[This op-ed was originally published in the New York Daily News.]
Mayor Bloomberg claims that times are so tough, there isn’t enough money in the city budget to give city workers, including teachers, the retroactive pay raise they are owed.
The truth is that — thanks in part to a strong local economy — the city has generated huge budget surpluses every year. And those surpluses would have been even larger if the mayor hadn’t blown billions on doomed pet projects and unnecessary tax breaks for developers and business.
The annual predictions of fiscal doom are getting ridiculous. In fiscal year 2007, Bloomberg first projected a budget deficit of nearly $4 billion. But when the city controller closed the books after the year ended, the deficit had turned into a $4.7 billion surplus.
That pattern has continued right through this year. In fact, since fiscal year 2005, the city has had annual budget surpluses ranging from $2 billion to well over $4 billion.
Why? The record shows that the city consistently overestimates its costs and underestimates its revenues.
At the end of fiscal 2011, the city had nearly $1.5 billion more than it had projected in tax collections and more than $400 million more in non tax revenues. At the same time, many expenses had come in well below what the city was expecting — in the case of workers’ pension and health costs, $831 million less. In 2012, unanticipated revenues totaled $364 million, while pension and health costs were $549 million under projections.
Meantime, the city has exaggerated its borrowing costs for capital projects like water system improvements, parks and highways. Debt service costs have come in well below expectations — an average of more than $250 million every year — since 2007.
Although the nationwide economic downturn was the worst since the Great Depression, New York City lost a significantly smaller percentage of jobs than the country did. And while the nation’s job total is still down 2% since the recession began in January 2008, the city’s payroll employment is now ahead of its prerecession level.
Wall Street profits in 2012 were nearly $24 billion; job growth was strong in computer systems, management consulting and other fields, and the mayor’s office boasted that tourist spending for the year passed $55 billion, setting a record.
But rather than spending these resources prudently, this administration has thrown good money after bad — on both the spending and tax sides of the ledger.
Remember CityTime, the system that was supposed to eliminate waste and fraud in the city payroll system? It started out with a projected cost of $68 million, ballooned to a $750 million project that still requires outside contractors to finish the job and embroiled the city in a scheme that resulted in criminal charges for more than a dozen individuals.
When the Bloomberg administration took office, business tax breaks were valued at about $1 billion, according to the Fiscal Policy Institute. Now they are worth almost $3 billion a year.
Look at the $200 million annual “carried interest” break that goes to hedge funds, or the property tax break for Madison Square Garden, or hundreds of millions in property tax benefits granted through the city’s Industrial and Commercial Abatement and 421-a programs.
An $88 million penthouse at 15 Central Park West is taxed as if it were worth only $3 million, thanks to an outmoded assessment process that grotesquely undervalues luxury buildings. The latest giveaway was highlighted by the Daily News, which found that the city budget will take a multi million-dollar hit because a special exemption has been carved out for five super luxury developments in Manhattan.
The mayor keeps saying that teachers and other city workers have been getting raises even without new contracts. But while recent city contracts with outside vendors have included automatic raises to match inflation, city step and longevity increases apply only to some city workers at some points in their careers. A study by Controller John Liu found that city workers overall make less money than their counterparts in the private sector.
The mayor may claim that teachers in particular have done well during his tenure — but New York City teacher salaries are still well below those of teachers in surrounding districts, even below struggling districts like Yonkers and Hempstead.
Bottom line: Despite unneeded tax breaks and disastrous outsourcing mistakes, New York’s underlying economic strength and rolling budget surpluses show that the city can afford to make a fair agreement with the people who keep it going. But City Hall has to have the willingness to do so.