The Economist
New York's Mayor presents two grim economic pictures for the city
THE jobless rate in New York City increased from 7% in December 2008 to 10.6% a year later. Some 425,000 New Yorkers are looking for work, more than at any time since the 1970s, and the number is expected to grow. The city budget is a tough one to balance even at the best of times. In the worst of times, it is near impossible without support from New York state and the co-operation of the unions.
So when Michael Bloomberg, who has just begun his third term as mayor, presented his preliminary budget for 2011 on January 28th it wasn’t pretty. The city faces a staggering $4.9 billion deficit for 2011. This year’s $2.9 billion surplus has gone; it was spent on reducing next year’s deficit and paying bills and bond repayments. To close the gap, Mr Bloomberg is ordering every city agency to make cuts—the seventh round he has ordered since early 2007. That should save the city $1.6 billion over the next two years.
The mayor has proposed closing four city swimming pools and a Manhattan centre for the homeless. He has also suggested removing fire-alarm boxes from city streets, to stop hoax calls. Mr Bloomberg wants to reduce the city payroll by 4,286. Every department, from police to libraries, faces cuts. The mayor is postponing the next police academy class. Some 2,500 teachers could be forced out of their classrooms unless their union agrees to a 2% wage increase instead of a promised 4%. Teachers have enjoyed a 43% salary increase during Mr Bloomberg’s tenure.
Earlier, the mayor had painted an even bleaker picture when he testified before a state finance committee on January 25th on the impact of Governor David Paterson’s state budget on New York City. That budget eliminates large chunks of assistance from the state to the city, even though the city provides half the state’s revenues. This, Mr Bloomberg said, would force the city to shed 19,000 city workers, including 8,500 teachers by September. More than 3,100 policemen would lose their jobs, thinning the blue line to 1985 levels. Fire stations could be closed. City funding for soup kitchens, which have never been busier, could go. Rubbish collection would be reduced. (This is all worryingly close to the New York of the 1970s, when rubbish went uncollected, fire stations closed and police officers were laid off.) The mayor also fumed about the “intolerable burden” of state pension obligations, which have risen by 350% since 2002. He wants Mr Paterson to start reforming pensions.
And the politics of this? Doug Turetsky of the non-partisan Independent Budget Office said Mr Bloomberg hoped to send two messages in his two budgets. “Number one, cuts are the state’s fault. And two, labour has got to give.” Blaming the state is an old game; but the unions won’t give in without a struggle.
So when Michael Bloomberg, who has just begun his third term as mayor, presented his preliminary budget for 2011 on January 28th it wasn’t pretty. The city faces a staggering $4.9 billion deficit for 2011. This year’s $2.9 billion surplus has gone; it was spent on reducing next year’s deficit and paying bills and bond repayments. To close the gap, Mr Bloomberg is ordering every city agency to make cuts—the seventh round he has ordered since early 2007. That should save the city $1.6 billion over the next two years.
The mayor has proposed closing four city swimming pools and a Manhattan centre for the homeless. He has also suggested removing fire-alarm boxes from city streets, to stop hoax calls. Mr Bloomberg wants to reduce the city payroll by 4,286. Every department, from police to libraries, faces cuts. The mayor is postponing the next police academy class. Some 2,500 teachers could be forced out of their classrooms unless their union agrees to a 2% wage increase instead of a promised 4%. Teachers have enjoyed a 43% salary increase during Mr Bloomberg’s tenure.
Earlier, the mayor had painted an even bleaker picture when he testified before a state finance committee on January 25th on the impact of Governor David Paterson’s state budget on New York City. That budget eliminates large chunks of assistance from the state to the city, even though the city provides half the state’s revenues. This, Mr Bloomberg said, would force the city to shed 19,000 city workers, including 8,500 teachers by September. More than 3,100 policemen would lose their jobs, thinning the blue line to 1985 levels. Fire stations could be closed. City funding for soup kitchens, which have never been busier, could go. Rubbish collection would be reduced. (This is all worryingly close to the New York of the 1970s, when rubbish went uncollected, fire stations closed and police officers were laid off.) The mayor also fumed about the “intolerable burden” of state pension obligations, which have risen by 350% since 2002. He wants Mr Paterson to start reforming pensions.
And the politics of this? Doug Turetsky of the non-partisan Independent Budget Office said Mr Bloomberg hoped to send two messages in his two budgets. “Number one, cuts are the state’s fault. And two, labour has got to give.” Blaming the state is an old game; but the unions won’t give in without a struggle.
