Monday, December 27, 2010

Debt to Pay

In yesterday's NY Daily News, City Hall Bureau Chief Adam Lisberg reported on the city's growing debt burden under the tenure of the current mayor: "A report from Controller John Liu shows New York is carrying $69.5 billion in debt - the highest level ever. That breaks down to $8,281 for every man, woman and child in the city, 7% higher than a year ago. New York, like most governments, runs up those huge sums on long-term projects like parks and bridges and schools - as well as big tech projects like CityTime - then pays them back over time with interest. "The credit card bills are coming due," Liu said."

Long term projects such as the unworthy Willets Point boondoggle-a project that could make the CityTime scandal look like a candy store heist: "Many of those projects are worthy, but Mayor Bloomberg has plowed the taxpayers' money into them like never before - even as he plans to lay off workers and close fire companies at night. "There always has to be a balance. We're trying to strike that," said Bloomberg spokesman Marc La Vorgna. "We do have to deal with the growing cost of debt service."
And the Willets Point project has already started to bleed red ink-before a shovel has even been put in the ground. EDC, the city's lead agency in this fiasco, has hired environmental consultants who so severely botched the traffic review of Van Wyck ramps needed to alleviate the massive traffic projected from the Willets Point development, that the study needed to be thoroughly revised-at a cost of millions. Underscoring the lack of proper controls in this project, EDC retained the same consultants who messed up the original analysis to revise the traffic study needed to be submitted to the NYS DOT-enriching the deficient consultant team for their original failure.
There has never been a full accounting of the cost of the Willets Point redevelopment-and keep in mind that the plan was first proposed and passed by the city council before the current recession hit. As we commented a couple of months ago: "The city council approved the Willets Point project before the full impact of thee Great Recession was understood. Now that the recession's impact has been fully felt, can the city council still sit back and allow the Bloombergistas to siphon off all of this cash for a project that, as we said in the News, raises numerous, "empty lots of questions?" Or will it intervene to prevent the full scale lay of of city workers by doing the right thing: Laying off Willets Point?"
And let's not forget that the city is cutting back its capital construction budget by 20%. Lisberg dramatizes this situation: "Still, there are signs that even Bloomberg has found the limits of what New York can afford to spend on the future. His budget director, Mark Page, recently sent a memo to agency bosses ordering them to figure out how to cut their long-term spending by 20%. "We are obliged to also address the amount of the budget going for debt service," Page wrote. "To do so, we must reduce the plan for capital spending which drives capital borrowing and its resulting debt service cost." In other words, City Hall is just like your house right now - it's cutting back to live within its means, but it has only itself to blame for spending big in the first place."
In this climate, whither Willets Point? And with elected officials railing against city budget cuts and layoffs, why haven't local Queens pols weighed in with a, "No mas?" The Bloombergistas can't be depended on to be fiscally responsible in this regard-and it's up to local council members to hold their fingers to the fire: "And maybe just like in your house, City Hall has promised to cut back in the past - but blown it. Maria Doulis, an analyst at the Citizens Budget Commission, studied Bloomberg's last two cuts in long-term spending - 20% in May 2008, 30% in January 2009 - and found they didn't last long. "The reversal of this reduction began just a few months later," Doulis wrote. "Failure to impose fiscal austerity on the infrastructure agenda is evident," she added. Take this year's budget: Bloomberg first proposed spending $9.2 billion on long-term projects. Then he cut it to $6.2 billion. And then he opened up the spigot again to $12.1 billion."

Priorities need to be set here. And if the cost over runs on the ramp consultants are any indication, it's the right time to pull the plug on this Bloomberg legacy project. We'll give Lisberg the last word-with the proviso that the mayor is not the one who cabn be relied here to do the fiscally responsible thing: "Or as Doulis put it: "Spending will ultimately be much higher than currently planned unless the mayor becomes more determined about establishing priorities."