By Jared Chausow
By Katie Toth
By Elizabeth Flock
By Albert Samaha
By Anna Merlan
By Jon Campbell
By Jon Campbell
By Albert Samaha
Though virtually unnoticed in the press, the detailed, professional assessments of Kathleen Grimm, the state deputy comptroller for the City of New York, and the Financial Control Board (FCB), were blasts at the Bloomberg balancing act, released in mid July. Here are some of the core findings:
City revenue estimates are overly "optimistic," anticipating $250 million more this year than the monitors think will be collected, and $390 million next year. Bloomberg is predicting a 23 percent rise in Wall Street profits this calendar year, while the FCB is anticipating another decline. The state comptroller questions the city's dubious assumption that "economic growth in the coming recovery will be somewhat stronger than the gains seen in the 1990s, resulting in better tax revenue growth."
The UFT contract will cost $1.1 billion a year, $425 million more than was budgeted, with an arbitration panel set to rule on a police contract that could, with secondary effects on fire and other unions, cost hundreds of millions more. Yet Bloomberg has not budgeted a dollar for future collective bargaining, though another round of negotiations for most unions will start this fiscal year, on the heels of the long-delayed recent pacts. The FCB cites the "enormous strain" these settlements pose for the city, with the state comptroller expecting $200 million in additional costs for this year, up to $660 million by next year.
The various forms of borrowing in Bloomberg's four-year financial plan "will free up $3.7 billion through 2007," with 80 percent of it spent by next June. Yet "future taxpayers will have to repay these loans at a cost of $6.4 billion and will receive no services in return." Both monitors deplored the city's return to the costly refunding of its debt, with one calling it "imprudent" and the other warning that the multibillion-dollar debt splurge has reached "levels that the city has never demonstrated an ability to sustain," sounding the near-bankruptcy alarm from the '70s.
The mayor who presided over the '70s collapse was onetime comptroller and certified accountant Abe Beame, elected because he "knew the buck." The FCB, which was created to supplant Beame's fingers-crossed botching of the city's books, wrote in its July report that Bloomberg's "decision not to address the city's fiscal condition" in this budget was "of course related to the wish to avoid taking actions that would further unsettle the local economy." But Bloomberg's business acumenand supposed ability to "address the city's fiscal condition"was precisely why he was elected.
Saying that the mayor's budget contains "a high level of risk," the ordinarily muted FCB contends that the uncertainties "simply cannot be ignored." They should also not have been ignored in June, when the City Charter required both branches of municipal government to honestly confront them.
Research assistance: Ross Goldberg, Christopher Heaney, Rebecca Isenberg, Matteen R. Mokalla, Nate Schweber, Emily Weinstein