all claiming credit for it.

And come election time, politicians go back to the same organizations and groups that they funded looking for campaign donations or help in getting out the vote.

"We are eager to give this money out," said Jack Freedman, chief of staff to Councilmember David Weprin. "But we're politicians, so we also want people to know where it came from."

For a look at what your individual council member obtained in this year's city budget, read What Did Your Council Member Get for Your Neighborhood?

Big Trouble Ahead, Say Budget Monitors

The three budget monitors have weighed in on the recently adopted $47.8 billion city budget, and they agree on two things: First, Mayor Michael Bloomberg and the City Council get credit for crafting a balanced budget for the current 2005 fiscal year. Second, all three monitors see big trouble thereafter.

Among the latest reports from the State Financial Control Board (In PDF Format), the City Comptroller (In PDF Format), and the State Comptroller(In PDF Format), the state comptroller's is the most grim, foreseeing deficits considerably above the city's estimates from 2006 to 2008 ($5.1 billion instead of $3.7 billion in 2008, for example.) Worse yet, the state comptroller's report suggests a possible further $700 million deficit in 2007 (and $1.2 billion in 2008).

What to do? Well, that's not exactly the monitors' job. Rather, their job is to show how budget choices work out and to suggest some alternative choices that haven't been made.

They are unanimous, for instance, in questioning the use of about $3.5 billion in one-time, non-recurring resources to balance the 2005 budget. They also all point out that the city is not anticipating future education and labor costs in its four-year financial plan. And the Financial Control Board highlights the long-term fiscal risks of not fully funding capital maintenance needs.

Non-Recurring Budget Resources

The single largest reason for both the 2005 budget balance and the longer-term budget deficits is the use of one-time resources, primarily non-recurring revenues. The Financial Control Board lists over $3.5 billion of such resources in the 2005 budget:

Among these are more than $1.9 billion in surplus from fiscal year 2004.

Also, after years of wrangling over rental payments between the city, which owns the land under LaGuardia and Kennedy airports, and the Port Authority, which manages the airports, a new lease (which will be approved by the authority's board in September) promises the city nearly $700 million as a final settlement of past rents.

The state's picking up the costs of the remaining Municipal Assistance Corporation debt (incurred during the city's 1970s fiscal crisis) means the city will be reimbursed for $502 million in debt service it paid during the 2004 fiscal year.

The $204 million expected from the Battery Park City Authority is mostly ($150 million) from an anticipated, but as yet unexplained, sale of city land to the authority.

The city has argued that using the previous year's surplus should not be counted as using a nonrecurring resource, and the Financial Control Board seems to acknowledge that semantic point by distinguishing between "nonrecurring actions" and "use of the prior-year surplus." An alternative view, of course, is that the $1.7 billion surplus could have been used in any number of other ways (in either 2004 or 2005) so both are actions, or budget choices. And in both cases, the result is a very big hole in the next year's budget.

Underestimated Expenditures and Tax Cuts

A big reason for the higher estimates among the fiscal monitors of future budget deficits is the fact that many likely expenditures are simply left out of the mayor's four-year financial plan. Perhaps the most blatant example over the past 10 years is overtime estimates.

The City Comptroller's July report says, "Between FY 1993 and FY 2003, overtime expenditures have averaged 49 percent more than overtime projections at budget adoption." In FY 2003, the city spent $275 million more than projected in the adopted budget, and in 2004 "the city's current estimate of $857 million [in overtime] is $340 million higher than the budget adoption projection."

Another common instance of underestimated expenses is future labor costs. Here there are two problems. First, the financial plan funds near-term labor costs on the model of the recent District Council 37 contract, but the large teacher, police and fire unions still do not have contracts and may not accept that model. And second, the current financial plan has no money for the next round of labor contracts, beginning in fiscal year 2006. The State Comptroller's July report projects that a cost-of-inflation increase in labor costs would add $220 million in expenditures in 2006, $700 million in 2007, and $1.2 billion in 2008.

A new problem still unacknowledged in the financial plan is additional city education funding required in response to the state judge's mandate in the Campaign for Fiscal Equity case. All three monitors' July reports note that the proposals from Governor George Pataki, the State Senate, and the State Assembly all assume additional city spending over the next five years, ranging from a minimum of $554 million (Senate) to $1.2 billion (Assembly) to $1.5 billion (Pataki).

Since the state failed to respond to the court's July 30 deadline for a plan, and since the court has named a commission to report in November on next steps, the city is off the hook for the near future.

Another reason for long-term deficits, of course, is tax cuts. The monitors remind us that the adopted budget tax cuts -- the mayor's property tax rebate to residential owners and the council's new city earned income tax credit -- reduce revenues by about $300 million a year for three years. And, they point out, the phasing out of recent sales tax and personal income tax increases on higher-income New Yorkers will cost the city an additional $1 billion a year in lost revenues beginning in 2007.

Capital Budget Priorities

In recent years the Financial Control Board has often argued that the city's rising debt service costs are a major cause of structural budget imbalance. The board is certainly unhappy with the new financial plan: "Past efforts to contain the growth in debt service seem to have been abandoned." The board urges the city to "refrain from increasing the total size of its debt-financed capital program."

Their report shows that debt service rises from $4.2 billion in 2004 to $5.3 billion in 2008. The board's favorite measuring rod -- debt service as a percentage of city tax revenues -- rises from 15.3 percent in 2004 to 17.0 percent in 2008. Their conclusion is that "debt service levels for the outyears could be affordable only if revenues increase substantially or spending for competing operating needs is scaled back."

What irritates the board is a new surge of capital commitments, after a January 2003 financial plan that cut back a total of approximately $4 billion in capital commitments across all areas with the exception of environmental protection contracts. Since then, the city has increased commitments in fiscal years 2004-2007 for schools by $5.5 billion, the emergency response communication system by $1.2 billion, economic development by $320 million, and hospitals by $313 million.

It is unclear how much weight the board's report will have on the mayor and council's priorities. But there is one area where the board and the city's priorities ought to be shared: maintaining the city's infrastructure.

The city publishes an annual maintenance report. The latest one identifies $4.4 billion in capital maintenance needs - that is, bringing roads, bridges, schools, police stations, etc. - up to states of good repair. If that's not done, the city can be forced to pay much higher fix-up costs in the future (as happened with city bridges that were not maintained adequately after the city's 1970s fiscal crisis). The control board's report shows that the city is funding only $2.1 billion of those needs, or 49 percent. The maintenance needs of streets and highways used to be funded at least 90 percent. Now they are less than 50 percent.

Who Pays for West Side Development, and How Much?

The three monitors' reports have useful sections on the fiscal implications of Mayor Bloomberg and Governor Pataki's Manhattan West Side development plans. Rather than one clear, comprehensive plan for the area, there are three scenarios at play, each with its own - often sketchy -- financing plan: expansion of the Javits convention center, the Jets Stadium, and the commercial and residential development of the adjoining West Side. Much of the financing depends on actions by public authorities, which means outside normal democratic budgeting processes.

Here is how the Financial Control Board describes the current plans in terms of future city financial obligations:

- Extension of the #7 Subway line and residential/commercial infrastructure: Paid for through $4 billion of bonds issued by a local public authority, with debt service to total $7.6 billion through 2035. The effect on the city budget is not clear, although short-term financing, the likely use of payments-in-lieu-of-taxes (PILOTS), and the designated use of new West Side property taxes could drain money from other city uses.

- $350 million of city support for the expansion of the Javits Center: Paid for through bonds whose debt service would come from Battery Park City Authority revenues, and requiring the agreement of the authority, the city, and the city comptroller. (The comptroller has not announced his position on this proposal.) Othershave argued that such funds are really city funds that should be used for affordable housing.

- $300 million from the city to help pay for the platform for the stadium: No final financing plan has yet been provided by the city.

The control board's reservation about the third scenario -- "the use of city funds to finance a sports facility may ultimately crowd out spending for competing capital projects" - is a useful warning about all the West Side development scenarios.

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






























NYC Newspapers

Henry Scott, the publisher of Metro New York, doesn’t go a day without the New York Times.

"I get the Times home delivered, and I take it to work because I don't have time to read it beforehand,” said Scott, whose paper is the newest newspaper in the nation's last remaining newspaper town. “I carry it around all day, take it home with me, and if I have a few minutes before I go to bed I might read some of it. I think a lot of people are the same way."

Who Owns New York's News?

NYC Books
Books About New York Newspapers

Readership Of Dailies:

The Wall Street Journal -- 2,101,017
The New York Times -- 1,677, 003
New York Daily News -- 802,103
New York Post -- 678,012
Long Island Newsday -- 662,317
Hoy -- 109,598
Staten Island Advance -- 68,700
New York Sun -- 53,000
El Diario La Prensa -- 50,019

Sources - Audit Bureau of Circulations or the newspapers themselves

This, argues Scott, is why New York needed to add yet another newspaper to the 40-some dailies already serving New Yorkers in about a half-dozen languages. A free "commuter daily" like his offers a quick read, a lightweight alternative to the heavy hitters like the Times.

This is the same argument put forth by Russell Pergament, the publisher of AM New York, a competing commuter daily launched late last year.

Everywhere else in the United States, newspapers are in decline -- 98 percent of American cities now have only one daily newspaper; the total number of newspapers in the country, and the total number of readers, has declined every year for the past two decades. In some ways, other news media offer even fewer choices, radio and television stations throughout the nation now dominated by just ten corporations. (See Who Owns New York's News?by Joanna Erenberg and Ian Manheimer)

But New York is the media capital of the world, headquarters for all the nation's television networks, home of an estimated 10,000 journalists, center of an information industry -- which includes not just newspapers, but book and magazine publishing, motion pictures, sound recording, broadcasting, and telecommunications -- that is the city's fourth largest "industry supersector," larger even than finance. Here newspapers still seem to matter, at least to the companies that own them.

But what does their vivid presence mean to New Yorkers and the city as a whole -- economically, politically, culturally, psychologically?


Not that long after New York printed its first newspaper, in 1725 (the paper had a fine name: the Gazette), the city became the kind of colorfully cut-throat newspaper town for which it is known to this day; publishers would race into the harbor to snatch scoops that came sailing in on British ships. By the late 1800’s, the city had 29 daily newspapers, with two – the New York World and the New York Journal -- boasting daily circulations above one million.

With the exception of the Post and the Times, all of these papers have disappeared. But the city as legendary newspaper town remains (see Favorite Books about Newspapers in Gotham Gazette's book section), and not just because of the swashbuckling past. Newer newspapers have taken place of the old, and the New York Post, started by Alexander Hamilton in 1801 and the country’s oldest continuingly published newspaper, is now in a well-publicized war with the New York Daily News, the country’s original tabloid newspaper (an adjective originally meant only to describe its shape), which was founded in 1919.

New York now has about half a dozen major metropolitan, general-interest English-language dailies, depending on how you count (do you include Newsday, for example, based in Long Island and with spotty circulation in the city itself? How about the business-oriented Wall Street Journal, which shuns local news?). It also boasts some three times as many newspaper readers as Los Angeles, the country’s second largest newspaper market. Of the fifteen highest-circulating daily papers in the country, four are published in New York City; there are also some 200 ethnic and community newspapers published in the city; and upstart dailies like the New York Sun continue to emerge, looking to carve their own niche.

Why is this happening here and nowhere else?

The answer is not much of a mystery. New York is both the largest "media market" and the nation’s largest metropolitan area, the home of the greatest number of commuters who use public transportation. It is also diverse enough to make it difficult for one newspaper to appeal to everybody.


All of these newspapers employ reporters, editors, photographers, circulation managers, and many others. All said, the newspaper and periodical industry employed 53,100 employees as of May 2002, not including the countless number of independent journalists in New York who work as freelancers. The entire information industry, according to the city comptroller's office, employs more than 150,000 people, paying them about $9.5 billion in wages over the first three quarters of 2003. The industry also contributed nearly $600 million in city tax revenues.

Newspapers and other media provide intangible economic benefits as well, said Jonathan Schwabish, an economist with the Partnership for New York City.

"You've got the New York Times and the Wall Street Journal, which are probably two of the top five newspapers in the world,” he said. “You're combining those, in New York City ... It just adds to the city's reputation as a global center, a global economic force, an entertainment center.”


Operating in the country’s biggest newspaper market doesn’t necessarily pay off financially. The Times, which for the past half dozen years has deliberately positioned itself as a national newspaper rather than a local one, makes most of its money through its national circulation (half of its readers now living out of the metropolitan area). Few of New York’s other papers could be called flush. Elsewhere in the country, newspaper profits continue to be strong even as readership drops; here it is just the opposite.

The Post and the News, in their competition for the city’s readers, best illustrate the mixed blessing of publishing a newspaper in New York City.

The Post is enjoying some of the most rapid circulation growth in the country – its circulation rose 9.3 percent in the six months ending March 30 to 678,012 papers a day (the News has a daily circulation of 802,103). But the newspaper is also losing large amounts of money. Since Rupert Murdoch took over the Post almost 30 years ago, it has lost over $500 million.

While the specifics of the Daily News’ finances are unknown, it is rumored to be barely profitable. The last time it made specific statistics public, in 1998, the News showed annual losses of over $20 million.

The high costs of maintaining a newspaper in this high-priced city – and the pressures of competition – make it harder for newspaper publishers in New York to make money than their counterparts elsewhere. But if even the most widely read newspapers are not financially successful, why continue to compete?

The widespread belief is that New York's big-time newspaper publishers are willing to subsidize their unprofitable enterprises to capture a different kind of coinage -- political influence.

Post owner Rupert Murdoch received a waiver from the Federal Communications Commission’s regulations against owning different media outlets in the same market to buy the Post; he then used the newspaper to lobby for further leniency. His competitor, Daily News owner Mortimer Zuckerman, has pushed a variety of his own pet causes through his newspaper.

“In this tabloid war, the rules of modern capitalism are suspended,” writes the New Yorker’s media writer, Ken Auletta, in his book Backstory.

“While it is true that Murdoch cannot tell his directors that the Post has made money, he can surely confide that it has been good for News Corp,” writes Auletta. “And, more personally, in the words of one close adviser, Murdoch knows that he has gotten ‘his conservative precepts across in the biggest market in the country.’”


Better Informed?
When Ben Smith began work for the New York Sun in 2001, having previously reported for the Indianapolis Star, he was struck by the "sense of competition and urgency here. It means," said Smith (who has since left the Sun to work for the weekly New York Observer), "that you wake up every morning and read your competitors with a certain amount of stress."

This competitive stress, some believe, results in fuller coverage, which makes New Yorkers better informed. “When you have people competing head-to-head, it makes people work harder,” said John Morton, a newspaper analyst. “I think, overall, even overlooking some of the lapses, the readers are well served by this.”

Readers apparently agree. According to a recent poll (in pdf format) some 45 percent of New Yorkers believe that the local media helps the city solve its problems, as opposed to 31 percent nationwide.

While local media also includes television and radio stations, many believe that newspapers continue to hold a special place in the news-producing world. The newspaper "may be in decline in certain age groups, and it may be in decline over the horizon, but it is still significant," said Steve Isenberg, who was the last publisher of New York Newsday (before the New York edition folded in 1995). "To my mind, it is still the spinal column for all other news. Every radio and every TV person begins their day with it; they all read the major papers."

It is not just the major English-language newspapers in New York that keep their readers better-informed. Two healthy Spanish-language dailies, Hoy and El Diario, target an immigrant readership with different sets of priorities and bases of knowledge who don’t necessarily get what they need from the English-language press.

"In this paper, we are making a big effort to teach our readers how to integrate to this country, and to this city," said Javier Castaño, the news director of Hoy. "That's why we were covering the [Democratic and Republican National] Conventions, even before they started, with writing, pictures, and graphs explaining how the system works,” he said. “We have that obligation, because our readers are new to this country and this city."

More Alarmed, Maligned, Misled?
Earlier this summer, gruesome crime stories filled the front pages of New York's newspapers, sparking some talk of a summer crime wave,and bringing Mayor Michael Bloomberg’s boasts of a safe city into question.

"The fact is that the incidence of crime remains relatively low,” Paul Browne, deputy commissioner of public information for the New York Police department, responded in the Times. "But the way it’s covered you wouldn’t necessarily know that." Browne claimed that the public’s view on crime is distorted because news organizations devote the same amount of space covering it, even as the actual amount of crime has dropped.

This is not a new complaint. Some argue that crime in New York, and particularly in Central Park, was never as bad as the public perceived. Even when it was the universal symbol for urban chaos New York did not have the worst crime rate in the nation.

Distortion and error, some say, are the downside of a competition that can be overzealous and downright vicious. When the Post ran a front-page story last month mistakenly naming Dick Gephardt as the Democratic choice for vice presidential candidate, the News took pains to rub it in. After using the Post’s cover to illustrate its own cover the next day – and delivering a case of champagne to the Post’s office to congratulate it for the “exclusive” – the Daily News ran several days of stories gloating over its competitor's mistake, a long-running finger-pointing habit that both papers share.

This kind of gleeful harping also targets public figures, which some see as part of the tabloids' major identity and in many cases their strength. But by thriving on conflict, says Andrew White, the tabloids bully public officials into confronting one another, making New York politics all that much more contentious.

The attacks "are not necessarily substantive, they don’t necessarily contribute in a meaningful way to the direction of the city’s effectiveness,” said White, the director of the Center for NYC Affairs at New School University, and the former editor of the monthly magazine City Limits. “But it’s just a reality of New York City politics that you have to deal with.”


Given that so many New York newspapers are losing money, it might seem odd that publishers saw room for more. Odder still, AM New York's publisher, the Tribune Company, which also puts out Hoy and Newsday, is arguably creating its own competition. Already, the competitive pressure is clearly intense: recently, both Newsday and Hoy were caught in a scandalafter inflating circulation numbers to lure readers away from their competitors.

So why add more papers to the mix?

Many say that there is no point, that these papers, with more than 50 times the number of hawkers -- or, as Scott prefers to call them, "street promoters" -- than reporters, are a passing fancy that do not add anything to coverage of the city. "Journalists and readers of well-informed journalism were disappointed" by the content in commuter dailies, said NYU sociologist Eric Klinenberg, who is writing a book about local media coverage.

But the publishers of commuter dailies, as well as analysts such as Klinenberg, argue that they may wind up serving a specific and important purpose -- recruiting new readers to the world of newspapers. By offering the Internet generation instant gratification for free, these weekday handouts attract young readers in a way that heftier papers cannot, or so goes the theory. In other markets, such as Chicago, it is the major daily newspapers that have started commuter dailies, grooming young readers who, they hope, will graduate on to a more substantive paper later in life.

Scott of Metro New York subscribes wholeheartedly to this idea.

“We are developing, I hope, a new cadre of newspaper readers,” he said. “My guess is, as our readers grow older, they may turn to a newspaper like the New York Times, the Daily News, or the New York Post, which are focused on an older audience.”

But New York’s other commuter daily, AM New York, takes offense at the “training wheel” theory. In comparison to Metro -- and to other commuter dailies throughout the country – the paper sees itself as doing the job of a conventional newspaper, albeit on a much smaller scale. (Its masthead lists nine editors and two reporters.)

Russell Pergament, AM New York’s publisher, keeps a thick stack of newspaper clippings in his office. Within minutes, he fills the conference table with them – each one a story that his paper broke, with copies of stories that other newspapers wrote after picking up the leads – as he explains what he thinks a newspaper should do.

“When I was a kid, I ran a paper out of my garage. We got people run up the river,” says Pergament. At AM New York, he is most proud of a story that served a similar purpose, by exposing mismanagement of the Statue of Liberty Foundation. After AM New York broke the story, the New York Times quickly turned it into a front-page feature, sparking a federal investigation.

“Based on the work [we’re] doing, it is a good newspaper, forget the qualifying ‘free’,” said Pergament. “And I hope that by the fall we’ll be a very good newspaper.”


There isn’t an agreed-upon length of time that it takes for a new newspaper to take hold in the city, either as a financial success or as a significant political presence.


The New York Sun, which started more than two years ago and claims 53,000 readers, seems willing to lose money for years to come in order to establish itself as a conservative alternative to the Times.

“Success will be measured by two things: whether we make money, and whether we meet our idealistic goals,” said the Sun’s publisher, Seth Lipsky. "We're a long way from both.”

But analysts seem doubtful that the publishers of AM New York and Metro will tolerate losing money for much more than three years. And it is too soon to judge whether the new newspaper model will have much of an effect on other papers in the city, or on how New Yorkers get their news.

As for the competing commuter dailies, each one insists that it is not in competition with the other, though everyone else agrees that they are, and expresses doubt that both will last.

That said, many believe that one of them will make it. Like all New York newspapers, after all, they do have at least one thing working in their favor.

“Everyone needs to read on the subway," said Smith. "What else can you do? Cell phones don’t work.”


Urban Issues: Economy

  • Jobs
  • Minimum Wage
  • North American Free Trade Agreement
  • Taxes

George W. Bush

In May 2003, President Bush signed the Job and Growth Act, which cut capital gains and dividends taxes and gave $20 billion in state aid to create new jobs. The White House says that since August 2003, over 1.4 million new jobs have been created. Bush would continue tax cuts to encourage job growth.

Bush has not proposed an increase in the federal minimum wage, which is currently $5.15 an hour.

Bush supports the North American Free Trade Agreement and says that it has raised the standard of living of the average American family of four by up to $2,000 a year. (Learn more)

Bush tax cuts will total over $1 trillion dollars over six years. New York City receives about $78 billion in tax relief. Bush plans to continue tax cuts in the future. (Learn more)

John Kerry

John Kerry hopes to create 10 million jobs during his first term as president through a series of tax reforms and small business investments. He proposes eliminating all tax breaks that encourage companies to move jobs overseas. He also proposes a New Jobs Tax Credit to encourage companies to reinvest their foreign earnings in the U.S. He wants to double the number of urban business zones that receive tax incentives. He supports private job training centers and promises to expand opportunities for minority and women owned business. (Learn more)

Kerry supports raising the federal minimum wage from $5.15 to $7 an hour. (Learn more)

Kerry voted for the North American Free Trade Agreement, but says that it may need to be amended to keep jobs in the U.S.

Kerry wants to repeal tax cuts for families with incomes above $200,000, and would not raise taxes for any family making less than $200,000 a year. He also supports a State Tax Relief and Education Fund that will help states so they don’t have to make further cuts or raise taxes. Kerry wants to protect the increases in the child tax credit, the reduced marriage penalty, and the new tax bracket that helps people save $350 on their first level of income. (Learn more)

Back to Urban Issues Main Page




Small Victories, Big Questions In The New Budget

After a contentious battle between Mayor Michael Bloomberg and Council Speaker Gifford Miller, the adopted city budget for fiscal year 2005 reflects a number of small victories for both men. The mayor got his $400 property tax rebate for homeowners and maintained city services, and the speaker got a long-sought, progressive city earned income tax credit (EITC), as well as several modest program initiatives.

But the adopted budget ignores several big issues, two of which - looming budget deficits and uncertainties about court-mandated school funding reform - may well threaten services during this new fiscal year.

Another fiscal problem - an inequitable city tax structure - got worse as the speaker's property tax saving plan for renters was abandoned. And the petty bickering between the administration and the council over the meaning of "budget cuts" unnecessarily obfuscated the budget process and may have set the stage for even more contentious political battles over the next sixteen months leading up to the 2006 citywide elections.

Property Tax Rebate and Earned Income Tax Credit

The mayor's win on the property tax rebate means a substantial benefit for lower-income owners, especially seniors on fixed incomes. The victory was somewhat diminished, however, by the late revelation that the rebate could be taxable and a delay in receiving state approval for the rebate itself. The cost of the rebate - about $250 million in the first year - is a lot more than the $50 million cost of the council's new earned-income tax credit.

This tax credit will benefit 700,000 working New Yorkers, who will save up to $215 a year (or an average of about $72), and complement the benefits from the similar (and larger) state and federal credits.

There's no doubt the tax benefits will help many over-burdened residents. But the costs -- $300 million a year in total - and the haphazard nature of their introduction only compound the city's underlying budget deficit.The city's projected deficit for 2006 is currently about $3.7 billion. For 2007 it is $4.5 billion. It will also favor house owners over owners of co-ops and condos (a consequence of the Byzantine property tax system.)

The Ups and Downs of Budget Surpluses

The mayoral and council tax cuts and council restorations and new programs were apparently encouraged by the $1.9 billion surplus in the 2004 fiscal year just ended. The $1.9 billion is an extraordinary $600 million more than the surplus projected just two months earlier in the mayor's executive budget. (Revenues were $600 million higher than projected in April.) Such a surplus is a mixed blessing at best. It helps disguise the fact that the city will spend a lot more money in 2005 than it is bringing in - at least $700 million more, according to a projection by the Independent Budget Office.

The big surplus and the new tax cuts are also eerily reminiscent of the multi-billion dollar budget surpluses during the later years of the Giuliani administration. Those surpluses encouraged Giuliani and the council to introduce multi-billion dollar tax cuts in the late 1990s, a step that in turn contributed to the fiscal turmoil in Mayor Bloomberg's first year as the September 11 attack and a national recession drained revenues. The immediate result of that fiscal crisiswas a $3 billion increase in taxes in one year.

While the new tax cuts are a small fraction of those in the Giuliani era, they set a poor precedent in a time of structural budget imbalance, especially when two of the stabilizing 2003 tax increases (higher personal income tax rates for high earners and the 0.125 percent sales tax increase) are being phased-out, and they make worse the basic mismatch between city spending and city revenues.

Problems for City Services

In addition to its progressive tax initiative, the council not only restored $215 million in services that the mayor had cut; it added about $50 million to five new or existing programs: job training for the long-time unemployed, 1,400 new day care slots, legal services, school class-size reduction, and libraries.

But all new and expanded services - as well as existing services -- are threatened by the underlying budget deficit.

By focusing on tax cuts, the mayor and council seem almost to guarantee that there will be cuts to services in the future. This was an odd choice, since the mayor's major political and fiscal success in the past year has been his ability to minimize service cuts; the adopted budget is notable for its lack of such cuts.

Of course, even at current funding, several services are in effect being cut back, since they do not restore the cuts made in previous budgets. Library spending, for example, dropped from $255 million in 2002 to $230 million in 2004. Now, in the new adopted budget, library funding is at $241 million - more than it was last year, but less than it was three years ago.

In a similar way, as a report from the Independent Budget Office showed, there were cuts of ten percent for the Department for the Aging and for the 34 so-called Cultural Institution Groups (those housed within city property.)

Then there is the prospect the city may have to provide additional funding for education in the final settlement of the Campaign for Fiscal Equity case in state court. According to an Independent Budget Office review of several recent studies, the city's own share of education funding might increase by $950 million to $3.6 billion a year. The report goes on to point out this increase "is nearly twice as much as the city currently spends on parks, cultural affairs, and libraries combined."

The other problem on the service side is the rapid increase in mandated expenditures. Those costs must be paid, throwing more pressure on the discretionary service budget. According to the Independent Budget Office, Medicaid; settlement of lawsuits against the city; and pensions, health care, and other fringe benefits for city workers will grow by $4.7 billion between 2004 and 2008, to $18.9 billion.

Politics and the Deficit

Another odd thing about the adopted budget's focus on tax cuts is its apparent political folly. The 2006 budget will be determined a few months before mayoral and council elections. Reducing budget deficits by tax increases and service cuts is certainly not an attractive option for a mayor running for re-election and a council speaker presumably challenging his re-election. By delaying the hard choices, the mayor and council seem to be flirting with political trouble next year.

If recent history is any guide, one possible scenario is a mid-year budget modification of major proportions, perhaps as early as November 2004. In November 2002, after all, Mayor Bloomberg in little more than two weeks pushed through $2.3 billion in agency cuts and a $1.7 billion property tax increase. The timing precluded any public debate and eased the final deficit reduction planning in the spring of 2003.

The adopted budget for 2005, in other words, is likely to be modified in major ways before the end of the fiscal year. It will be interesting to see how long the political compromises that provided a few small victories in June hold up in the face of the big fiscal problems ahead.

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
























The 2005 City Budget

Most New Yorkers would probably agree with Mayor Michael Bloomberg when he said that there was "good news" in the city's new $47 billion budget, passed last week and going into effect on July 1st.

The city's economy has improved and for the first time in two years, there were no massive layoffs of police or sanitation workers, no threats to close firehouses or zoos, and no new tax increases. The mayor and the City Council even set aside additional money to build day-care centers, to help the unemployed find jobs, and to build 76 new schools over the next five years.

But the good news did not extend to everyone.

Some critical programs — like summer jobs for young people — were still cut. Teachers, police officers, firefighters and other city workers still have no contracts. And as more details of the budget have emerged, many New Yorkers learned that they may have to give back a portion of their promised $400 tax rebate.

The worst news about the budget does not come from City Hall, but from the State Capitol.

The governor and State Legislature in Albany, which has been called the most dysfunctional legislative body in the nation, have burdened New York City with additional problems. For the 20th year in a row, the state failed to meet its budget deadline. Lawmakers left for summer vacation without complying with a court order requiring them to give more aid to city schools or approving a portion of the city budget that gives tax breaks to residents — and have no plans do so until August.

As a result, the city's budget, which depends on $8 billion in state money, is still in limbo.


This year an improving economy and higher than expected tax revenues produced a $1.9 billion surplus in the city's budget. The major battle between the mayor and the City Council was over how to spend it.

The new $47 billion budget is divided into the usual manner, with nearly 80 percent of the money going to education, social programs like health and homeless services, and police, fire, sanitation, and corrections (in that order.)

In addition to the regular expenses, this budget also includes $291 million in spending that was not in the plan the mayor outlined earlier in the year, including:


  • $38 million to hire elementary school teachers
  • $29 million for youth and after school programs
  • $22 million to extend library hours
  • $19 million for 3,900 day care slots
  • $11 million for Legal Aid which offers legal representation to people who can not afford a lawyer
  • $10 million to train unemployed New Yorkers for new jobs
  • And $7 million for City University of New York scholarships.


"I think the whole city will fare better under this budget," said Washington Heights Councilmember Robert Jackson.

Individual City Council members also lobbied hard for their personal budget requests.

Each council member is given $240,000 to allocate in the neighborhood as they wish. In addition, grants for local initiatives, neighborhood organizations, and cultural events, often called "member items," are part of the mix.

For example, Friends of the High Line, a group working to build a park on an abandoned railway in Chelsea that Speaker Gifford Miller supports, received one of the largest grants of $200,000. A group called Black Veterans for Social Justice received $50,000. And the Garibaldi-Meucci Museum, a cultural institution of Italian-American heritage in Staten Island, was able to secure $15,000. Even the Huskers, a lacrosse team from Far Rockaway got a piece of the pie, with $3,857 for equipement.


Even with a surplus, some budget items still went on the chopping block.

Summer youth employment, for example, was a major point of disagreement between the mayor and the City Council in this year's budget. More than 5,500 jobs for young people were eliminated.

Council members also complained the District Attorneys were not being given adequate funding. The result, they argued, is that prosecutors are often forced to plea bargain cases and to make decisions based on money.

And while tax breaks were given to New Yorkers wealthy enough to own their own home and families who make less than $20,000 a year, there are no tax cuts for those in the middle of the economic ladder.

"I am disappointed we couldn't get tax benefits for renters or the working people who also need it," said Brooklyn Councilmember Tish James.

Police officers, firefighters, and teachers were also left out.

Most city workers have been without a contract or a pay raise for several years, and although the budget contains about $657 million to pay for salary increases, union representatives say that is not enough to pay workers what they deserve.

"If Bloomberg wants a safe city, a well-educated city, a great city, then he has to offer us a fair contract," said Randi Weingarten, head of the teachers union. "We have all waited long enough."


Tax cuts sparked the major debate in this year's city budget.

Both Mayor Bloomberg and Council Speaker Miller who raised property taxes 18.5 percent two years ago produced rival plans to give some of that money back. Mayor Bloomberg proposed giving $400 to each owner of a co-op, condo, or private house. Speaker Miller wanted to reduce the property tax rate for all homeowners and businesses by two percent.

In the end, Mayor Bloomberg's plan won out and Miller agreed to the rebate that he previously described as a "Bush-style gimmick."

"Budgets are the process of compromise," Miller said later. "I think this is the budget in the best interest of the city. Obviously, it wasn't my first choice."

But as more details of the tax rebate began to emerge, some homeowners learned that they might have to pay taxes on their refund.

That is because the $400 rebate is not an actual reduction in the tax rate, but a check from the city that some New Yorkers may have to report as taxable income. A homeowner who claims property taxes as a deduction and is in a 25 percent income tax bracket, for example, could have to pay as much as $100 in federal income taxes on the $400 rebate.

For his part of the negotiations, Speaker Miller was able to secure a city version of the Earned Income Tax Credit that will give 700,000 low-income New Yorkers up to $215 in tax relief.

Together the two tax relief plans will cost the city $300 million.

But both of these plans have been delayed because the city needs state approval to raise and lower taxes and state legislators in Albany refused to approve the measures. Governor George Pataki, Assembly Speaker Sheldon Silver, and State Senate Leader Joseph Bruno all said they supported the idea in general, but the three men could not work out the details to pass it by the deadline.

"It is an aberration of the law that we need to go to Albany to adjust our own taxes," said Mayor Bloomberg.

If the state passes the measure in August, New Yorkers could get their rebate by October. If not, they may have to wait even longer.


New York City is required by law to pass a balanced budget each year by July 1, but there is no such law requiring the governor and the State Legislature to do the same.

This year, the usual gridlock in Albany was even worse than usual. State lawmakers missed their April 1 deadline to pass a $100 billion state budget and have no plans to meet again until August.

Albany's inaction has put New York City's budget on hold.

A plan to transfer private bus lines to the Metropolitan Transportation Authority, which will cost the city about $159 million, is delayed.

In addition to the city's operating budget, which covers the day-to-day expenses of running the city, the mayor and City Council approved a separate $13 billion, 5-year capital budget plan to build and improve schools across the city. The city has asked the State Legislature to pay for half of it, but no agreement has been reached.

And even though the state's highest court has ruled that the state system of funding schools is unfair and gave legislators until July 30 to provide more aid to New York City schools, lawmakers have not agreed on a plan to do so. This means that the city is missing out on $2.5 billion a year in school aid, according to estimates from the Independent Budget Office, and many of Mayor Bloomberg's education reforms are dependent on this additional money. Until the funding comes through, city officials are trying to make do.

"Obviously until we get [this] money from Albany it's not as if we have lots of resources to move," said Schools Chancellor Joel Klein.

For the time being, the governor has passed an emergency spending measure that keeps funding for programs at their current levels, but no one knows when the state will get around to passing a real plan that accounts for about 17 percent of the city budget.

"In the immediate short-term it is not a problem," said Doug Turetsky of the Independent Budget Office, "But if it drags on for months and months, state aid becomes a more serious question."


But even if Albany does come through, the city still faces serious challenges in the next two years.

Earlier this year, the New York State Financial Control Board reviewed Mayor Bloomberg's proposed budget and found that the "city's finances remain structurally unbalanced."

Medicaid payments, employee pensions, and union contracts are expected to increase dramatically in the future. The city is also relying heavily on temporary increases to the personal income and sales taxes that will expire over the next two years. Fiscal watchdogs warned the mayor and the council that their tax breaks and increases in spending could create problems in the future.

This year's surplus of $1.9 billion is expected to turn into a $3.7 billion deficit by next summer.

That means that cuts to social programs, layoffs, and tax increases: The "doomsday" budgets of the past two years may return.

Where's Our $21 Billion?

Several months after September 11, 2001, President George W. Bush detailed $21.4 billion in pledged federal aid to New York City to help rebuild after the attacks on the World Trade Center.

Three years later, New York is still grappling with the serious and lasting impact of the attacks. But because of the Bush administration’s vague accounting, we do not know how much money we have actually received to date. The total amount of money we will eventually receive is also far from clear.

Unfortunately, it is clear that New York State’s own poor decisions have made it even harder for New York City to get what it needs from Washington.


The Bush administration is required by law to produce a full accounting of this 9/11 aid. Why it has failed to do so adequately is extremely difficult for me to understand. Along with members of the New York Congressional delegation, I have urged the administration on seven separate occasions to detail when and where recovery funds have been used and to clarify what has not been sent to New York from the President's initial pledge.

In late May, the White House Office of Management and Budget finally produced an attempted accounting document, but it can be called an "accounting" of 9/11 aid only by Enron standards. There is inadequate detail on where specific funds went for what purposes. In several instances, we don’t know when, if ever, these funds were used.

The document does not address the $268 million lost to wrongful taxation of 9/11 aid to downtown businesses. It also fails to explain how the administration intends to respond to billions in losses to our region that, at present, remain totally unaddressed. For example, city and state tax revenues lost as a result of 9/11 are estimated at $8.8 billion, for which the federal government has provided no assistance.

Nor does it account for a shortfall of about $2.6 billion in “Liberty Zone” Tax benefits.

“Liberty Zone” tax benefits made up fully one-fourth of the overall aid package, or about $5 billion, earmarked for New York's recovery by President Bush. These were intended to stimulate economic activity in Lower Manhattan. Now, most officials agree that $2.6 billion Liberty Zone benefits will go unused if Congress and the President fail to extend the deadline for when these benefits can be used, or alter how New York City can take advantage of the funds.

Significant gaps in the federal response have made achieving a full economic recovery for New York a serious challenge. From the widest perspective, costs and losses from 9/11 total between $80 billion and $100 billion while federal aid designated for the region remains under $20 billion and insurance payments are estimated to be between $30 billion and $40 billion. This leaves New York alone to shoulder the burden of between $20 billion and $50 billion in losses, in addition to ongoing costs for anti-terrorism security measures, unanticipated long-term health costs from the disaster and increasing costs for rebuilding projects in Lower Manhattan.


The city’s financial problems go beyond those surrounding the president’s $21.4 billion, however. Seeking additional help from Washington is made more difficult by poor decisions on the use of existing funds by New York State.

For instance, rather than using current Liberty Bonds for their intended purpose, to help downtown redevelopment, Governor Pataki's administration is diverting $400 million for a power plant in Queens that is opposed by the community. This, even though Congress has said specifically that "public utility property and residential property located outside [Lower Manhattan] cannot be financed with the bonds."

Because the Governor has left us no choice, I have joined several elected officials in a lawsuit challenging this misuse of the Liberty Bonds. Federal legislators from around the country will be much less likely to support future requests to help New York's recovery if we don't spend existing resources the way they were meant for use by Congress.


Billions of dollars have come in for the redevelopment of the World Trade Center Site and transportation projects throughout New York City. But a significant portion of the pledged funding that we received has only come after a tough fight by the New York congressional delegation. The good news is that after our sustained efforts, there are a number of successes to report:

  • $90 million for the health screening of sick and injured Ground Zero responders
  • $80.5 million for New York's school system to make up for lost instructional time resulting from the terrorist attacks
  • $33 million for the mental health needs of students affected by the disaster
  • $10 million in federal aid for universities damaged by the attacks
  • The extensive reform and expansion of Federal Emergency Management Agency's emergency response programs, leading to thousands more New Yorkers made eligible for individual grants and housing assistance after 9/11.


Hopefully, our continued advocacy in Washington for New York's remaining recovery needs will lead to additional successes, but we will need a united front, including the governor and the mayor, to achieve much needed and more positive results.

Congresswoman Carolyn Maloney represents the 14th District in New York, which includes parts of Manhattan and Queens.


Tourism and Jobs

After four years as a jet-setting consultant in the financial industry, Ryan Zenga grew weary of traveling so much for his job, tired of the rude hotel clerks and snippy flight attendants. So he quit his high-paying job and enrolled in graduate school to follow his bliss.

But some of his friends were baffled when they learned what that bliss was: He is pursuing a master’s degree in tourism.

"You’re studying to be a travel agent?" people kept asking.

Poor service or no, Zenga sees tourism as the industry of the future. "People will always travel," he said.

Right now, they are traveling more and more to New York.

Last month, the number of visitors to the city reached pre-September 11 levels for the first time. Hotels are filling up, sites like the Empire State Building are drawing record numbers, and even foreign visitors, who dropped off most drastically in recent years, are returning.

That is why the city, like Zenga, is making tourism a major focus of its future economic development.

In March, Mayor Michael Bloomberg announced a $1.4 billion plan to expand the Jacob Javits Convention Center on the west side of Manhattan.

"This is about more than just tourism," Bloomberg said. "It's about our future and making sure that future means jobs for New Yorkers, and opportunity for everyone up and down the economic ladder."

As summer begins and more visitors wander the streets, guidebooks in hand, some New Yorkers wonder: do all these gawking visitors really translate into jobs – and the kind of jobs that residents want and need?


  • When it comes to the art of seduction, New York has two cards up its sleeve: charm and spontaneity.
  • Enjoying everything New York City has to offer during a short trip is more than a challenge, it's an impossibility.
  • Anything can happen here -- stuff so strange, you couldn't make it up.
    Fodor’s NYC Travel Guide

Traffic and its attendant fumes are a serious disincentive to exercise-minded New Yorkers. So are bagels and cream cheese. Most New Yorkers are not fitness %0 freaks, but those who are spend serious money on it. Manhattan gyms are extravagant multiplexes featuring indoor interpretations of most sports from beach volleyball to golf.
Lonely Planet Guide to New York

  • Don't do anything you wouldn't do at home.
  • Leave your gold chains and fancy watches at home.
  • Stay out of the parks and subways at night. And don't play any of the three-card Monte (the old shell game with cards) or dice games on the streets; they are for suckers.
  • Pack your good manners, enthusiasm, and curiosity; then think about clothes.
  • I have to admit I usually also bring by fur coat to town since New York store clerks always treat me differently when I am in my mink.
  • Subways. Fast, cheap, dirty and complicated."
    — New York for the Independent Traveler by Ruth Humleker,1997.

What is a New Yorker?
A NewYorker…

  • Knows she can cross the street leisurely when Walk/Don't Walk signs are flashing
  • Don't Walk," and can scamper across when the signs bear a solid "Don't Walk."
  • Knows the "Close Door" buttons in elevators really do nothing.
  • Pronounces "Houston Street" properly; calls Manhattan "the city"; calls the subway "the train"; and knows what TriBeCa stands for.
  • Can spot a tourist a mile away.
  • May never get a driver's license (and won't miss it).
  • Knows the true meaning of "hurry up and wait."
  • Knows what end of the subway to get on so he'll end up at the stairs when he exits and/or knows what door won't open so he can lean on it.
  • Says "New York," when out-of-staters ask where he's from. (Only upstaters expect someone to say "New York City.")
    — Native's Guide to New York by Richard Laermer,1988.


Tourists first started coming to the city in large numbers after 1820 — and providing jobs for New Yorkers — when transportation became faster and cheaper, according to the Encyclopedia of New York.

By the beginning of the 20th century, electric bus tours zipped visitors around Manhattan and Brooklyn. In 1931, one million people paid a dollar to ride to the top of the Empire State Building. Grasping the potential, the city created the first agency to promote tourism, the New York City Convention and Visitors Bureau in 1935. By 1945, the Circle Line boats began their sightseeing excursions.

A decade later, tourism had become a major industry and officials actively marketed its image, eventually birthing slogans like "Fun City," "Big Apple," and "I LOVE NY."

However, there have long been tensions between New Yorkers and visitors.

If Thomas Jefferson wasn't exactly a tourist in 1790 when he expressed relief at leaving a place he called a "sewer of all the depravities of human nature," his sentiments persist to this day."I went to "Wonderful" New York recently," one visitor wrote on a website recently, "If one more [person] at the [South Street] Seaport asks me to buy a watch I'm gonna shoot them." The web site is called I HATE NYC

New Yorkers are happy to return the feelings, complaining about tourists stopping on the sidewalk for no apparent reason, overruning neighborhoods, driving up prices, and wearing really unhip pastel clothing.

"It’s reached a point to where I don’t go out to lunch," said John Sweeting, a lawyer who works a block west of Times Square. "To avoid the crowds, I bring my lunch and hide in my office."


New York City officials, though, are happy to see them back. The industry had peaked in 2000, then crashed in the months after the September 11, 2001 terrorist attacks. Approximately 30,000 people who work in tourism lost their jobs.

Now nearly three years after the attacks, many of the economic signs point toward better times ahead.

This year, New York City expects 36.6 million people to come from out-of-town and to spend more than $15 billion, reaching record highs. New York’s occupancy rates are second in the nation (after Washington D.C.) with 87 percent of all rooms filled. And even foreign tourists, who spend four times more than domestic travelers, are returning lured in part by a weak U.S. dollar.

"We have pretty well recovered from September 11, with the exception of lower Manhattan," said Chuck Hunt of the New York State Restaurant Association. "Look at the New York Times Sunday job ads and you will see four or five columns of restaurant-related ads every week."

September 11 may have also changed the relationship between New Yorkers and tourists.

"New Yorkers had the attitude that if you don’t come to New York, you’re too dumb to be worth having," Jonathan Tisch, the CEO of Loews Hotels and chairman of NYC and Company told Newsday. "In an ironic way, 9/11 woke up a lot of people to the importance of tourism because of the substantial drop-off."

In turn, many people who had long been suspicious of New York turned sympathetic.

Gudryn Bilas, a tourist from New Zealand, said her view of New Yorkers improved after 9/11 and when she arrived, they turned out to be even friendlier than she previously thought. "People see me looking at my guide book and keep stopping to offer directions," she said, as she twirled it every which way, as if deciphering an ancient text, in City Hall Park.


Tim Zagat, publisher of the Zagat’s Survey, once described each tourist that visits the city as "carrying a little wheelbarrow full of cash to put in the pockets of New Yorkers."

But while the tourism industry is critical to the local economy, some experts say that its overall impact — and the number of jobs tourism creates — is relatively small given the size of New York.

The biggest employers in the city are still finance, insurance, real estate and health care. Even with all of the growth in recent years, tourism-related jobs only still represent about five percent of the city’s total jobs. (By contrast, the health care industry employs 14 percent of the city's workforce.)

The real benefit of tourism is how it supplements New York’s existing economy. New Yorkers also eat at restaurants, go to Broadway shows, and visit the Met, but visitors help boost these businesses and improve the quality of the experience for everyone.

"If tourism dropped off a cliff, the city‘s economy would suffer," said Jason Bram, an economist for the Federal Reserve Bank of New York. "But it would not the same as if it happened in Orlando or Las Vegas where the whole economy is built around tourism."


About 230,000 New Yorkers already work in tourist related industries.

Tony Daniel, who runs a hotdog pushcart on Cedar Street in lower Manhattan, is one of them, and he loves tourists.

"Most people, when they come to me, they let me know they're from somewhere else, and they say they've heard about New York City hotdogs," he said. "I try to make them happy. If I can make them happy, then I’m happy because I make money, and that’s what it’s all about."

The bulk of jobs that the tourist industry creates, economists say, are low-skill and low-paying jobs.

According to Crain’s New York Business magazine, the average annual salary for the most available tourism related jobs include:

  • Restaurant workers who earn $20,000 (not including tips)
  • Retail workers who make about $25,000
  • Museum and gallery employees who earn around $35,000
  • And hotel workers who make about $40,000.


And while tourism can provide much needed jobs for some who have been laid off from other areas — like manufacturing, which has seen steep declines in recent years — the skills do not always translate.

"A cleaning person can move from one job to another," said Bram. "But someone who loses their job sewing in the garment industry can not necessarily make the transition to hotels or restaurants."

But Lilia Rach, associate dean at the New York University School for Hospitality, Tourism, and Sports Management where Ryan Zenga studies, says the industry gets unfairly stereotyped as only creating entry-level jobs.

"It’s a fallacy that has gained mythic proportions," said Rach, who says she has seen a recent increase in students leaving other successful careers to join the tourism field. "There are scores of mid- and upper-level positions."

Rach points toward to companies like American Express, which bills itself as the "world’s largest travel agency" and employs about 5,000 people in New York City. The number of jobs in the hotel industry, which provides some of the higher paying jobs, including some union jobs, grew by 25 percent in the 1990’s.

"My students see an industry that promotes people, that values creativity, and they see how New York City has reinvented itself through tourism," said Rach. "And it’s definitely an area that is hiring."


In an effort to create more tourism-related jobs, Mayor Michael Bloomberg recently outlined an aggressive plan to double the Jacob Javits Convention Center and create a new convention, sports, and business district on the west side of Manhattan.

Many business leaders in the city have long argued that the convention center needs to be bigger. Although the city has the highest convention attendance of any city and is the second most popular convention center, for decades, officials have said the city loses out on dozens of more lucrative events because Javits is too small.

The mayor’s plan has been overshadowed by the debate over a stadium for the New York Jets that is also part of the plan. For 17 days a year, the stadium would be used for football games and other sporting events and concerts. The rest of the time, it will be a mid-size convention center, like the one in St. Louis.

Bloomberg said that the whole project would create 42,000 temporary construction jobs and 17,500 permanent new jobs.

"It will mean an end to seasonal layoffs in New York City's hotel industry forever," said Peter Ward, manager of Local 6, the hotel and restaurant employees union .

But watchdogs on both ends of the political spectrum question the grand predictions.

"All of the statistics about the projected benefits are overblown and exaggerated," said Jonathan Bowles of the Center for an Urban Future. "It is uncertain that this plan will lead to considerable new business for Javits."

For the Javits Convention Center to be really successful and to create new jobs in the hotel and restaurant industries, Bowles argues, New York must draw conventions made up of out-of-town visitors, not just people who live in the region. And the costs in New York – where the average hotel rate is over $225 a night - are too high.

Dozens of other cities have also expanded their convention centers in recent years, including Philadelphia, Chicago, and Los Angeles. Few of these cities have realized the profits and visitors that they had hoped. Boston, which recently opened its $800 million new convention center, had hoped to draw 38 new conventions in its first year; so far it has only booked three.

Plans for 40 other such convention projects across the nation are also underway, even though there is no evidence that the convention industry is growing.

"How can New York City officials justify spending $1.4 billion to nearly double the size of Javits?" wrote Steve Malanga of the Manhattan Institute wrote in a New York Times op-ed. "Actually they are using the same argument that officials everywhere else have made to justify their white elephants; claiming that their convention project will somehow work better than those of other cities."


Tourists present a dilemma for New York City and its neighborhoods: visitor’s money and the jobs they produce are desirable, but the crowds, chintzy stores, and higher prices at restaurants aren’t.

In the 1990’s Rudolph Giuliani made a big push to make the New York more visitor friendly, fashioning Times Square as a model for other places in the city. Giuliani shut down sex shops, cleaned up graffiti, and welcomed large chain stores from suburban malls to set up shop. Although many New Yorkers liked feeling safer and seeing less garbage, they complained about the "Disney-fication" of city streets.

One of the primary quality-of-life issues for neighborhoods like Greenwich Village is the noise, crowds, street vendors, and other activities that come along with tourism. The neighborhood's population can multiply numerous times on a nice summer day.

The phenomenon repeated itself elsewhere, prompting Kathryn Freed, a former council member from Lower Manhattan, to once lament that SoHo had become "a giant amusement park… and the tourists don’t even throw us peanuts."

Harlem, in particular, has seen both sides of the issue.

The neighborhood has long attracted busloads of visitors who cruise up and down 125th Street or eat a meal at Sylvia’s, but also quickly get back on the bus to go back to midtown for their hotel and shopping. But when the125th Street Business Improvement District was formed in 1993 to help organize local merchants and help turn tourism into profits, it was seen by some as a sign of gentrification.

Still when it comes to how much the city spends to promote itself, New York is not Las Vegas. The desert gambling mecca spends about $190 million a year to promote tourism. By contrast, New York City and Company, the city’s official tourism bureau, has a budget of just $14 million.

Despite the contradictions tourism can create, other neighborhoods like Chinatown and Lower Manhattan are launching new marketing efforts with events, websites, and "neighborhood brands" in the hope that tourists will create jobs for residents.

In February, Brooklyn opened its first tourism and visitors center in Borough Hall as a way to help lure people out of Manhattan. Although it is too early to see specific results, officials said, they are pleased that they haven’t received big complaints either.

"So far we have no reports of crowds of tourists taking over a neighborhood," said Michael Kadish, a spokesperson for Brooklyn Borough President Marty Markowitz. "We haven’t become the Village."


Related Articles:
Tour Guides
Selling New York
Shopping Industry
Everyone Loves NYC, For Now

Related Links:
Association for a Better New York
Hotel Association of New York
NYC and Company
New York State Hospitality and Tourism Association
New York State Restaurant Association


Tax Cuts and New York City

On a recent day at City Hall, Mayor Michael Bloomberg presented his annual $46 billion budget in the Blue Room on the west end of the building, while City Council Speaker Gifford Miller presented his budget in the Red Room at the east end of the building.

But when the two spoke about their rival tax cut plans, it seemed as if they had magically changed places.

The billionaire Republican Mayor Bloomberg sounded like a populist, accusing the City Council of catering to corporations and of neglecting the working people of the city.

"Somebody’s got to pay for the services," the mayor said, "and the truth of the matter is, the homeowners are less able than big business."

Meanwhile Democratic Speaker Miller sounded a lot like a Republican, arguing that a permanent, across-the-board tax cut for businesses and landlords would help stimulate the economy.

"They want a tax cut; they don’t want a check," said Miller. “They want to see their taxes go down.”

This year, New York’s budget battle has come down to tax cuts. Mayor Bloomberg wants to give $400 to each owner of a co-op, condo, and private house. Speaker Miller wants to reduce the property tax rate for all homeowners and businesses by two percent.

Despite their different approaches, the mayor and the speaker both start with the same basic assumptions about tax cuts:

  • The tax cuts will reward those who helped the city weather tough fiscal times
  • The tax cuts provide an incentive for residents to stay in New York
  • They can help spur economic growth

And -- though not stated explicitly -- both officials clearly assume that the tax cuts will help get them elected in 2005.

However, many budget watchdogs argue that neither plan is particularly good for the city.

Can the city afford a tax cut? And do they really produce what politicians promise - or are they just a way to get votes?


The theory of how taxes affect the economy, simply put is: If government taxes an item, it adds to the cost. As the price rises, fewer consumers wish to purchase the good and the quantity produced also decreases. The government gets the revenue from the tax, but both the consumer and the producer of the product bear the increased cost, and demand for the product will fall as a result.

The tax is not just a transfer of wealth from consumers and producers to the government; it is a permanent loss of economic activity to the whole society. This is why most economists agree that taxes reduce some of the incentive to spend, save, and invest.

At the same time, though, taxes pay for essential services that citizens demand from their government, such as schools, police officers, fire departments, and libraries.

While federal taxes have been instituted and rescinded in America since the mid-1800's, the notion of using tax cuts to "fix" the economy, experts say, is a modern one.

President John F. Kennedy issued one of the first major tax cuts designed to stimulate the economy, which was passed by his successor Lyndon Johnson in 1964.

Kennedy's plan instituted a new standard deduction, increased deductions for childcare expenses, and lowered taxes, including for those in the top tax bracket. The idea was that each dollar a person spent instead of paying taxes would go to another person who would spend it again. The plan used the immediate boost in economic activity to justify a government deficit. And the initiative is one that many economists point to as an example of successful tax relief. For a time, the national economy rebounded.

In local economies like New York's, tax cuts are often used to make a city more competitive with the surrounding area, and with other cities. New York City depends on an array of property, income, sales, and business taxes for revenue, and some argue that they affect people's decisions about where they work and live.

“There is some evidence that higher property taxes - all else being the same - are a factor in where people choose to live,” said Sanders Korenman, an economics professor at Baruch College.

However, one must also consider what those taxes are paying for. If taxes are cut, government spending must be cut as well.

"I don't mind paying my taxes because they fund valuable services like education," said Korenman. "You must look at taxes and expenditures together as a whole.”

Many people in the city point to the repeal of the commuter tax in 1999 as one of the worst tax cuts for New York City. State legislators in Albany eliminated the tax on people who worked in the city but lived in the suburbs as part of a political battle between the two parties over one upstate legislative contest.

The loss of the commuter tax costs the city $500 million a year in today's dollars - or enough money to pay for all of the city's parks along with all of its programs for senior citizens and for youth.


Once the discussion gets beyond basic economic theory, experts have wide and divergent views on whether tax cuts actually benefit New York City.

E.J. McMahon, a fellow of the Manhattan Institute, for example produced a study in 2001 concluding that 80,000 jobs - or one in every four new jobs in the city - had been created by local tax cuts in the previous five years.

“The lesson is clear: Tax cuts work,” wrote McMahon. “And in the years ahead, the best way to continue building New York’s job base will be to continue reducing its still-heavy tax burden – and by all means, avoiding adding to it.”

However, others, like James Parrott of the Fiscal Policy Institute see the same Giuliani era tax cuts as mistakes that helped create huge deficits for the future.

“I can’t think of any [recent] local tax cut that has made sense,” said Parrott.

Parrott argues that the way for government to create jobs and make the city more attractive is to invest in education, housing, and new development projects. “In general, what the city can do to stimulate the economy," he says, "is most often on the spending side."

Most voters, however, want it both ways. They want their taxes to go down. And they want good schools, roads without potholes, and a police force to keep them safe.

"There is a core belief in the American political culture that government should be small, but we also want services," said Doug Muzzio, a political science professor at Baruch College. "The public wants a free lunch."


Today, the Republican Party presents itself as advocates for smaller government and lower taxes, while the Democratic Party emphasizes vital services like education and social services for citizens.

But this was not always the case.

The first federal income tax was issued by a Republican administration, during the Civil War. For decades, it was the Democrats who painted the Republicans as a high taxing, big spending party.

It was not until the 1980’s that the Republican Party made tax cuts a fundamental part of the party’s ideology.

President Ronald Reagan argued then that tax cuts could not only stimulate the economy, they could also shrink government while creating greater wealth for the nation. Economists still debate whether the Reagan cuts really led to boom times, or just created huge deficits.

Today, tax cuts are once again the rule of Washington, where Republicans control the presidency and both houses of Congress. President George W. Bush has continued the tax-cutting legacy, issuing plans for $330 billion in tax cuts over the next decade. Even growing deficits and the Iraq war have not deterred officials.

“Nothing is more important in the face of war,” House Majority Leader Tom DeLay said last year, “than cutting taxes.”

The national trend has even had a profound effect on New York City, a town where Democrats outnumber Republicans five to one -- and where just six years ago, there was another apparent ideological switcheroo in a fight over a tax cut: In 1998, Miller's predecessor, Democratic Council Speaker Peter Vallone, Jr., called for the elimination of a 12.5 percent surcharge on the personal income tax, which cost the city roughly $500 million a year. Bloomberg's predecessor, Republican Mayor Rudolph Giuliani, said the city could not afford it. The reasoning behind the plan was no secret: Vallone's aides said that the speaker needed a tax cut to attract votes in his race for governor. The tax cut went through, but it did not translate into a win for Vallone.

“Since the late 1970’s and 1980’s, the political notion that tax cuts can help the economy has become more prevalent,” said Marcia Van Wagner of the Citizens Budget Commission, a group that has advocated reducing taxes in New York. “It’s become the political theme everywhere.”


Both Mayor Bloomberg and City Council Speaker Miller argue that their tax cut proposals will help stimulate the economy and return some of New Yorkers’ well-earned money.

Mayor Bloomberg wants the city to write a $400 check to all homeowners who had to pay the 18.5 percent property tax increase imposed in 2002. Business owners and landlords of large buildings would not be eligible.

City Council Speaker Gifford Miller wants to roll back property taxes two percent across the board, including for commercial property owners. A single-family homeowner with a $400,000 house would get about $50, and the owner of a condo of the same value would get about $125. In addition, Miller would eliminate the entire 18.5 percent property tax increase for senior citizens on fixed incomes.

But under Speaker Miller’s plan, the mayor charged, the average homeowner in Queens would get just $49, while Con Edison would get an $8 million tax cut. Miller responded with charges of his own, calling Bloomberg's plan a "Bush-style gimmick."

The mayor’s plan would cost about $250 million a year and would have to be approved by the State Legislature in Albany. The speaker's plan would cost $297 million, and the council could enact it with a simple majority of its own members, or 26 votes.

However, many budget watchdogs argue that neither plan is particularly good for the city.

While the city government has a surplus this year, it is expected to have a $3.7 billion deficit in the fiscal year that begins in July of 2005. Even the mayor admitted that if the economy and tax revenues returned to their highest levels in history – which is unlikely – the city would still not be able to close the budget gap in future years if costs continue as expected.

More fiscally conservative groups like the Citizens Budget Commission say officials should use the money to pay down some of the city's debt. In a letter to the mayor, the group said that although it supports reducing taxes in the city, that his plan was a "mistake" that "distributes the money in a way that is largely ineffective in promoting economic competitiveness."

Left-leaning groups like City Project want the money spent on education and social programs. "Any tax cuts at this point in time - whether proposed by the mayor or the council - are premature and fiscally irresponsible,” said City Project's Bonnie Brower.


While the political rhetoric often oversimplifies the debate over whether taxes are good or bad, budget experts warn that the public must carefully consider various issues when evaluating any tax proposal.

“It very much matters which tax you cut or raise, and how you do it,” said George Sweeting of the Independent Budget Office.

Who Gets the Tax Cut?
One consideration is whether a tax affects all people equally.

In the case of the city’s property taxes, many agree that the elected officials would do better to reform the current system than to issue pre-election tax cuts. In 1993, Mayor David Dinkins did an assessment of the property taxes and found that the system was "inordinately complex” and “poorly understood by taxpayers." Commercial real estate owners, multiple apartment landlords, and utilities pay much more than single-family homeowners.

“I have friends who own brownstones in Park Slope who pay next to nothing in property taxes,” said Van Wagner.

Who Needs A Tax Cut?
Another issue is who is most able to afford a tax increase.

Last year, for example, the mayor and City Council imposed a surcharge on personal income taxes for residents who make more than $100,000 a year and couples who make more than $150,000 a year based in part on the argument that they are more able to afford it. However, it could be argued that the sales tax – which also rose in both the state and city to a total of 8.625 percent in 2003 – is tougher on lower-income people.

“With any tax cut one must ask if this is being done to improve efficiencies, or if one party wants to appear to give money to one group or another,” said Korenman.

Does It Make the City More Attractive?
Also, various taxes may have the ability to make the city more or less competitive with surrounding areas.

The city, for example, has lower property taxes for individual homeowners compared with those in the suburbs, but the city also has several business taxes that make it more costly for companies to have their offices in New York.

Can the City Afford It? The most important measure is if the government can really afford a tax cut. And that is when the arguments circle back to the beginning.

Some would argue that if the city government cut spending and lowered taxes, that the whole economy and government would fare better. Others argue that tax cuts will starve essential services, making the city dirtier, more dangerous, and in general a less desirable place, inducing people to leave.

“No economist will argue that taxes do not affect an economy,” said McMahon. “The argument is over how much it affects the economy, and how that is offset by other spending.”

Whether or not Mayor Bloomberg’s or Speaker Miller's tax cut is approved this year, some warn that the city’s situation is growing more tenuous. Budget experts on all sides agree that the city’s long term budget situation – with growing debt, increased costs for health care, and increased labor costs – is troubling.

And a recent report by the Federal Reserve Bank of New York concluded that the city’s tax revenues are less reliable than they were 30 years ago because they rely heavily on income and business taxes, which are less predictable than property taxes. As the city’s economy rises and falls, the report argues, so will the government’s finances.

As in the past, that means that today's tax cut may soon be replaced by tomorrow's tax hike.

Related Links:

Citizens Budget Commission
City Project
Independent Budget Office
Federal Reserve Bank of New York
Fiscal Policy Institute
Manhattan Institute

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