Raise
revenues to protect services
By MIKE MUSURACA
Assistant Director,
DC 37 Research and Negotiations Department
In the first months of the Bloomberg era, many political leaders
and commentators have broadcast a troubling message. They echoed Mayor
Michael R. Bloomberg, who ruled out tax increases in his inaugural
address and budget proposals and has suggested a reduction in the
city's workforce through attrition, early retirement incentives and
severance.
Although he says he hopes to avoid layoffs, there will be pressures
on him to turn to such drastic moves in the new fiscal year beginning
July 1. If benefit cost reductions and federal and state aid do not
materialize, the mayor's contingency plan includes layoffs. That,
in short, is the framework the city will use in making what the mayor
calls "tough choices" to balance the budget.
This thinking is as narrow and as unimaginative as it gets. It also
ignores a number of realities.
For one, the composition of the city's workforce has undergone a radical
transformation since Rudolph W. Giuliani took office in 1994. Teaching
and uniformed personnel now account for a much larger share of the
employees than they did then.
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Living on borrowed time
While we applaud the mayor's plan to move ahead with civilianization
in the NYPD, we must warn that workforce cutbacks alone will not generate
nearly the levels of savings the city needs.
Second, we have to recognize that long before Sept. 11, New York City
was living on borrowed time. The tremendous surge in the stock market
from 1995 to 2000 allowed the city to both cut taxes and deliver services.
This was becoming more difficult in the slowing economy before Sept.
11. It is impossible now.
As the city plunges into tighter economic circumstances, some of the
structural problems that led to the 1975 fiscal crisis still exist,
notably the city's relationship with the state. Albany shortchanges
the city by billions of dollars on education and Medicaid.
New York is one of the few states that require cities to pay any share
of Medicaid costs. Take the local share of Medicaid - over $3 billion
a year - off the city's books, and the fiscal problem is more manageable.
"The great unspoken"
In the last few years, Albany has gone further than previously in
putting the screws to the city, eliminating both the Commuter Tax
and the Stock Transfer Tax Incentive Payment. That is more than $600
million in revenues on an annual basis, or the equivalent of roughly
15,000 jobs at $40,000 per position.
Of course, the city has not helped its case, because it too has reduced
taxes, apparently believing that the run-up in the stock market would
last forever.
The economic slowdown reinforces the urgency of the city's need to
reevaluate some of the $3 billion in tax cuts that have been enacted
since 1995.
Behind this discussion of tough choices and revenue increases versus
spending cuts is a great unspoken: the services that are on the chopping
block.
In 1975, the City University of New York, public hospitals, the subway
fare and affordable housing programs were sacrificed to the gods of
the bond market. As the mayor reminds us in this year's budget, more
than 60,000 full-time employees were eliminated.
What will we give up now? Or will we make the really tough choices
to fund the services we need to sustain a vibrant local economy and
keep this a city that folks want to live in?
The city clearly faces a revenue problem. Can it be solved by simply
relying on the private sector to quickly resurrect the city's economy
and its tax base? Or do the services that city employees provide play
a central role in creating the conditions that allow the private sector
to flourish?
If you believe that the role of government is vital, then raising
revenues has to be an important part of the solution to balancing
the budget.