Gotham Gazette

The Place for New York Policy and politics

What Can Any Mayor Really Do?

At a recent event in Crown Heights, Brooklyn, Mayor Michael Bloomberg offered a list of reasons why New Yorkers should give him another four years in office. He talked about education reform, the rebounding economy, and his commitment to build 65,000 new apartments - but he focused most on the drop in crime, which is at a record low.

"As long as I am mayor," Bloomberg said, "we will keep crime down in the city."

There is no guarantee that Bloomberg will be re-elected. There is a crowded field of challengers, and the political landscape is different from 2001. (See "Will Bloomberg Be Re-Elected?" by Joseph Mercurio) But even if he is, larger questions loom: How much can the mayor (how much can any mayor) claim credit for improvements in the city? How much can a mayor really do for New York?

The mayor would like to take credit for improvements in the schools. Even if everybody agreed that the schools have gotten better -- and not everybody does -- the public school system relies on a variety of variables largely outside of mayoral control: things like the federal No Child Left Behind program, funding from Albany, state standardized testing programs, and the number of immigrant students trying to learn English.

On the economy, the mayor has virtually no control over job gains, unemployment rates, or Wall Street profits, and little influence over whether a company chooses to do business in New York.

On housing, the mayor's commitment to build 65,000 additional apartments over five years will not eliminate the city's housing shortage.

And even on crime, many experts point out that the decrease is nationwide, and single out the decline in the use of crack cocaine, more than the number of police officers or new techniques, as the major factor behind the falling murder statistics.

As the 2005 campaign for mayor gets underway in New York, candidates will make extraordinary promises. But in truth, the next mayor -- as previous mayors -- will have a limited amount of control over many of the most critical issues facing the city.

For example, mayor cannot:
- Raise taxes (except the property tax) without permission from the state
- Set the minimum wage
- Determine the amount of funding schools get from the state
- Extend rent control
- Determine how much to spend on Medicaid
- Or set mass transit fares or build new subway lines.

When David Dinkins was once asked if a mayor could make a difference in the city, he offered a philosophical answer.

"If nothing else, I can change the climate, the atmosphere," he said. "If a mayor can’t make a difference, who can?"



When Mayor Bloomberg took office in 2002, he argued that if given the power he could improve the city’s schools.

And within seven months, Bloomberg had succeeded in doing what his three predecessors tried and failed to do: He convinced the governor and State Legislature to give him control of the school system, and he abolished the Board of Education.

Then in a 2003 address, Bloomberg outlined three goals of his education reform:
- Cutting bureaucracy to put funds in classrooms
- Ensuring that all students acquire skills in writing and math
- Giving parents the tools to be active partners in their children’s education.

So far, Mayor Bloomberg has received mixed reviews .

Some complain that the old bureaucracy has just been replaced with a new one. Some test scores have risen, but city students still lag behind the statewide averages and more than half of eighth graders failed to pass recent standardized math test. And many parents feel left out of the process without community school boards.

"On the one hand, the Board of Education was a widely loathed institution," said John Mollenkopf, professor at the City University of New York Graduate Center. "On the other, one hears as many stories that reforms have created chaos as stories of success or even measurable progress."

Whoever becomes the next mayor must convince the governor and the State Legislature that the system is working. The current governance system will come up for a vote again in 2009.

Another major issue facing the city’s schools is the result of the Campaign for Fiscal Equity lawsuit.

In November, a court-appointed panel recommended that city schools should receive an additional $5.6 billion a year phased in over the next four years. Next year, the panel recommended an increase of $1.4 billion, but did not say how much should come from the state and how much should come from the city. If the city’s funding equals nearly a quarter of the money, it will have to pay an additional $330 million next year and a total of $1.4 billion by 2009.

The next mayor will have to lobby for education funding in Albany, the largest source of money for schools and figure out how to pay the city's share.

Mayor Rudolph Giuliani is often credited with one of the city’s greatest economic transformations. And cutting taxes, Giuliani said, was key.

Giuliani claimed he created 180,000 jobs and stimulated tourism by eliminating the Commercial Rent Tax in most areas of the city, reducing the Hotel Occupancy Tax, and eliminating the Unincorporated Business Tax.

But many believe the national economic expansion fueled the city’s expansion.

"There is almost no Giuliani policy that has anything to do with the economic boom," Village Voice reporter Wayne Barrett wrote in an essay for Gotham Gazette. "Wall Street drove the boom."

After September 11, 2001 the city went into a recession and lost thousands of jobs. Now three years later, the city is beginning to recover. The city is expected to gain 23,000 jobs this year and analysts are projecting more job growth in the years to come.

Still, the city will not fully recover all of the jobs lost in the recession until 2008, according to one report.

And there are reasons for concern as the high cost of real estate and taxes, outsourcing and security concerns make it more difficult to attract and keep jobs in the city.

Verizon, for example, recently announced it will be leaving Manhattan for New Jersey and taking 500 jobs with it.

In the late 1960’s under Mayor John Lindsay, the city faced difficult times. Unions went out on strike, crime increased, poverty devastated many neighborhoods, an economic recession set in, and many people left the city.

Tax revenues declined and city expenses increased. Lindsay, without the power to raise taxes himself, resorted to borrowing (as had his predecessor Robert Wagner). By 1975 the city was nearly bankrupt.

To resolve the crisis, the state created the Emergency Financial Control Board to monitor municipal spending and tell the city how to manage its money. Lindsay’s successor, Mayor Abe Beame was forced to make massive cuts in the city's capital budget and to lay off 65,000 city workers.

It was not until 1981 that the city’s budget was balanced and even today, the city pays $500 million a year in interest on the money borrowed in the 1970's.

In the last three years, operating under a set of rules that the state imposed after Lindsay, Mayor Bloomberg has balanced New York City budgets by cutting expenses and raising taxes, but also by taking on additional debt. Even though the city’s economy has improved, the city still faces difficult budget problems in the future. Next year, the city will have another deficit of $2 billion followed by a $3 billion deficit the year after.

Still, all of the debate between the mayor and City Council over issues such as fire house closings, library hours, city university scholarships, and youth job programs only affects about $750 million out of the city's $47 billion annual budget.

In contrast, budget items like debt payments, labor pensions, and funding for Medicaid – all of which the city cannot control - cost about $17 billion a year.

Future budgets will also be harder to close with less tax revenue.

This year, the mayor and the City Council voted to give $400 rebates to homeowners. Two other current taxes - the personal income tax surcharge and the sales tax increase - are set to expire in 2005.

Not only must the mayor and the City Council pass a balanced budget, they must lobby in Albany and Washington D.C. for aid for housing, transportation, and schools. And the power to raise all taxes in New York City, with the exception of the property taxes, resides in Albany, not City Hall.

And candidates are reluctant to make radical changes to the way things have been done in the past.

"Addressing the city’s fiscal problems is hard," said Marcia Van Wagner of the Citizens Budget Commission. "And most people don’t run on things that are hard."

New York City teachers, firefighters, police officers, and other municipal employees are currently working without a contract. Contracts with DC 37, which represents about 125,000 municipal unions, expire next summer.

Mayor Bloomberg has said there is no money for raises unless unions make concessions to work longer hours and implement other ways to save money; the unions argue that they are already paid less than workers in the suburbs and are losing their best employees.

Still the cost of labor is largely out of control of the current mayor.

Despite cuts in recent years, the city's overall labor costs have risen 20 percent. Part of the reason is that New York's overtime, benefit and pension packages are more expensive than elsewhere in the country and the costs continue to rise.

Pension costs are the fastest rising share of the budget. According to the mayor's office, pension and fringe benefit costs rise five percent each year; by the year 2008, the city will pay $10 billion a year in pensions or about 20 percent of the annual budget. In addition to the city's active workforce, New York also supports 180,000 people who have already retired.

While the mayor negotiates issues like pay and work hours with municipal workers, the terms of pensions are decided in Albany.

In 1986, Mayor Ed Koch promised to build 100,000 new homes. It was the largest commitment to city housing since Mayor Fiorella La Guardia established the city’s public housing program.

Housing remains one of the most critical issues facing the city.

A recent report by the National Low Income Housing Coalition estimated that the fair market rent for a two bedroom apartment is $945 a month. In order to afford such an apartment, a full-time worker must make at least $18.18 an hour.

Although rents in New York City's controlled and stabilized apartments are set by a city body, the Rent Guidelines Board, the state determines whether rent control should exist at all. Federal subsidies for housing are also shrinking and there is a long waiting list for public housing and Section 8 vouchers.

Mayor Bloomberg has outlined an ambitious proposal to build 65,000 new homes over five years. In order to afford such an ambition plan, Bloomberg is also helping allowing developers to create market rate housing, which is unaffordable to many New Yorkers.

In lower Manhattan, for example, of the 6,000 of the apartments that have been authorized or financed, only about one percent are affordable.

There are two major government health care programs: Medicare and Medicaid.

Medicare affects people over 65 years old regardless of income and is funded by the federal government. Medicaid offers medical coverage for low-income people and is funded by federal, state, and local governments.

Unlike most states, New York requires local governments to pay a major portion of the Medicaid bill. New York City's costs have risen dramatically in recent years. Over the next two years, the city’s share of Medicaid spending will grow from $4.7 billion in 2005 to just over $5.0 billion in 2008.

The mayor does not have the power to change the Medicaid funding formula and must lobby lawmakers in Albany in order to ease the growing financial burden it puts on local governments.

Mayor Michael Bloomberg has outlined an ambitious plan for redeveloping the 360-acre area in Manhattan west of Eighth Avenue from 30th to 42nd Streets, which he calls the Hudson Yards plan.

The $2.8 billion development proposal would nearly double the size of the Jacob Javits Convention Center and include a 75,000-seat stadium for the New York Jets. Officials says the expanded convention center and new stadium as well as office buildings and residential high-rises would help create more than 15,000 jobs for the city and provide more than 500,000 days of additional hotel stays per year.

The big question is how the city will pay for it.

The stadium would be financed with $600 million from the city and state, which would pay for the retractable roof and the platform over the rail yards. The Javits Center expansion would be financed by $600 million from the city and the state, and $500 million from a $1.50-per-night hotel tax. The extension of the number 7-subway line from Times Square to the far West Side would cost about $2 billion, which would come from the Metropolitan Transportation Authority.

But some predict the stadium will cost the city more than just $300 million, because of debt, additional tax breaks on construction bonds and property taxes, and cost overruns.

City Comptroller Bill Thompson called it an "extremely risky" strategy that could jeopardize the city finances.

The state legislature has already approved the expansion of the Javits Center and will vote on the stadium proposal in early 2005. Even if the stadium is approved, there will still be many unresolved issues. Several lawsuits have already been filed to stop the plan.

Others warn the Jets stadium could also set a dangerous precedent. The Yankees and the Mets also want new stadiums and will likely want taxpayers to help pay for them.

Many believe the Yankees got the best of Mayor Ed Koch, who negotiated their current deal on Yankee Stadium. The city owns the building, but the Yankees pay a relatively small amount in rent. David Dinkins, in contrast, is credited with making a more lucrative deal for the city on the U.S. Tennis Center in Flushing.

In December, the Metropolitan Transportation Authority voted to raise fares on weekly and monthly Metrocards and commuter rails, increase tolls on bridges and tunnels, and close 164 token booths. The fare hike came just 19 months after the base fare for a subway ride increased from $1.50 to $2.00.

Mayor Bloomberg, who opposed the fare hike, instructed his appointees to the MTA board to vote against it. But it did not affect the outcome of the decision.

Such fare increases and service cuts are needed, the MTA maintains, because the authority has a millions of dollars in deficits; it estimates a $586 million deficit in 2006, rising to $988 million in 2008.

In addition, the MTA’s is unclear how it will pay for $17 billion of the projects outlined in its five-year capital plan to build new projects like the Second Avenue subway, a rail link from lower Manhattan to JFK airport, an extension of the number 7 subway line to the west side of Manhattan.

The state legislature determines how much taxpayer money the MTA will get each year.

Peter Kalikow, the head of the MTA, said recently he would abandon transit expansion projects such as the Second Avenue subway, if the authority does not get funding from the state. Kalikow warned that without new tax revenues the subways could enter a period of decline similar to that of the late 1970s.

While riders are being asked to pay more, the city and the state government want to chip in less for mass transit. Both Mayor Bloomberg and George Pataki have cut funding in recent years.

It has been more than 60 years since any new subway line has opened in the city. But in 2005, mayoral candidates will once again promise that, if elected, they can get it done.





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