Conundrum

Mayor Runs the City Government

But Even He Cannot Print Money.

Nationwide Deficits Raise Public Debt,

Making it Harder to Balance Budgets

Writing about city government is, to a large extent, writing about the mayor. The City Charter provides for a strong mayor, in direct control of the executive branch and with power of appoint over much of the judiciary.

To estimate the relative authority of elected city officials crudely and arbitrarily, the mayor can be judged as having up to ninety per cent control of city government, the Speaker of the Council nine per cent and the rest of the council one per cent. We omit the five district attorneys, who are fast becoming lifers, and the comptroller and public advocate (formerly council president), who primarily devote themselves to becoming the next mayor. Those borough presidents who think of themselves as papabili ply their trade around the five boroughs; the others aim at spending their twelve years in dignity and comfort.

Having watched city government for over half a century (forty years as a participant and thirteen as a pensioner-observer), I can say that the seven men who have been mayor since 1954 varied widely in intelligence, integrity and industry. They were all elected, but different candidates appealed to different constituencies.

The sea change in city government came, not from a new mayor, but from an old mayor who changed his base. In the 1961 Democratic primary, Mayor Robert F. Wagner, regular turned reformer, decisively defeated State Comptroller Arthur Levitt, candidate of the Democratic county leaders. The political power of the Democratic organizations (Tammany Hall in Manhattan, the other four had no particular names) was sharply diminished, and in time the labor unions, particularly those comprised of city employees, succeeded the politicians as powers behind the throne.

The primacy of employee unions was established in January 1966, when a twelve-day transit strike that followed Mayor Lindsay's January 1 induction ended with surrender by the new administration, which was motivated by an economy collapsing in the absence of public transportation. This was the opposite of the events of January 20, 1981, when the Iranian ayatollahs freed 52 Americans the day Reagan succeeded Carter. In New York, the city was held hostage from the day that Lindsay succeeded Wagner, and no one knew when it would end.

The basic problem with employee dominance over management became apparent over the years. No entity can prosper if its CEO is selected by its employees rather than by its shareholders. The interests of taxpayers are basically widely divergent from the interest of employees. People who work for the city want to get all they can in salaries, benefits (which are no longer fringes but range up to a third of salaries), and pensions (which over the long run, are comparable to salaries). Benefit costs have grown substantially in the last few years for three reasons: 1) Lower rates of return in both equities and fixed income assets; 2) People are living longer; and 3) They are getting more and better medical care before they die.

This is also basically true on the federal and state level, as well as with regard to cities, counties and other nations. On the federal level, the imbalance in entitlements (social security, medicaid, medicare, employee pensions) is added to the the costs of numerous wars, which include weapons development, a field in which the United States appears to be the world leader, as has been demonstrated in periodic wars and other occasions requiring the use of force.

In cases, such as the United States government, the State of California and to a lesser extent New York State, the bicameral legislature is divided between political parties and the fiscal situation is even more complex. Former Governor Schwarzenegger was unable to resolve the problem in his seven years in office. His four referendum proposals were defeated by the voters in 2005, and he seems to have largely given up after that setback.

We do not know of any state or local government that is following a straight path to eliminate its deficit, although some are doing better at that task than others, like Indiana under Governor Mitch Daniels. The underlying financial issue is that people want more services than they are willing to pay for, and employees want more jobs, higher salaries and sweeter pensions than the state or city can afford to provide out of tax revenues.

The elected officials, dependent on labor union support in money and volunteers, are caught in a vise. They will give the employees everything they can, except for the fact that they are past the point where there is anything left to give. The usual outcome is layoffs, which reduce the delivery of services, cause additional unemployment, and impede economic recovery. The greatest burden falls on younger employees, who are in the stage of marrying and starting families. They are a particularly vulnerable population, and so are the middle aged (people over fifty are unlikely to get another job, certainly not a position at a comparable salary).

An aggravating factor with regard to employment is that, due to technology, it now takes fewer people to do the work society requires than it did years ago. Even if the economy were not in recession, there would be substantial unemployment. Economists know that and most people sense it. You can't cure ingenuity, nor should you try. Sadly, no one has figured a cure-all for joblessness. Public works create jobs, but even worthwhile projects exacerbate the debt problem since the government must eventually pay the cost of labor and materials, plus interest. Requiring union wages (union scale) results in far fewer jobs for the same government expenditure.

Various states have taken action to deal with budget shortfalls, with different degrees of effectiveness. In order to have impact, a new law, a labor agreement, or a change in retirement age or benefit terms must have continuing effect in order to reduce the structural budget deficit. The sale of a state asset for privatization is a one-shot revenue which cannot be repeated. Too often governments have relied on one-shots, like requiring a tax payment to be made in July of one year and June in the next, so the double payment will fall in one fiscal year. That may sound like an odd maneuver, but it has been done repeatedly as an artifice to balance state or city budgets.

What we have done in this column is to try to define the problem of chronic structural financial deficits and report early steps that have been attempted. We will discuss more comprehensive solutions in another article. Unfortunately, there is no magic bullet to resolve this problem, and any solution will require significant pain-sharing. For people who are used to gain-sharing, this would be a reversal of fortune.

Can these problems be resolved, or significantly alleviated, without the application of external force to recalcitrant elected officials, who seek to escape personal responsibility for any hardship that may be involved in attaining fiscal sanity? Time will tell.

Justice Delayed Is Justice Denied

Commission Delays Two-Term Limit

For City Officials Until A.D. 2021,

However the Public Votes This Year


The Charter Revision Commission appointed by Mayor Bloomberg voted last night to postpone by eleven years the effective date when a two-term limit would take effect, even if the voters approve it in referendum this fall.

After a motion to put the eight-year limit into effect now was defeated, (it received six votes, eight being needed to pass), and a so-called 'hybrid' motion for a 2017 effective date also failed with six votes, Commission Chairman Matthew Goldstein brought the 2021 date up for a vote and it was approved 12-0, although it was not a compromise between the other two alternatives, but mandated an even longer delay in carrying out the decision made in the public referendum.

On the two previous motions, the chairman had called the roll and voted last. On the 2021 proposal he called on himself first and dramatically voted 'Yes'. The eleven other members present followed suit.

A large majority of the witnesses who testified last night supported implementation of the referendum at the next Council election, scheduled for 2013. The speaker for a delay was Public Advocate Bill de Blasio, who had taken a leading role in supporting the two-term limit in 2008. He did not explain why he changed his mind, but as a mayoral candidate in 2013, he will be seeking support from the legislators whose eligibility he sought to prolong.

The effect of this postponement is to confer a benefit on a small group of Councilmembers, some of whom voted in 2008 to extend their eligibility. Others, who voted No on the change, allegedly on principle, will also have the opportunity to seek a third term, and it is likely that most of them will avail themselves of that privilege. The extension to 2021 will give the freshmen, now in their first year on the Council, the right to serve twelve years before there will be an open seat..

The rationale behind this gift of time is that, since in 2009 the three-term limit was in effect, the candidates ran with the expectation that they would be entitled to seek three terms and the city is in good faith bound to honor their belief. Those members first elected in 2005 would require the gift of a third term to have them serve into 2017. However, the public will presumably by 2010 have voted three times (1993 and 1996 were the first two) for a two-term limit.

The theory that there is a duty to fulfill the expectations of the ambitious appears as harebrained to me as it may sound to you, but it was expressed by at least one Commissioner last night, and it was the rationalization of others. Try to think of another justification for prolonging the implementation of the decision of the voters for a period comparable to serious prison time.

The fact is that, even if the voters approve a two-term limit in November, the Commission has arrogated to itself the power to frustrate that decision for eleven years. The proposal was offered to allow the public to decide the effective date of the two-term limit, whether at once (2013), 2017 or 2021. This idea was ignored; how can the people be trusted to make a decision of such magnitude? Don't the mayoral appointees on the Commission know what is best for the masses?

The individual members of the Commission are, by and large, reasonably intelligent, not particularly politically sophisticated, and honorable New Yorkers. The chair is a distinguished public servant. How could all these bright people have gone so wrong? Look at Vietnam and numerous situations since then when our country has made decisions which turned out to be wrong. But those important issues had two sides and complicated facts. In this case, the facts are clear and the argument completely one-sided. I invite anyone to submit a column explaining why 2017 or 2021 is the appropriate time for a 2010 referendum to take effect. We'll publish it.

The bottom line here is that some people wanted to take care of some other people they know. And they were able to convince enough naive colleagues so that they could do it.

The remedy here is relatively simple: another referendum, with an effective date written into it so no Commission can substitute its wishes for the voters' decision by fiddling with implementation and postponing a simple reform for over a decade.

The unanswered question is Rule 17-C. Who will bell the cat? Who will step forward and take the initiative to see that the will of the people is implemented, whatever it may be. Now is the time to begin consideration of that question. It has been attributed to Edmund Burke in 1795. No one, however, really knows who said it first: "The only thing necessary for the triumph of evil is for good [people] to do nothing."

To those of you who think, what difference does this make, two terms or three, you have a point. The issue, however, is not two or three terms. The issue is fairness; first the Mayor and Council circumventing the Charter in 2008 for their own benefit, and now the Commission trying to circumvent the referendum of 2010, whether they know it or not.

Americans, and New Yorkers are Americans, like to play fair, and don't like to be disregarded or manipulated. That is what underlies this controversy. It is the same nagging issue that sharply reduced the majority the competent mayor should have received after two successful terms. Our recommendation: respect the will of the people.

"Justice Delayed is Justice Denied". Britain's Prime Minister Gladstone said it in 1868 addressing Parliament as Queen Victoria's prime minister.

The City of New York should not provide golden parachutes. Not in dollars, not in years. Let the new elected officials take their places, and may they serve the public, not themselves.

Eleven Years A-Waiting

The Charter Revision Commission, appointed by Mayor Bloomberg on March 3 to recommend changes in the City Charter, has brought forth its recommendations. In order to appear on the November ballot, the changes must be submitted to the City Clerk sixty days prior to the election. This year that date is September 3.

The principal purpose of the Commission was to give the people a chance to vote on term limits for elected officials. In a referendum in 1993, the voters approved a charter amendment limiting city officials to two consecutive elective terms, usually eight years. In 1996, the voters affirmed their earlier decision, rejecting an alternative limit of three terms.

The Charter change was made effective in 2001, at which time a large majority of Council seats turned over. New members were elected, who under the law could serve for no more than two terms. If not for the Charter changes approved by the voters, most of the old councilmembers would have been re-elected and the new members would not have run. In fact, eight of the newly elected were relatives of their predecessors, dynastic succession not being prohibited by the Charter.

In 2008, the elected officials who would have been ineligible to seek re-election the next year decided that their services would be needed for many years to come. At the urging of the mayor, who said his leadership was required because of the impending fiscal crisis, the Council voted, 29 - 22, to override the two referenda and extend their own eligibility for an additional four years. This decision was upheld in court.

Public dissatisfaction with this maneuver was demonstrated by the unprecedented defeat of five councilmembers in districts where re-election had usually been automatic. The narrow margin of Mayor Bloomberg's victory over his opponent was attributed more to voter dissatisfaction over the manipulation of the Charter than to complaints about his administration of the city, which was widely regarded as satisfactory.

During the campaign, Mayor Bloomberg promised to appoint a Charter Commission to review the city's governmental structure and, specifically, to address the issue of term limits. He had previously promised to appoint such a commission in 2008, but in the press of business found it impossible to adhere to that commitment. This time, with the third term under his belt, he did appoint a commission, which is making recommendations to be placed on the ballot in 2010.

The Commission consisted of 15 members, led by the widely respected chancellor of the City University, Dr. Matthew Goldstein. Its most important recommendation had been predicted, to give the voters another chance to vote on term limits. Another was to forbid the Council to vote to overrule the voters to extend their own eligibility. This was the public locking of the barn door, after the third term horse was stolen in 2008. That was the proper and appropriate thing for the Commission to do. It should have been provided for in the initial referenda, but Ronald Lauder's lawyers overlooked it, perhaps because they believed that no one would have the nerve to throttle a decision made in a democratic process involving a million voters. If they believed that, they were mistaken.

Having made the inevitable decision to submit the issue once again to the public (that, after all, was why they were appointed in the first place), the Commission then proceeded to commit the inexplicable blunder of not making its decision effective until 2021, which is eleven years into the future. Councilmembers elected in 2005 and 2009 would be eligible to seek a third term, and the two term limit would not become effective until the members to be elected in 2013 took their seats.

If the people are to regain the right to limit Councilmembers' terms, their decision should be put into effect at the next Council election, which may be in 2011 or 2013, depending on when census data is reported. The eight year delay appears to be an attempt to subvert the Commission's own decision, which its members may not have been too happy to make, some of them being creatures of the comfortable establishment, quite content to see members linger in office until they are thoroughly superannuated.

Some of this is hard to understand. If a matter is submitted to referendum, as this issue will be in 2010, the decision of the people, whatever it may be, should go into effect as soon as possible. If the matter involves eligibility for election, it should go into effect for the election immediately following the referendum. The eight-year delay in ineligibility, not allowing it to go into effect until 2021, makes no sense. First, it is an invitation to change the charter again within the next ten years, to repeal or to further extend term limits. Second, it unjustly allows incumbents to seek third terms when the people have again rejected such privilege for a handful of office holders. Third, at the very least, the public should have the opportunity to vote on whether the charter change goes into effect at the next election or not until 2021.

The right to decide this issue was snatched from the public by the 2008 self-perpetuating dance of the incumbents. The proposed charter change restores that right to the people. It is a normal expectation for charter changes to go into effect as soon as practicable. Whether the effective date of this restoration of voting rights should be delayed by ten years is a separate issue which the public has a right to decide.

The Charter Commission has generally done good work, and its members have served long hours without pay. We do not suggest that they are corrupt or derelict in their responsibilities. But the ten year delay in implementing the public's decision on term limits is inexplicable. It suggests an imperialist power agreeing to grant independence to a colony in ten years, by which time the natives may be expected to learn how to govern themselves.

Such a time-consuming process is not only unnecessary but insulting to the public. If we are capable of deciding how many terms our elected officials can serve, we are capable of deciding, if we choose to, that our wishes shall go into effect at the next election for Councilmembers, not a decade into the future.

There is still time for the commission to correct what appears to be a manifest error. We hope they do so, in order for the voters to make their decision effective, whatever it may be. It will require leadership by the Chair and farsighted commissioners to modify the mandatory ten-year delay. Otherwise, the cause of the rule of law and returning the decision on term limits to the voters will have been subverted. That would lead to a loss of confidence in the commission and the important issues it is expected to consider in 2011.

Do the right thing.