Mayor Mike unveiled his second-to-last budget yesterday, musing over how many of “these things we’ve done together.” But his budget was as much about the future — and things aren’t looking bright for the next mayor.
For the next fiscal year, starting in July, New York will spend $50.8 billion in city funds (much more if you count federal and state money). A decade ago, city spending was $28.8 billion. It’s up 76 percent in 11 years, 2 1/2 times the inflation rate — and on track to have doubled during the 12 years of Bloomberg’s watch.
The culprits are the usual suspects: public-worker health care and pensions, which will cost $16.6 billion next year, debt, at $6.1 billion, and education, at $13.6 billion. That’s $7.5 billion more than New York spent on everything 11 years ago.
It would be one thing if taxpayers could afford it, but they can’t. As the mayor said yesterday, the city has been spending more than it takes in — 3.6 percent a year more — for half a decade. What’s kept it in the black, sort of, is the “remainder of the surplus” $8 billion — “from the last economic boom.”
Now that surplus is gone. After the mayor uses the last $1.7 billion to plug this year’s budget hole, there’s only $100 million left. But deficits aren’t gone. There’s a $3 billion hole next year and $3.7 billion after that.
Sure, Bloomberg has held the line on spending for the services that people see, by doing things like cutting cops. He deserves credit, but the city can’t cut actual services forever.
Taxpayers won’t see relief soon from the latest statewide pension reforms; the fixes apply only to new workers. Nor can we look to Wall Street; profits have shrunk from $27.6 billion in 2010 to $7.7 billion last year. “It doesn’t look to us like they’re going to bail us out,” Bloomberg said.
New York must come to terms with its permanent deficit and soon. If not, the good things that the mayor has done — like invest in two new subway lines — will be at risk. Why does Bloomberg delay this day of reckoning?
Yesterday, he criticized Washington for “kicking the can down the road.” But he’s can-kicking, too.
Consider: New York initially faced a $4.6 billion budget gap this year. Because Wall Street’s still slumping and costs are rising, that gap had widened to $5.1 billion by yesterday.
To fill that gap, the mayor is relying on one-shots. He’ll take $466 million that New York is getting from the corporate fraudsters who hatched the CityTime overbilling and kickback scheme — and another $1 billion from selling more taxi medallions.
Plus, he’s taking $1 billion from a “trust fund” that’s supposed to pay future retiree health benefits.
Altogether, when you include the old boom-era surplus, that’s nearly $3.8 billion. Unless the city plans to be defrauded often and to sell a lot more taxi badges than it’s telling us, it won’t see money like this again.
The prudent course would be to put this money toward capital spending, including better roads for the taxis. That way, New York wouldn’t have to take on so much debt for its investments. Instead, debt costs are going up 22 percent in three years because, the mayor said, of “more debt.”
The mayor is creating an opening for his would-be successor. If, say, Manhattan beep Scott Stringer or City Council chief Christine Quinn wanted to stake out a moderate position, he or she could point out now that Bloomberg is setting up his successor for a fall after next fall.
The candidates should point out that the city shouldn’t be spending down its health-care fund. It should be paying a good $4 billion a year into the trust for future retirees.
A responsible candidate also would say that the mayor was right yesterday about one thing: The city can’t afford to pay any retroactive pay hikes — ever — to union workers whose contracts expired long ago.
Instead, the would-be mayors spent yesterday carping around the edges, complaining about cuts to day care, after-school programs and firehouses.
As the mayor said in February, unless Gotham gets its bigger problems under control, we’ll see a lot more of those cuts in the future.
Nicole Gelinas is contributing editor to the Manhattan Institute’s
City Journal.
Twitter: @nicolegelinas