Proposed New York State budget cuts would cost New York City $1.3 billion and trigger 19,000 layoffs, Mayor Michael Bloomberg said yesterday at a budget hearing in Albany.
State budget director Robert Megna called Bloomberg’s dollar estimate “inflated” and put total cuts to the city at $748 million.
On the positive side, Bloomberg praised a proposal in the budget that would allow the New York City Transitional Finance Authority to structure qualified school construction bond deals with an invested sinking fund.
Last week, Gov. David Paterson proposed a $134 billion all-funds fiscal 2011 budget that closed a $7.4 billion gap through a mix of cuts and revenue-raising measures. The proposed budget would cut the city’s entire $302 million allocation of local aid under the state’s aid and incentives for municipalities program.
“The cuts the state’s fiscal mess will cause us to make will not sit well with New York City residents — particularly when they realize the state’s budget is balanced on our workforce’s back to protect the state’s own workforce,” Bloomberg said in prepared testimony. The city currently employs about 305,000 people.
“Virtually every advocacy group and region of the state, including New York City, have individually claimed that they would be disproportionately impacted by these tough choices,” Megna said in a statement. “The truth of the matter is that Gov. Paterson proposed across-the-board reductions to every single area of the budget and every single region of the state, which were targeted in a fair, equitable, and progressive manner.”
Bloomberg said a proposal to allow the city to sell QSCBs using invested sinking funds would lower borrowing costs and allow the city to build and repair more city schools. The city received a $600 million allocation of the tax-credit bonds in 2009 under the American Recovery and Reinvestment Act and is expected to receive a similar allocation in 2010.
The legislation would let the city work around state finance laws that require debt to be retired annually under an amortization schedule. The proposal would count annual payments to an interest-bearing invested sinking fund as amortizations. This would allow the city to sell QSCBs with a bullet maturity while benefiting from earned interest in the sinking fund.
“Across the nation, people have found invested sinking funds useful, particularly for tax-credit bonds,” deputy budget director Alan Anders said. “The reason we need legislation is because of our complicated amortization rules. We would need to and want to have those payments constitute amortizations.”
