Friday, January 29, 2010

Waiting on Albany

Mayor Plans Budget Cuts

Caused by Less Revenue,

Uncertainty on State Aid

By Henry J. Stern
January 29, 2010

Having observed the municipal budget process for more years than the Jews spent in the wilderness, I offer a few comments on the kickoff of the annual ritual, the mayor's publication and presentation of a preliminary budget.

First, it is not possible to propose a definitive city budget without knowing what the state budget will be, since the city receives billions of dollars each year in state aid or matching funds (a sum which varies from year to year). This funding, which all muncipalities receive, is not an act of generosity by the state, because the money comes from state taxes paid by city residents and businesses. The issue each year is how much the state will divert for other purposes before returning our remittances.

This year, like last year and the year before that, the state is facing a worse financial crisis than the city. One reason for this is the fact that the city has a strong mayor, who is able to hold the line on expenditures, and a relatively pliant city council. Both in the Bloomberg and Giuliani years (the last twenty), the mayor and council resolved their differences in June and adopted a budget on time and without rancor. The city's fiscal year starts July 1; the budget just offered is for FY 2011, even though calendar year 2010 has just begun.

On the other hand, the state has a weak governor and a powerful although dysfunctional legislature. Pressure is exerted directly on legislators by both unions and their spending partners in education and health, the two agencies which are budget busters. This is an area where the interests of labor and management coincide; they both want more money from the state's taxpayers. The legislators, who run for re-election every two years, can be influenced by television commercials paid for by unions and trade associations. Both Governor Spitzer and Governor Paterson were repeatedly trashed in TV ads depicting them as indifferent to human suffering. Those ads took their toll on the governors public approval.

By law, the state budget must be adopted by the legislature and approved by the governor by March 31. For almost twenty years this statutory deadline was not meet, although recently it has been followed. Because of the city's dependency on state aid, serious consideration of the city budget cannot come before April. The City Council then holds hearings on the budget, while a parade of witnesses argue for money for the cause or employees they represent. The final budget is negotiated between a team of councilmembers headed by the Speaker and the mayor's office.

Traditionally, the mayor's budget as prepared leaves space for councilmembers to add hundreds of millions of dollars, for which they can and do claim credit. The Council has in the past added millions in members' items, or earmarks, or pork, to satisfy their supporters and in some cases their contributors. How much pork there will be in the FY 2011 budget has not yet been determined. It is too early in the season for that.

Nonetheless, the mayor's budget presentation yesterday was both important and impressive, reasonable in both tone and substance. His speech is described by David Chen on pA18 of today's Times. The headline: MAYORS BUDGET WOULD CLOSE 20 FIRE COMPANIES highlights a visible reduction which is unlikely to be adopted. The story is particularly well written, capturing the mood of the occasion and the mayor's frustration with the recession and Albany.

The presentation incidentally provided an occasion for the mayor to demonstrate his mastery of the details of the $63.6 billion budget. One of his accurate observations was quoted by Chen in the Times: "The trouble is, there are some things beyond our control. The world has changed and we have to make a choice." Later, when asked about labor contracts, the mayor said: "The bottom line is we dont have any money." That is an exaggeration: there is money, but there are more obligations to meet than funds to meet them.

One change over the years in budget presentation has been technological. What began with charts on oak tag has evolved into power point presentations and electronic slide shows. The old charts were mounted on easels, and a budget bureau staffer was assigned to change the chart when the mayor got into a new topic. Occasionally a chart would come close to falling as it was rushed onto the wooden easel. Mayor Giuliani wore a body mike as he walked around the lectern, basically discussing the budget from memory. Mayor Bloombergs presentation was more conventional, but thoroughly professional. The forty minute speech was also aired live on New York One and the citys website. You can watch it for yourself.

On pA17 of the Times, Clyde Haberman has a perceptive column, noting a major difference between the city's current fiscal crisis and the big one in the mid 70s, during the Beame administration. Then, the mayor, union leaders, citizens, and bankers alike agreed to genuine compromises, and the city narrowly averted bankruptcy. Everyone gave up something. But "the spirit of '76," as Haberman calls it, is gone:

"Mr. Bloomberg told teachers to accept a pay raise of 2 percent, which is less than they'd like but is at least an increase, or watch 2,500 of their colleagues apply for unemployment. Something's got to give, this line of reasoning goes, and it is better that everyone in the lifeboat go on shorter rations than to have lots of people tossed into the sea.

"Perhaps Mr. Bloomberg is merely posturing in advance of labor negotiations. Perhaps the union leader, Michael Mulgrew, is, too. But its hard to detect the spirit of '76."

Haberman also points out that Bloomberg has placed many of his campaign staff on the city payroll he intends to shrink. The names and agencies involved were detailed in a Times article Wednesday by Michael Barbaro on A20: AMID BUDGET WORRIES, MAYOR FINDS JOBS FOR CAMPAIGN STAFF. To be fair, many of these people had previously worked for the city and left their jobs to work in the campaign, which is a much better (and more legal) practice than having them work on the campaign while on the city payroll, or using up compensatory time which had been accumulated. Haberman continues:

"Speaking of salaries, the word derives from "sal," Latin for salt. As you know, the mayor wants to reduce salt consumption in the city. The same cannot be said about that salt derivative, salaries -- certainly not the salaries of those who helped get him re-elected. He has put a bunch of them in high-paying city jobs, including his campaign communications director, Howard Wolfson, who will earn $200,000 a year.

"Mr. Wolfson's purpose in life would seem to be to keep Mr. Bloomberg front and center in national politics. The mayor insisted the other day that he had "no plans" to run for president. Then again, he used to say that he had no plans to seek a third term at City Hall."

Actually, the mayor could be a good President, compared with what we have been through. If elected in 2012, he would be the oldest man ever to assume the office, surpassing Ronald Reagan, the existing record holder at 69 years and 349 days, by almost exactly one year. He would have to resign as mayor by Inauguration Day, January 20, 2013, at which time Public Advocate Bill de Blasio would assume the mayoralty. Under the City Charter, a special election would be required to be held within sixty days after the vacancy occurred. The election would be non-partisan, an honorable cause which Mayor Bloomberg has championed. We wonder if anybody else has already figured out the schedule.

StarQuest #640 01.29.2010 1285wds

No comments:

Post a Comment