Public Employee Press

Mayor paints positive budget outlook

By GREGORY N. HEIRES

Mayor Michael R. Bloomberg’s nearly $50 billion proposed fiscal plan for next year provides for budget restorations and a modest expansion of city services thanks to a record surplus. This year, the city enjoyed a $3.3 billion surplus because of a big jump in revenues, due primarily to a booming real estate market.

“We have a reason to have a grin on our face,” Bloomberg said when he presented the proposed fiscal year 2006 budget on May 5. Because of the rosy economic picture, the city “can afford a little more relaxation,” he said.

DC 37 Executive Director Lillian Roberts said she was pleased that the plan didn’t include the draconian cutbacks and downsizing that so often characterized the city’s budgets since the 1990s.

She described the inclusion of a labor reserve in the budget for the first time since 1990 as a particularly important development. The new labor reserve anticipates an annual wage increase of 1.25 percent.

Given the positive budget picture, the city won’t be able to credibly plead poverty when talks get underway for a new economic agreement, Roberts said. The union’s current economic agreement
expires June 30.

This year’s large surplus would also appear to remove any fiscal roadblocks in the ongoing negotiations between the city and union for the possible extra 1 percent under the current economic agreement, Roberts said.

Another positive development is that Bloomberg backed off a previous plan to seek $325 million in health and pension savings to help close a gap in the fiscal year budget. Those savings were contained in the mayor’s four-year plan released in January. Apparently, the city was able to scale back anticipated cutbacks as it took in $1.3 billion in extra revenue over the last three months alone.

Despite the overall positive outlook, the union is concerned about certain reductions in the budget. Bloomberg’s plan only provides for a restoration of half of the 6 percent reduction — about $7 million — in the spending for cultural institutions and libraries that the mayor included in his preliminary budget.

Other highlights of the fiscal year 2006 plan include:

• an $800 million increase in the education budget to decrease class size, expand funding for advanced placement courses and provide extra help for under-performing students;
• a total of $500 million in tax cuts, including a cut in the sales tax on clothing and shoe purchases under $110 to 4 percent from 8, and a continuance of the $400 rebate for home, co-op and condo owners;
• resurfacing 8,000 city streets, and
• renovations in public hospitals, parks and museums.

Budget and political analysts described Bloomberg’s plan as an election-year budget that reflected the city’s economic turnaround following the economic downturn that followed the terrorist attacks of Sept. 11, 2001. The Gotham Gazette Web site noted that city revenue from Wall Street profits, which make up a third of the city’s budget, doubled from 2002 to 2005.

While the plan relies on the surplus to close a previously projected gap next year, it projects budget shortfalls of $4.5 billion in fiscal year 2007, $4.2 billion in fiscal year 2008 and $3.7 billion in fiscal year 2009.

Bloomberg’s budget does not include any increases based on the Campaign for Fiscal Equity legal case on school financing since Gov. George E. Pataki is appealing last year’s court decision, which would require educational spending to be boosted by $5.6 billion a year. The budget limits growth in Medicaid costs to 3 percent a year because of recent adopted changes in state funding that are expected to save $1 billion by fiscal year 2009.