New York City Mayor Michael Bloomberg yesterday cranked up the volume in a fiscal fight with the governor at the release of his executive budget proposal. The mayor proposed a $62.9 billion budget that apparently included few changes from his preliminary budget released in January.
Bloomberg lashed out at budget cuts in Gov. David Paterson’s state budget proposal, that if enacted, the mayor said would force the city to cut nearly 11,000 jobs, including about 6,400 teaching positions and 400 firefighters. Roughly 6,000 job cuts would be through layoffs and the remainder through attrition.
“The governor’s proposed budget balances the state’s books by starving New York City,” Bloomberg said at a budget presentation at City Hall. “This short-sightedness could harm the city’s economic recovery and also imperil state revenues.”
The state budget is already a month late as lawmakers wrangle over how to close a $9.2 billion budget gap. Paterson said this week he would include state employee furloughs in his next weekly emergency spending bill. Gridlock in Albany has added difficulty to the city’s budget process.
“Never before has New York City faced much uncertainty in its budget so late in the process, and that leaves us no recourse but to plan for the possibility that the state will go ahead with the draconian cuts to the city still being discussed in Albany,” Bloomberg said.
Bloomberg asserts those cuts — largely direct aid and education aid — total $1.3 billion while the state has put them at $748 million. The state comptroller’s office put the figure at $1.22 billion for fiscal 2010 and fiscal 2011 combined.
New York budget director Robert Megna yesterday questioned the veracity of Bloomberg’s assertions in light of the city’s projected $3.2 billion surplus for fiscal 2010.
“New York City has to make difficult decisions about which cuts to make and how to allocate funding among competing priorities,” Megna said in a statement. “Ultimately, however, those decisions are made at the local level by local leaders. The mayor’s budget uses the state as a scapegoat to shirk responsibility for their own budget choices.”
Citizens Budget Commission president Carol Kellermann said the mayor’s budget was in part a message to legislators that he wants to restore state funds for the city.
“They’re in a squeeze play,” she said. “To some extent it’s lobbying through the public. The mayor says 'I understand they have to make cuts but do them fairly,’ but how would he do them?”
Kellerman said Paterson’s budget was a “responsible” proposal.
City revenues are projected to rise in fiscal 2011 for the second year in a row. Revenue would rise to $43.17 billion from a projected $42.07 billion in the current fiscal year.
Despite spending cuts to services, the city’s capital program would go ahead under the mayor’s proposal. The financial program calls for the city to sell $8.92 billion of bonds to partially finance its capital program including: $3.03 billion of general obligation bonds, $3.03 billion of future tax-secured New York City Transitional Finance Authority bonds, $2.16 billion of New York City Municipal Water Finance Authority bonds, and $711 million of TFA building aid revenue bonds.
The plan calls for the city to borrow $37.7 billion from fiscal 2010 through 2014 to partially finance capital commitments totalling $46.1 billion. The city’s debt service, excluding water authority bonds which are backed by fees and TFA BARBs which are backed by state aid, would rise from $5.07 billion in the current fiscal year to $6.89 billion in fiscal 2014.
Bloomberg called the rising level of debt service “a worrisome thing” but that using more pay-as-you-go financing was not an option.
“Pay-go financing assumes we have money, I think we don’t,” he said. “If we are going to invest in the future it costs money and the fact that it’s capital dollars doesn’t mean those dollars don’t hurt .”
The financial plan also assumes the city will sell $2.4 billion of short-term notes in each of the next four fiscal years for cash-flow purposes. Budget materials indicated the amount would be $75 million but a spokesman for the city budget office said that was an error. Officials anticipated a short-term borrowing in fiscal 2010 but it never happened.
The Hudson Yards Infrastructure Corp. plans to sell $1 billion of bonds in calendar 2010 or 2011 to support the extension of a subway line and related improvements to Manhattan’s West Side near Penn Station. The issuance would be the authority’s second and final deal, having sold $2 billion of the bonds in 2006.
The City Council will begin budget hearings on May 13. New York City’s fiscal year begins July 1.
