Mayor: NYC budget gap may be smaller than feared

By Daniel Massey

Published: October 22, 2009 - 2:11 pm

Mayor Michael Bloomberg said better-than-expected tax collections in recent months suggest the city's multi-billion-dollar budget deficit might not be as steep as he once expected.

In a speech and question-and-answer session before a friendly business audience at a Crain's breakfast forum Thursday, a relaxed-sounding Mr. Bloomberg offered little detail on how he would solve the looming budget crisis, beyond saying city agency budgets would have to be cut further.

“If you can't raise any more revenues and you can't walk away from your obligation to provide the basic services, what do you do?” he asked. “I think we've shown exactly what to do. We've cut [agency budgets] seven times now [since 2007] and we'll find ways to do it again.”

But some of the cuts, which the mayor says total $3 billion for the fiscal year that ends in June, apply to projected spending. And despite the belt tightening, total city-funded spending is projected to increase to $46.9 billion in the current fiscal year from $45.3 billion in fiscal 2009, according to a May estimate by the Independent Budget Office that takes into account use of prior surpluses.

The mayor ridiculed Comptroller William Thompson's plan—announced at a Crain's breakfast forum last week—to lobby for more money from Washington, D.C. and to fight in Albany for reinstituting the commuter tax.

“There is no Santa Clause in budgeting,” Mr. Bloomberg said. “The idea that we can expect Washington to come to our rescue is a few decades out of date.”

Last fall, the mayor cited the unprecedented financial crisis as a reason to change the law so he could seek a third term. But through August, he noted on Thursday, revenue from city taxes on personal income, local sales, property transfers and mortgage recordings came in $118 million higher than his office had projected. And while city budgeteers had “conservatively” projected Wall Street's third-quarter losses at $14 billion, the major banks instead recorded gains of $30 billion for the period.

The city won't reap direct tax revenue rewards from that unexpected profit, the mayor cautioned, because bank losses from last year can be carried over into future tax years. But the economic ripple effect of high finance salaries will help later this year and into next year as they are spent in the local economy.

Mr. Bloomberg suggested he would not raise any taxes, but stopped short of making promises, largely because the state's budget is in much worse shape than the city's. Upcoming cuts could chew into the approximately $12 billion that Albany sends to the five boroughs each year.

“That really is the big unknown,” the mayor said. “Nobody can ever promise for sure that they won't raise taxes….I believe in my heart of hearts that we can get through next year without raising taxes, that we have enough money, that we can identify enough cost savings, that we can get through. It will not be easy.”

Longer term, the mayor said “growing the economy” and seeking reforms to public workers' health care and pension plans—which now account for one-quarter of the city's annual tax expenditures—would improve the city's health. He cited a separate announcement his office made Thursday unveiling initiatives to create 13,000 “green jobs” over the next decade.

The mayor pledged to work with municipal unions to help the city “avoid fiscal peril” in future years, but said he would not seek to reopen any of the contracts he negotiated that provide for 4% raises for various groups of city workers.

Mr. Bloomberg also offered glimpses into how he would govern during a third term. Citing a need to inject new blood into his administration “to shake things up,” he said New Yorkers could see perhaps eight new city commissioners in coming months.

“That is what management is all about,” he said. “You have to constantly reinvigorate and have people that come up with new ideas and different approaches.”

On a separate issue, the mayor promised not sit on the sidelines should Wal-mart try to gain a foothold in the city, even though labor leaders insist the Arkansas retail giant is not welcome here. He suggested recent health care reforms undertaken by the company could temper opposition in the City Council, although Speaker Christine Quinn recently told Crain's that she remains strongly opposed to Wal-mart coming to the city.

“It is not the city's business to tell companies they can or can't be here,” Mr. Bloomberg said.

On the battle to redevelop the Kingsbridge Armory in the Bronx, he said the Related Cos. would not be able to build out the empty site should the City Council demand the company guarantee that its tenants will offer all workers at least $10 an hour plus benefits.

“You just can't ask the private sector to do things that would not let them turn a profit,' he said. “They just can't stay in business.”

The morning wasn't all business. The mayor, in an unusually spritely mood, interspersed jokes throughout his commentary, on subjects ranging from his own brand of bipartisanship (“I've been a Republican, and a Democrat, and an Independent. Nobody's got more experience than I have in working across the aisle”) to the reason he would fare better than Ed Koch in a third term (“better looking”).

He even joked when asked why he called Mr. Thompson “one of the best comptrollers” in the history of New York City during a 2007 graduation speech the mayor made at Tufts University, Mr. Thompson's alma mater.

“I don't apologize for being polite,” Mr. Bloomberg said, drawing laughter from the crowd. “It's a commencement speech.”

Poll finds mayor's lead widens

After Mr. Bloomberg's remarks Thursday, Marist released a poll that found Mr. Bloomberg's lead over Mr. Thompson has grown to 16 points, up from 9 in the same poll a month ago.

The mayor's support among likely voters remained the same at 52% — an indication that his relentless attacks on the challenger are working. Mr. Thompson's record as comptroller and former Board of Education president has been assailed in commercials and mailings by Mr. Bloomberg's big-spending re-election campaign.

Curiously, Mr. Thompson's drop in the poll was caused by a shift among Democratic voters. A month ago, they favored him over the mayor, 51% to 43%, but in the new poll, 47% back the mayor while just 39% support Mr. Thompson.

The challenger actually gained among unaffiliated voters and now leads in that group, 48% to 41%. A month ago, before he began running frequent television commercials, Mr. Thompson trailed in this group, 65% to 31%.

Thompson campaign spokeswoman Anne Fenton noted that the comptroller is much closer when all voters, not just likely voters, are counted. “Among the larger sample size of 744 registered voters, the race is 47% for Mike Bloomberg and 38% for Bill Thompson—only a 9-point spread,” she said in a statement. “Despite the nearly $100 million he has spent trying to buy this campaign, the mayor is still under 50%, with 12% undecided. This is still a very open race and we are very optimistic.”

Erik Engquist contributed to this report.