MAYOR Bloomberg’s budget presentation today will be sobering. He’ll say the city is desperately short of cash and will likely outline “bold” steps to keep City Hall solvent. But the one measure he likely won’t mention is probably the wisest: slashing taxes across the board.
In far-left New York, that suggestion’s usually a non-starter. But it could be just the economic and fiscal medicine the city needs right now – and for the long term.
Sure, City Hall’s kitty is shrinking, thanks to the paralyzed economy that feeds it. Even with Washington’s bailout billions, Hizzoner’s coming up shy, given his massive $60 billion-plus To-Spend list. The Independent Budget Office says the city is short some $4.3 billion through next year, and $7 billion the year after.
And yes, conventional wisdom says tax cuts would deprive Mayor Mike & Co. of even more funds, making the hole deeper.
But let’s think this through. Supposedly, Mike has but three options:
* Raise taxes – again.
* Borrow – again.
* Trim his sails and cut costs.
The first two spell disaster. State and local levies here already top the nation. If taxes spike further, many firms that are just squeezing by won’t be able to afford to do business here. That’s not good news for a city battling a recession.
Tax hikes, moreover, would likely remain forever. Remember Mike’s “temporary” 18.5 percent property-tax bump in 2002? It’s still here – and likely will be ’til the end of time. As will any new taxes imposed, no doubt.
Yet a permanently higher tax profile could wreck the city’s economic attractiveness – permanently.
Borrowing to pay for daily expenses, meanwhile, is the kind of trick that triggered near-bankruptcy in the ’70s. Bloomberg resorted to it during the post-9/11 fiscal squeeze. He’d be pushing his luck if he tried again now.
His third option, trimming costs, is a step in the right direction – but no game-changer. That’s because Bloomberg is philosophically opposed to any serious downsizing of government.
The mayor often talks of cutting fat, but never meat. (This time, he might have to scrape some sinew; Schools Chancellor Joel Klein hinted Wednesday of axing 15,000 education jobs.)
Bloomberg also vows – in full-throated demagogic tones – never to repeat the mistakes of the ’70s, when the city rolled back services in response to the fiscal crisis.
Yet only a wholesale budget-wide restructuring can pave the way for the shrewdest move, the one never mentioned: big-time, across-the-board tax cuts.
The huge pluses of such a step are obvious: Deep cuts lure businesses by signaling that the city no longer views them and their workers as cash cows. And the extra money New Yorkers keep could help them weather the economic storm.
Nor would we need to hit “vital” services – like policing, fire-fighting and garbage collection, which make up government’s core mission. Cuts in those areas would indeed degrade quality of life and hurt the city as much as tax hikes.
But there’s plenty else to chop: lavish health-care subsidies and other entitlements, runaway school funding – and, of course, compensation packages for municipal employees, including fringe benefits and base salaries.
Facing “the worst economy since the Great Depression,” folks would accept – more than at other times – the need for a big budget shake-up.
In his State of the City Address this month, Mayor Mike himself spoke of ending “unnecessary tax burdens that can stifle the creation of new jobs.” He promised to “work to end or reduce” the unincorporated-business tax for 17,000 small firms. He may well expand on that today.
But Bloomberg has also hinted that his tax reforms would be “revenue-neutral” – meaning, perhaps, an equal-sized tax hike for every cut. Plus, he said his ideas include “targeted tax relief,” which is often code for more new spending.
Meanwhile, there’s no sign that he’ll call for truly meaningful tax cuts or the fundamental spending rollbacks they’d require.
Whatever Mike’s choices, they’ll have enormous consequences – for him and the city.
Does Bloomberg want to be remembered as the mayor who wrecked New York’s commercial supremacy by making heaviest-in-the-nation tax burdens heavier?
Or would the man touted for his financial acumen rather be known for, once and for all, reining in Gotham’s monstrous outlays, lowering taxes, bringing back business – and securing the city’s future?
In the short term, all that may be at stake is his re-election; in the long term, it’s his legacy.
And, of course, the fate of the city. abrodsky@nypost.com