Public Employee Press

City owed millions as layoffs loom
Why won't billionaire Bloomberg collect business taxes?

By GREGORY N. HEIRES

In late May, Mayor Michael R. Bloomberg was ready to wipe out nearly 10,000 city jobs even though recovering uncollected revenue and reducing spending on contracting out could save the positions.

Union leaders and policy experts gathered April 28 at DC 37 for a hearing where they discussed how the city could plug its budget gap by tapping readily available revenue.

At a hearing in February, the union explored the waste and corruption in the city's $10.5 billion annual spending on contracting out. Both hearings reached the same conclusion: Bad public policy - not a lack of funds - is at the root of the city's budget problems.

Mayor Bloomberg's willingness to gut public services and throw thousands of municipal workers into the street reflects the conservative ethos in the country.

"We are working in an atmosphere that assumes that millions should go to tax breaks, services should be contracted out, workers should be laid off and taxes and fees should not be collected by government," DC 37 Associate Director Oliver Gray said at the hearing, which Political Action Director Wanda Williams facilitated.

Huge potential revenue

Executive Director Lillian Roberts said one of the ways the union will fight layoffs and service cuts involves documenting how the city is unnecessarily giving away hundreds of millions of dollars in potential revenue. In addition to opposing the budget cuts at City Council meetings, the union is mobilizing for a massive demonstration on June 14.

At the revenue hearing, DC 37 Associate Director Henry Garrido noted that under the Bloomberg administration, the value of tax-exempt properties rose from $17.5 billion in 2001 to $40 billion today, while the Finance Dept. cut its Assessor staff from 170 to 110 and reduced the ranks of Tax Auditors by 250.

Overhauling the assessment system and hiring 100 new Assessors could generate $100 million in additional revenue, according to Fran Schloss, president of Assessors, Appraisers and Housing Development Specialists Local 1757.

"The reduction in Tax Auditors has created huge backlogs, cutting audits and forcing Finance to neglect good cases that could produce revenues over $2 billion each year in personal, property, sales and corporate taxes," said DC 37 Treasurer Maf Misbah Uddin, who is president of Accountants, Actuaries and Statisticians Local 1407.

Tax breaks for business

New tax breaks under the commercial property tax abatement program cost the city $512 million in 2008, up from $170 million in 1999, according to the Independent Budget Office. Union research suggests that the cost could actually be as high as $750 million, Garrido said.

The city and the Metropolitan Transportation Authority fail to collect taxes for thousands of cell phone towers and billboards, costing the city an estimated $49 million, according to Garrido. About 7,000 cell phone towers are registered with the Buildings Dept., but half of them aren't on the tax rolls.

The city loses another $173 million because businesses and wealthy individuals have purchased tax-exempt properties and failed to notify the Dept. of Finance about the change in ownership. (The audience gasped - and laughed in disbelief - when Garrido noted that new owners are honor-bound to inform the city about purchases that end their tax
exemptions.)

The city could also save $316 million by establishing a voluntary vendor rate reduction program like those Chicago and Los Angeles have used to encourage contractors to reduce their fees. All told, the union's proposals to improve revenues and cut spending could add over $500 million to the city's balance sheet, enough to prevent the mayor's proposed layoffs for fiscal year 2012.

Starving government

James Parrott, chief economist of the Fiscal Policy Institute, blamed the city for putting itself in a financial straightjacket through tax giveaways. Over the past 10 years, he said, tax breaks have increased by 182 percent, from less than $1 billion to $2.6 billion.

Jobs with Justice Executive Director Matt Ryan pointed out that while the state provides $8 billion in corporate tax breaks to foster economic development, "There is very little correlation between tax breaks and job creation." He said living wage laws that require employers receiving government support to provide decent wages and benefits would provide more revenue and economic stimulus.

The issues raised at the union's revenue forum showed that the budget debate is essentially about a philosophy of government and the type of society we wish to live in - not just dollars and cents. Panelists underscored that point as they questioned Bloomberg's austerity budget and spoke in favor of policies to strengthen the public sector. "We need to redefine the debate," Garrido said. "This is not a budget crisis. This is a jobs crisis."

"We don't want to see any layoffs in this budget," said Domenic M. Recchia Jr., who chairs the City Council Finance Committee.

Referring to a recent Daily News article by Deputy Mayor Stephen Goldsmith acknowledging that in-sourcing could create savings, Recchia said, "The city has finally seen the light on this issue."

Public Advocate Bill de Blasio called for tying tax subsidies to job creation and said he backs in-sourcing and collecting outstanding revenue.

"Right now we are at war," said State Sen. Kevin Parker of Brooklyn. "We are fighting people who think working people should just be working for them and that people should not even have a sustainable living. They cut the funding and then say we are spending too much. And they blame the people who have been producing for the economy."

"We don't have a spending problem," said Jumaane Williams, a member of the Progressive Caucus of the City Council. "We have a revenue problem. You can't continue to give tax breaks to people and say there is a spending problem."