Hope We Do Better This Year Than Last
Well, we made it to 2009. Even bad years come to an end.
Public employees don’t get Christmas bonuses (at least, they’re not supposed to) but the pensions are pretty good and the legislature keeps sweetening them on request. Isn’t it the least that senators and assembly members can do after accepting contributions from state and municipal labor unions year after year?
As part of the seasonal atmosphere of peace and goodwill, city marshals usually halt evictions during the year-end holidays.
When I was a commissioner, we had a policy of not firing people between Thanksgiving and New Year’s Day, so as not to cast a pall over their families during the holidays. Most agencies, I believe, followed a similar practice. In those days, the city only let people go only if they were not performing their jobs in a satisfactory manner, or had committed a serious offense.
Year after year, the city payroll grew and grew, in part because it was much easier to hire someone than to fire someone. The failure of employee discipline is one of the greatest weaknesses of the civil service system, because the defendant has four allies: his union-provided lawyer, his political rabbi, the influence his local and its officers exert, and civil service rules and regulations that serve as shields.
The two darkest days, from city employees’ point of view, came in 1975 and 1991, the years of Fiscal Crises I and II. Mayor Beame was in office for the first crisis and Mayor Dinkins for the second. Neither was re-elected. Many more employees were laid off in 1975 than in 1991. In the Koch years, 1978-89, there were minimal layoffs and the city regained its credit standing.
Now hard times are upon us again, due in large part to the national economic collapse, and in some part to the city’s long- standing practice of spending most of its surpluses in the good years, and being caught unprepared when the business cycle heads downward. In fact, Mayor Bloomberg has been more prudent than any other public official in setting aside reserves for pension expenditures, health benefits and other purposes. That is one reason the city is relatively much better off than the state.
Nonetheless, the commitment to 4 percent raises for practically every city employee every year is a guarantee of steadily increasing costs, which are now beyond the rate of inflation.
Givebacks, as the mayor first asked? Forget about it.
The city’s hope now is that President Obama will sponsor a massive bailout for state and local governments throughout the country. The theory will be that if you can bail out the bankers, the mortgage brokers and the manufacturers of automobiles that the public are not buying, why not help the cities and states who provide essential services to the people? Local governments have raised property taxes and are still in danger of foundering because they lack the power of the Federal government to print money. This authority gives a whole new meaning to the phrase, “the power of the press.” The collapse of the equity market has reduced the interest rate the US government pays on short-term debt to practically nothing. Unfortunately, most of the debt is long term, and the burden of servicing that debt increases each year.
On the local scene, debt service is an increasing drain on the operating budget of the MTA. The subways can never pay for themselves while they have the burden of paying for capital improvements, which are a constant requirement.
There is talk of shared sacrifice, and everyone taking a haircut. When fiscal pain is widely shared, the result is more just than when it is borne by just one of the stakeholders. Subway, bus and rail passengers will pay more in 2009, exactly how much more is left to be determined.
During Fiscal Crisis I there was shared sacrifice. At that time the city had so badly overspent and overborrowed that it was unable to pay its debts as they became due. To help the city avoid bankruptcy, municipal unions deferred pay increases for several years. The United Federation of Teachers, then led by the iconic Albert Shanker, invested $150 million in union pension funds in Municipal Assistance Corporation bonds which at the time were barely marketable. Later the bonds turned out to be highly profitable. Today, 33 years later, most people do not remember those days. Many were not even born at the time. That is one reason the story should be retold.
We are well into a Regency period in local politics: rule by wealth, power, celebrity and prestige. Whether this is better or worse than the old style of rule by crooks and political bosses is something we will discover as time passes.
We cannot close without mentioning the enormous bright spot of 2008; the election of Barack Obama as President. One never knows what will happen, we have been disappointed by men who were honest when elected but over the years became enmeshed in the mire of hubris. It has been many years since New Yorkers regarded the national government as superior to our local governments, but that renaissance just might be on the horizon.