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February 14, 2002 Bloomberg Seeks Cuts in Spending at Most AgenciesBy MICHAEL COOPER
Mr. Bloomberg said the dire measures in his $41.4 billion budget were needed to make up for the steep decline in tax revenues caused by the combination of the national recession and the attack on the World Trade Center. He promised that the city would still be able to keep its streets safe and clean and to repair its schools. "The budget that we're going to show you hurts everybody," Mr. Bloomberg said as he presented the plan at City Hall. "We don't think it hurts anybody fatally. But it is a spread-your-pain, no-sacred-cow kind of a solution to our problem." His austere budget for the fiscal year beginning on July 1 ushered in a new, rockier phase to his tenure, which has so far been marked by a rather easy political honeymoon. Advocates denounced the cuts to social programs. Smokers complained about the steeper cigarette taxes. But perhaps the fiscal tactic most likely to draw fire, and the one Mr. Bloomberg seemed most defensive about yesterday, was his decision to issue $1.5 billion in new debt to cover current operating costs. Using deficit financing — money that future taxpayers will have to pay back, with interest — to cover the city's current operating costs is a practice harking back to the nightmarish cycle of the fiscal crisis of the 1970's, when the city continued to borrow to pay day- to-day bills and could not bring in cash fast enough. Mr. Bloomberg defended the tactic several times in his speech yesterday, stressing that the events of Sept. 11 were unforeseen and required "extraordinary measures." He promised that his administration would not borrow to pay for operating expenses in later years. "I hope that the rating agencies understand and people who are worried about our future," Mr. Bloomberg said as he tried to reassure the agencies that assess the marketability of the city's bonds and the soundness of its fiscal policies. "We're not trying to mortgage our future," he said. "But we are going to close a budget deficit with four different actions. One is to reduce expenses. One is to raise revenues where possible. One is to defer to the future things we'd like to do now. And the fourth one is to spend some of the moneys we're going to get later today." The mayor's budget plan is just the beginning of a process that goes on for months, and many of his suggested cutbacks will probably be traded for others by the City Council, which must pass the budget. Council officials made it clear that they were troubled by some provisions in his proposal and said they would go through it line by line. Almost no one will be shielded from the budget knife under Mr. Bloomberg's proposal. His plan calls for closing centers and eliminating weekend meals for the elderly. It would eliminate 75 ambulance shifts to reduce overtime costs. Legal services to help people fight evictions would be cut. Libraries would be cut by $39 million. And city money for the Board of Education would be cut by $354 million. Armed with a laser pointer as part of his PowerPoint presentation, the mayor, whose successes in the private sector made him a billionaire, tried to deliver on his campaign theme that the city needed a businessman to guide it through uncertain fiscal times. When it comes down to it, there are not that many ways to close a budget deficit: the city can cut costs, borrow money, get state or federal aid or raise taxes. Mr. Bloomberg's proposal relies most heavily on the first two options: it calls for $1.86 billion in cuts and additional revenues to city agencies, and for borrowing $1.5 billion through a bond sale. Mr. Bloomberg reiterated his belief that raising taxes would hurt the city in the long run by scaring away businesses and residents. But his budget does call for raising a number of fees, including the towing fee, to $175 from $150, and the fine for failing to separate recyclable paper from the trash, to $50 from $25. And it calls for raising the cigarette tax to $1.50 a pack from 8 cents. A pack of cigarettes now costs about $5, with the tax. That would generate $250 million in new revenue and, he said, discourage smoking. "The numbers are clear: you raise cigarette taxes, the kids smoke less," Mr. Bloomberg said. His budget also relies heavily on $800 million in revenues that the city can achieve only if the state and federal governments take action. It also calls for scaling back capital construction projects, like building new schools, by 20 percent Agencies that have long been shielded from budget cuts were hit this year. Mr. Bloomberg's proposal calls for the first planned reduction in the size of the Police Department in more than a decade. The force is currently budgeted for 40,710 uniformed positions, but there are fewer than 39,000 officers working because of a wave of retirements and difficulty in recruiting new officers. Mr. Bloomberg's plan would make the official number of budgeted positions 39,110. The budget proposal would actually add 73 firefighter positions to the Fire Department. But it would cut the Fire Department's budget by $60 million over all. To offset the loss of some of the police positions, Mr. Bloomberg's budget calls for hiring 800 civilians to take desk jobs held by police officers, freeing up the officers for patrol duties. But the proposed reduction in the size of the force drew some criticism. Patrick J. Lynch, the president of the Patrolmen's Benevolent Association, the union representing police officers, said he thought it was a "huge danger" to talk about reducing the force. Police Commissioner Raymond W. Kelly said that he was confident the department could continue to protect the public and cut crime, but that the planned reduction of 1,600 positions was significant. "When you reduce 1,600 officers, that's not symbolic," he said. "That is a significant cut." Mr. Bloomberg said he would authorize Mr. Kelly to hire more officers if crime started to rise. "We are committed to keeping this city safe," he said. "And I will authorize the commissioner to do whatever it takes if crime starts going up." Although the city will spend more money next year, it will provide fewer services. Mr. Bloomberg's proposed budget is $41.4 billion, up from this year's $41.3 billion budget. Mr. Bloomberg said that the extra money would pay debt service and pension costs. The $354 million proposed cut to the schools represents a roughly 7 percent reduction in the amount of city aid to the Board of Education, which gets most of its money from the state. Schools Chancellor Harold O. Levy said that his goal would be to "absorb as much of the pain as possible" in school administration and not in the classroom. Now the City Council will take up the budget, holding a series of hearings on it. "We are committed to going over this budget line by line to ensure that we maintain important services," Council Speaker Gifford Miller said. Several council members said they were concerned by the cuts in services for the elderly, social services and the libraries. Mr. Bloomberg said he would consider restoring money if he was presented with alternate cuts. Several council officials said they were hopeful that they could negotiate a budget agreement with the mayor, but some held open the possibility that they would try to pass their own budget. Some council members said that they were particularly dismayed by the mayor's proposal to suspend recycling of cans and bottles. The plan, which would save $56.6 million next year, requires their approval. Mr. Bloomberg said that he wanted to suspend the program because it does not work: it is expensive, and 40 percent of the cans and bottles collected are never recycled. So he called for eliminating the program next year and devising a new one that he would like to see paid with the 5-cent deposits currently collected on cans and bottles. Environmentalists called the plan a step backward. John J. Doherty, the sanitation commissioner, acknowledged that there was some danger that people would get out of the habit of separating their cans and bottles from the trash, a practice that has been built up with costly advertising campaigns. But he said they could get back into the habit. Over all, Mr. Bloomberg said, his challenge was to cut agencies without drastically affecting services, and to tell New Yorkers about the city's problems without scaring them. "So on one hand, I want to paint you a realistic picture of how severe our financial problems are," he said. "On the other hand, I don't want you to walk away thinking that there is no hope."
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ayor
Michael R. Bloomberg yesterday proposed closing the city's $4.76
billion deficit by cutting almost all city agencies, including
the Police and Fire Departments and the schools, and by suspending
the city's program to recycle cans and bottles. In the first budget
plan of his mayoralty, he also proposed raising the cigarette tax
by $1.42 a pack and borrowing $1.5 billion to close the gap.
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