Early Budget Agreement Marked By Cooperation
The early agreement on the 2008 city budget between Mayor Bloomberg and the City Council is the latest example of their “era of good feeling.” The Mayor and Council Speaker Christine Quinn have forged a constructive relationship that has generally been helpful to the city. This is part of Ms. Quinn’s strategy for a mayoral race in two years, when the mayoralty will be open as a result of the Term Limits.
There is nothing wrong with Ms. Quinn’s judgment that her best opportunity to attain higher office lies in demonstrating responsibility in her position as Speaker, and aligning herself, so far as practicable, with a generally highly regarded city administration. Her acceptance of the failure to include a tax credit for renters showed good spirit. ”Sometimes you put ideas out there, and it takes more than one year to accomplish.”
Ms. Quinn’s predecessor as Speaker, Gifford Miller, followed the opposite game plan, opposing the mayor on a variety of issues, notably by passing dozens of bills and overriding the mayor’s vetoes. Most of those bills were of minor importance, except to the councilmember who introduced them, so no great harm was done to anyone. Indeed, on major issues, such as the ban on indoor smoking and the increase in the real estate tax, Speaker Miller supported the mayor’s initiatives. Part of the problem from 2002 and 2005 was the generation gap (27 years) between the mayor and the speaker, but most of it came because the mayor was seeking re-election, and the speaker wanted the job, posthaste.
In past years, we have written many articles, which you can find on our Web site, www.nycivic.org, about the budget process, centering on the perennial disputes between the council and the mayor, and the financial irresponsibility of state and city budgets based on borrowing.
When I was younger, so much younger than today, when the President sent the Federal budget to Congress, the legislature was likely to reduce it, because they were not sympathetic to funding some of the programs he wanted, did not want to support some unpopular ideas, and wanted to avoid a situation where they might have to raise taxes. History has reversed that protocol. In recent years, the legislatures, both state and municipal, habitually seek to increase the executive budget, and it is the governor and the mayor who try to hold the line.
The senators, assembly members and council members are responding to constituent pressures for more local services and additional funding for cultural institutions they favor. They receive demands from labor unions, who are fully aware that more than half the discretionary funds the council appropriates end up in their members’ pockets.
This was a flush year for the city, financially, with billions of unanticipated dollars coming in as a result of the advancing stock market and the real estate boom (or bubble). In the past, the city has spent almost all that it received in bonanza years and then was unable to balance its budget during down years. It is now more fully recognized that, particularly in the FIRE sector of the city’s economy (finance, insurance, real estate), revenues are cyclical. Public expenditures, however, change in only one direction: upward. There are a number of reasons for this: One, wages increase each year rather than remain constant or decrease. Two, even modest inflation impacts a $59 billion budget. Three, the state legislature has an apparently irresistible desire, stimulated by the union lobbyists at whose trough they feed, to enact pension sweeteners which have a permanent impact on city budgets but cost the state nothing. Four, the ever-increasing public debt requires that more and more money be set aside to pay interest to bondholders. That expenditure is expected to exceed $3.5 billion in the 2008 expense budget, although the administration is reducing the cost of debt service by prepaying interest.
There is no question that the city’s finances are in much better shape than they were a few years ago. Moody’s and Standard & Poor’s, the rating agencies which evaluate the safety of municipal bonds, have reacted by upgrading the city’ s credit rating, which leads to lower interest cost on city borrowing. If there is no large deficit next year, New York City will still have the money for other purposes, possibly even making some repayment of municipal debt to reduce future interest costs.
Macroeconomic issues of public finance are being reasonably well handled, and harmony, at least for now, is the rule between the executive and legislative. The time is now propitious to attend to operational issues that have not yet been discovered, let alone resolved. There is a digital counter in the bullpen (the large room which is the northwest quarter of the second floor of City Hall, formerly the Board of Estimate Chamber, now the City Hall offices of the mayor and his principal staff) which ticks the number of days remaining in Mayor Bloomberg’s term. Today the number is 924, meaning there is still time to initiate good works.
It is most important as well for the mayor to take an interest in seeing to it that his successor is competent and compassionate, honest and decent, moderate and reasonable, devoted to the poor and the sick in body and mind, while totally committed to protecting New York City and its people from the criminals, psychopaths and terrorists who would destroy us if they could. To paraphrase Alexander King . “May this city be safe from tigers.”