Crains New York - March 11, 2013 - (Page 8)

OPINION The city’s budget theatrics I t’s nearly time for the annual budget dance at City Hall, when the mayor’s office and City Council haggle theatrically over closing firehouses and slashing day care—a political exercise in which council members puff and pontificate, the speaker saves the hapless citizens, and the Bloomberg administration shifts the focus from larger fiscal concerns. New Yorkers shouldn’t be distracted by the show. No firehouses will be shuttered as Speaker Christine Quinn seeks voters’ support and fire unions’ endorsements in her bid for mayor. Politics demand that redundant firehouses be kept around for at least another year. But attention must be paid to other, more pressing fiscal concerns. Every municipal union contract has expired, creating a budget bomb that could cost taxpayers $4 billion to $10 billion, depending on how far back any retroactive raises stretch. A $1.6 billion taxi-medallion sale has been stalled by litigation. The trust fund that held several billion dollars for future retirees’ health care expenses has been exhausted to patch deficits, yet the liability remains. Moreover, the city is getting less help than it used to. The congressional sequester this year alone will eliminate $800 million in federal funding here and kill perhaps 20,000 jobs across the five boroughs, depressing revenues further. Another $260 million in state school aid was lost when Mayor Michael Bloomberg and the United Federation of Teachers failed to produce a deal on performance evaluations. The $300 million in state revenue sharing that CRAIN’S ONLINE POLL the city used to get annually from Albany has vanished, just like the $500 million commuter tax before it. Yes, the city’s budget is a whopping $70 billion. But lose a few hundred million here, a few hundred million there, and pretty soon we’re talking about real money. Unfortunately, complacency seems to have set in. What are the solutions? Property-tax reform could more fairly assess some buildings, but that’s a heavy political lift that no mayoral candidate has embraced. One contender, Bill de Blasio, has called for higher income taxes on the wealthy, but only Albany can grant that—and in any event, Mr. de Blasio wants to spend that money on pre-kindergarten, not close budget gaps. At last week’s Crain’s GOP debate, candidate John Catsimatidis suggested taxing tourists, but the city has already raised and extended its hotel tax. The idea of casinos is bouncing around, but Gov. Andrew Cuomo doesn’t want any in the city for the foreseeable future. The mayor and the City Council must pass a responsible budget in June that doesn’t leave a mess next year for taxpayers. They should spend the rest of the year looking for savings in every corner and crevice of city government. Complacency over spending seems to have set in COMMENTS Do the inequality math bloomberg news SAME NUMBERS, DIFFERENT VIEWS SHOULD CONGESTION PRICING BE TRIED AGAIN? Yes. It would distribute traffic better, limit fare hikes and reduce some tolls. No. Free driving routes to Manhattan must be maintained. Date of poll: March 4 235 votes 55% Yes 45% No FOR THIS WEEK’S QUESTIONS: Go to www.crainsnewyork.com/poll to have your say. 8 | Crain’s New York Business | March 11, 2013 Greg David’s March 4 column (“Inequality debate doesn’t reflect reality”) could have been titled “Economists agree NYC’s inequality is very high and poverty is up; some think it’s a problem.” Fiscal Policy Institute reports have documented this reality: The local economy has fared better than the nation overall in the recovery, yet inflation-adjusted median incomes here have plummeted by 8%, more than for the U.S. overall, and poverty has increased as much here as for the nation overall. Also, income polarization has soared over the past 30 years even more in the city than for the nation overall. Nothing in the New York City Economic Development Corp. (EDC) report that Mr. David cites suggests otherwise. Using 2009 income-tax data, the city’s Independent Budget Office reported that the city’s richest 1% of tax filers had 33.8% of all income, more than the combined incomes of the 80% of tax filers with incomes under $68,000. This suggests a high degree of income polarization. State tax data point to further income concentration since 2009. Using a poverty measure that accounts for the city’s high housing costs and public assistance, the Mayor’s Center for Economic Opportunity (CEO) estimates that 23% of city families with children lived in poverty in 2010, up from 20.2% in 2008. For families near its poverty threshold, earnings dropped by 11% to 15%. According to the American Community Survey—the data source used by EDC—rental housing costs are 26% higher in New York than the average of the next four largest cities in EDC’s study. Mr. David maintains that poverty is lower in New York than in the other large cities. That picture would change if a CEO poverty measure were used that factored in relative housing costs. —james a. parrott Deputy director and chief economist Fiscal Policy Institute PRICED TO MOVE “Congestion pricing” may be a dumb name for it, but the concept is solid. There’s limited space in the city. Giving free access to so many bridges during rush hour encourages more people to drive in than our streets can hold. If you make people pay a nominal fee, they will drive in only when they need to, and there need no longer be ridiculous inequity among bridge toll prices. Bring the Verrazano toll down, add one to each of the East River crossings, and things will move much, much, much more efficiently. —dave abraham Floral Park, N.Y. CRAIN’S WELCOMES SUBMISSIONS to its opinion pages. Send letters to letters@crainsnewyork.com. Send columns of 475 words or fewer to opinion@crainsnewyork.com. Please include the writer’s name, company, address and telephone number. CRAIN’S NEW YORK BUSINESS editor in chief Rance Crain publisher, vp Jill R. Kaplan EDITORIAL editor Glenn Coleman managing editor Jeremy Smerd deputy managing editors Valerie Block, Erik Ipsen assistant managing editor Erik Engquist senior producer, news Elisabeth Butler Cordova news producer Amanda Fung contributing editor Elaine Pofeldt columnists Greg David, Alair Townsend crain’s health pulse editor Barbara Benson senior reporters Theresa Agovino, Aaron Elstein, Lisa Fickenscher, Matthew Flamm reporters Chris Bragg, Matt Chaban, Daniel Geiger, Andrew J. 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All rights reserved. ®CityBusiness is a registered trademark of MCP Inc., used under license agreement. CRAIN COMMUNICATIONS INC. BOARD OF DIRECTORS chairman Keith E. Crain president Rance Crain treasurer Mary Kay Crain Cindi Crain executive vp, operations William Morrow senior vp, group publisher Gloria Scoby vp/production, manufacturing David Kamis chief information officer Paul Dalpiaz founder G.D. Crain Jr. (1885-1973) chairman Mrs. G.D. Crain Jr. (1911-1996) secretary Merrilee Crain (1942-2012) http://www.crainsnewyork.com/subscribe http://www.crainsnewyork.com/advertise http://www.crainsnewyork.com/events http://www.crainsnewyork.com/poll

Table of Contents for the Digital Edition of Crains New York - March 11, 2013

IN THE BOROUGHS
IN THE MARKETS
THE INSIDER
BUSINESS PEOPLE
CORPORATE LADDER
OPINION
GREG DAVID
REAL ESTATE DEALS
REPORT: SMALL BUSINESS
STARTUP GUIDE
CLASSIFIEDS
NEW YORK, NEW YORK
OUT AND ABOUT
SNAPS

Crains New York - March 11, 2013