NYC Haunted By Busted Budgets

New York City mayor Michael Bloomberg-2001/11/26
During the 1970s and early '80s, New Yorkers endured a period memorable for all that was awful about it.

The city fired 64,000 workers, closed 22 fire companies and raised subway fares. Garbage piled up, crime spiraled and theaters began playing dystopian films such as "Escape from New York" and "The Warriors."

The effects haven't returned to those levels, but with the city facing a budget gap of at least $3.4 billion, Mayor Michael Bloomberg is preparing "doomsday" contingency plans that could eventually mean 15,000 layoffs and shutting the doors on eight fire companies.

On Tuesday, he is expected to unveil some of the deepest spending cuts in nearly 30 years.

"When you're in government, you hear talk about budgets that are austere or Spartan or bare bones. Well, this year, I think it's going to be less than bare bones," said political consultant George Arzt, an aide to two mayors during the 1970s. "It may not be as bad as the '70s, though it could clearly build to that level."

Bloomberg has tried to stanch such talk with frequent pledges that he has no intention of allowing the city to sink into the fiscal morass of that previous era.

"We cannot make the mistake of the '70s and destroy this city," Bloomberg said recently. "We are not going to let our streets fall apart. We are not going to compromise safety. We are not going to stop the momentum we're building to improve the school system."

The mayor's $42 billion budget plan for 2003-04 will propose at least $600 million in cuts, including 5,400 layoffs, the most since 1991.

The job cuts issue has help turn organized labor into Bloomberg's most dependable critic.

"He seems to want unionized members to slit their wrists," said Municipal Labor Committee Chairwoman Randi Weingarten. "And then slit their throats."

The mayor also is set to outline a so-called doomsday plan, an idea that even the relentlessly positive Bloomberg called "very scary."

The doomsday scenario calls for $1 billion in cuts and thousands more municipal layoffs if the city fails to win authorization from the state legislature to impose a commuter tax on people who work in the city and live in the suburbs.

The chances of the city getting that authorization are seen as slim. A similar tax was rescinded by the state legislature in 1999.

"It just doesn't work," said state Senate Majority Leader Joseph Bruno. "It's not going to happen."

Bruno and Bloomberg are Republicans, as is Gov. George Pataki, who has spoken frequently about his opposition to "job killing taxes" like the commuter tariff.

Pataki has said he wants to aid the city, but the state has its own $11.5 billion budget deficit to worry about.

The city stumbled into its current crisis through a combination of bad luck, deep tax cuts enacted during the boom times of the late 1990s, the continuing national recession and the Sept. 11 terrorist attack.

The result is tax revenues coming in at a trickle and the unemployment rate climbing to 8.8 percent, well over the national rate of 5.8 percent.

The fiscal crisis of the 1970s was also partly caused by declining tax revenues, but more importantly, the city had been borrowing for years to cover operating expenses, which were out of control.

When banks refused to loan more money, the city was left on the brink of bankruptcy. The federal government at first refused to bail it out — "Ford to City: Drop Dead," read the Daily News headline — but it eventually provided loan guarantees to help it weather the emergency.

A state agency helped put it back on its feet. The Emergency Financial Control Board had to approve the city's expenditures and financial plans. With its oversight, and better management by mayors Ed Koch, David Dinkins and Rudolph Giuliani, the city put its financial house in order.

In dealing with the current fiscal crisis, the city has already made $2.6 billion in cuts, borrowed $1.5 billion and raised property tax rates by 18.5 percent.

"The easy things have been done," said Bloomberg. "Now we're getting down to the point where it is difficult."
By Timothy Williams