Thursday, September 23, 2010

Till NYC Freezes Over

Greg David has an interesting take on the latest hiring freeze imposed by the austere Mayor Mike:

Earlier this week, Mayor Michael Bloomberg imposed a hiring freeze and warned that the city's budget deficit means he will be forced to reduce the work force. The unions rushed to denounce the move, arguing their members were already overstretched and that vital city services would suffer. The media, with the exception of Crain's, took their cue from the unions and portrayed it as a choice between higher taxes and service cuts.

Of course, the city must erase $3.3 billion gap in the budget for the fiscal year beginning July 1. But the administration's move is less about next year than about the long-term burden the city faces from soaring costs for pensions and retiree health care. The real issue that the media needs to focus on is that this is a struggle between the Bloomberg administration and the unions over the cost of city workers."

And the cost of public pensions is moving front and center-as it is all over the country: "In the Crain's story, based on a breakfast Tuesday sponsored by the Citizens Budget Commission, Deputy Mayor Steven Goldsmith noted that $7 billion of next year's budget will go pension costs and another $7 billion will pay for retiree health costs. That's 20% of the entire budget. Those figures are projected to soar in future years. The Legislature approved a less costly pension plan for state workers last year, but it wouldn't institute a similar one for the city because of union opposition."
This is a recipe for insolvency, and the picture being painted is one of a stalwart Mike Bloomberg (the ant of the fable), facing off against the profligate public employee unions (the designated grasshopper). Of course, this narrative is misleading since it was none other than Mayor Mike who kept adding government workers and ignoring pension reform for most of these past eight years.
Nicole Gelinas has been belling this hypocritical cat-as we pointed out earlier this year: "Sure, the mayor has been able to balance the books through three years' worth of fiscal crises. But beneath the balancing tricks lurk scary, permanent gaps: Like Greece, we permanently spend more than we take in. And the gap looks to grow wider. In fiscal year 2009 (which started in July 2008), New York spent 6.1 percent more than it took in via tax collections and other recurring local revenues -- a $2.5 billion gap. In 2010, the city spent 5.2 percent more -- $2.2 billion. For the new year, 2011 -- which starts this July -- the city will spend 7.6 percent more than it takes in, or $3.3 billion. By 2014, we'll cross an important line, with an 11.3 percent gap. Like Greece did, we're approaching scary double digits."

And here's why: "Plus, the city-funded workforce has grown by more than 12,000 people in the last three years - so even the 4,556 job cuts that Bloomberg projects won't bring us back to 2005." Yet Bloomberg still gets high marks for fiscal probity from the chattering classes her-a shining example of epistemic closure.

The Times Union's Capitol Confidential lays out the bleak picture: "So much for the myth about underpaid New York City teachers and administrators.They make up a third of the retirees in the Empire Center’s SeeThroughNY database of New York City retirees but comprise 99 percent of those whose retirements are above $100,000 annually." And it was, of course, right at the DOE where Scrooge McMayor went on his spending binge.

 Which brings us to the Bloomberg endorsement of AG Cuomo-and note the emphasis on fiscal discipline. Daily Politics has the story: "We've got complex challenges ahead. I think everybody knows that. Reforming Medicaid, which is bankrupting us. Making state education funding fair and effective. Rightsizing government. And most urgently, putting the state's finances back on solid ground. If we don't do that, all of the programs that we have come to enjoy, whether it is keeping our streets safe, educating our kids, helping those less fortunate, all of those programs will suffer if we don't get this state's fiscal situation on solid ground..."
Rightsizing government? Is this a do what I say, not what I do moment? And no mention at all about public pensions. An oversight perhaps? But we did get a kick out of the Paladino campaign response-one that dramatizes why Crazy Carl is such a genuine threat:
"Michael Bloomberg's endorsement of Andrew Cu0mo is a dog bites man story. Of course two of the biggest backers of the Ground Zero Mosque are joining hands against Carl, a staunch opponent of this insult to the American people. We knew it would chafe the Mayor-for-Life when Carl Paladino announced eight-year term limits as a vital plank in his anti-corruption agenda.

"His Royal Highness opposes the will of the people on the Mosque and subverted the will of the people on term limits, so it's no surprise Bloomberg is missing the point on this important election and climbing into the same royal coach as Prince Andrew. One upside to this: the two can stop passing Grey Poupon back and forth from their limousines. It's holding up traffic on Park Avenue."

This promises to be a real barn burner, but beneath the theatrics lies a real serious bill come do for NY State-and both Cuomo and Paladino are going to have to level with the voters about some common sense solutions to the upcoming meltdown. Chris Christie has started to do this in New Jersey, but New York-both city and state-is still being governed by an exceptionalism that the Paladino rise is taking direct aim against. And in our view, nothing less than a political sea change will make this dire situation remediable.