April 27, 2007

Bloomberg’s Budget Includes Tax Cuts and a Record Surplus

By RAY RIVERA

Mayor Michael R. Bloomberg proposed a $59 billion budget yesterday that maintains tax cuts he promised earlier this year and includes a record-setting $4.4 billion surplus carried over from this year that he says will be used to help cover revenue shortfalls expected in 2009 and 2010.

The surplus, the city’s fourth straight one, was fueled by tax revenues that were $1.3 billion higher than the mayor’s office projected in January, a reflection of a robust real estate market that continues to defy national trends and a spike in Wall Street profits in the last quarter of 2006.

But as the mayor warned that the city’s good fortunes would not last, grumbling could already be heard among some City Council members and union leaders who said that he should dip into that surplus to finance other initiatives and increase pay for police officers.

Requests the City Council had made for inclusion in the budget that Mayor Bloomberg omitted included a $300 tax credit for renters and a proposal that would have increased spending to have all public libraries return to being open at least six days a week, a service that was lost in cuts after 9/11.

But the mayor did propose plenty of new spending measures, including $199 million for his 25-year PlaNYC blueprint to make the city more environmentally friendly, $28 million for 9/11 health programs and $1.4 million to hire 32 more fire marshals to investigate arson cases.

In a news conference yesterday, the mayor said he remained open to other proposals for the budget, which outlines spending for the 2008 fiscal year that begins this July 1. But signaling that the Council should lower its expectations, he pointed to projected budget shortfalls totaling $9.3 billion dollars in fiscal years 2009 through 2011.

The mayor was also mindful of his first two years in office, when, faced with the city’s worst fiscal crisis since the 1970s, he was forced to raise taxes and slash spending.

“The surest ways to reverse all the progress we’ve made over the last five years is to fall victim to complacency and political expediency,” he said. “We’re not going to take that path. Instead, we’re going to stick to the formula which fueled New York City’s remarkable recovery and created our current prosperity.”

That caution and the mayor’s emphasis on long-range debt reduction was praised by fiscal watchdog groups.

“It’s really extraordinary how well the city is doing economically and continues to do,” said Elisabeth Lynam, deputy research director for the business-financed Citizens Budget Commission. “And that has importantly shifted the emphasis from the short-run budget cycle to the long-run planning horizon.”

The city’s comptroller, William C. Thompson Jr., a potential 2009 mayoral candidate and a frequent critic of the mayor’s on education issues, also praised the budget plan.

“In times of prosperity, we must take steps so that we do not have to return to New Yorkers to ask them to dip into their pockets when times are bad,” Mr. Thompson said in a statement. “The budget is fiscal integrity at its best, and displays a continuous commitment toward achieving fiscal stability.”

But the absence of some of those Council priorities in Mr. Bloomberg’s budget will probably make this year’s budget negotiations more contentious than expected, despite the close working relationship that the mayor and Council Speaker Christine C. Quinn have developed over the last two years.

The mayor and Council have until June 30 to agree on a final budget.

Mr. Bloomberg’s plan did include some Council proposals, like adding $13 million to the baseline budget for the district attorney’s offices and another $5 million for the prosecution of child abuse cases.

It also increases spending to buy land in the Catskill-Delaware watershed, which provides 90 percent of the city’s drinking water, to $320 million over 10 years, from the $52 million he proposed in January.

In addition, Mr. Bloomberg financed Ms. Quinn’s proposal to create 10 new health clinics for underserved communities.

“Mayor Bloomberg has prudently offered both tax breaks and new programs while keeping spending in check and saving for the future,” Ms. Quinn said in a statement. “We look forward to reviewing this budget in further detail and to productive discussions with the Bloomberg administration over the coming weeks to achieve a fiscally responsible budget that serves New Yorkers and protects core city services.”

Among new spending in the mayor’s plan is $50 million to start a new financing authority, which will require Albany’s approval, to support major infrastructure projects. It also includes $25 million to start a fund to reclaim unused contaminated land in the city; $81 million to make city-owned buildings more energy efficient; and $8.2 million to construct a bicycle path network.

All four initiatives were outlined in his PlaNYC proposal, which is intended to make New York more environmentally friendly and reduce greenhouse gas emissions as the city adds an estimated 1 million new residents by the year 2030.

Other highlights include $3.3 million for bullet-resistant vests to auxiliary police officers; two auxiliary officers were fatally shot last month. The spending plan also includes $5.4 million to increase ferry security.

The budget maintains $1 billion in tax cuts the mayor promised in January, including $750 million in one-time property tax relief.

Mr. Bloomberg’s capital plan includes more than $83 billion in infrastructure projects and improvements, including $42 million for new soccer fields, $387 million for eight regional parks and $28.2 billion for school construction.

The plan also includes $1 billion to build a new police academy, as previously announced.

Since the mayor’s initial budget proposal in January, the city lost some $308 million in expected state aid and also called for all its agencies to cut back on spending. The agency cuts created $700 million in savings.

City Councilman David I. Weprin, chairman of the Council’s Finance Committee, said that in light of the whopping budget surplus, those cuts needed to be looked at more closely.

“In the days ahead, we are going to review the mayor’s executive budget and make sure that none of these cuts affects essential city services,” Mr. Weprin said.

The Patrolmen’s Benevolent Association, which has been locked in labor negotiations for months, urged the mayor to use the surplus to make police salaries more competitive.

“There is no better time to adjust our police salary to market rate than now,” the union’s president, Patrick J. Lynch said, adding that one reason the city was so prosperous now is because of crime reduction.

The mayor responded that the city had offered substantial raises to the union, which rejected them.

Despite some Council priorities that were left out of the budget, the mayor said he expected the budget to be completed on time.

“The City Council has a good staff and Christine Quinn is a tough negotiator, but she’s willing to sit down at the table and look me in the eye and negotiate,” Mr. Bloomberg said. “ I don’t see why we won’t come up with a budget that will let everybody have something, but nobody’s going to get everything they want, us or them.”