Friday, January 09, 2009

"He Knows the Buck"

This is getting real close to being an Abe Beame moment for Mike Bloomberg. You might remember that Comptroller Beame ran and won the mayoralty in 1973 using the slogan: "He Knows the Buck." After demonstrating little fiscal acumen, as New York slid into the fiscal crisis that put the city into receivership, Beame was ridiculed for having touted his financial acuity.

How close is Mike Bloomberg to his own Abe Beame impersonation? Well, if current financial reports are any indication he is realclose indeed. As City Room reports: "Now comes word today, through a new report [pdf] by the Citizens Budget Commission, that the average compensation cost of full-time employees of the city, when including both pay and fringe benefits, is $106,743. The report documented the skyrocketing costs of pensions and health insurance."

Where was Mike Bloomberg when this out of control personnel spending was mushrooming? As Nicole Gelinas outlined a few days ago: "It's almost jaw-dropping that the mayor, faced with these projections and with no hope of a return to a bubble-era "normal" on Wall Street, has made things worse. City workers' salary growth, for example, is set to rise 13 percent between now and our drop-dead year - largely because the mayor late last year voluntarily entered into labor contracts granting hefty raises to both civilian and uniformed workers. The cost of higher pay adds nearly $1.7 billion to the drop-dead-year deficit. 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."

And things are going to get much worse, as Eliot Brown points out: "The city’s Independent Budget Office just released a dour report on New York's fiscal picture, projecting a cumulative $11.3 billion in budget gaps over the next two and a half years and $18.3 billion by mid-2012. Such figures would represent substantial shortfalls requiring major cuts and/or new revenues, given a city budget currently of about $60 billion. The IBO report shows budget gaps far larger than the Bloomberg administration’s estimates released in November, with IBO projecting $6 billion less in revenue than the city did over the next three and a half years, according to the report."

All of this doesn't sit well with the CBC. As the NY Times reports: "City worker compensation grew twice as fast as that of employees in the private sector and elsewhere in the public sector during the same period, the Citizens Budget Commission said in the report, which was released on Thursday. The increase was driven by contractual raises that outpaced the inflation rate, and by the rising cost of health insurance and pension benefits, said the commission, a business-backed research group. The group said those benefits have remained “exceptionally generous” under Mr. Bloomberg."

Bloomberg, much like the grasshopper in the fable, was idly playing philanthropist (with the tax payer's dough), while the city's fiscal situation deteriorated-and don't tell us that no one could have anticipated the meltdown. Bloomberg's approach to government-let's say his generosity of spirit-made the current crisis almost inevitable: "These skyrocketing costs are stunning,” said Carol Kellermann, president of the Citizens Budget Commission, “and they impose an enormous, and growing, burden on increasingly strained taxpayers. Corrective action is essential and can no longer be delayed.”

Mike Bloomberg allowed government and the municipal work force to expand as tax increases and Wall Street cash allowed the city to get flush. In light of what has transpired, and in light also of what we know historically about the city's fiscal peaks and valleys, this amounts to political malfeasance on the mayor's part: "Thus budget experts regard New York as a city that sees far greater peaks and valleys than the nation as a whole, with mountains of cash flowing in during the high times and budgets getting squeezed close to suffocation during the tough times."

The mayor, however, was hoisted on his own ideological petard; one that construed government expansion as a good thing-and he made few real demands on the labor force, opting instead to bargain for tranquility rather than demand greater effeciences.

What has been Bloomberg's big idea, promoting citizen health by banning transfats and requiring calorie posting on fast food menus? And this from a mayor who, because of his financial background and his lionization by acolytes for fiscal shrewdness, now wants term limits ended so he can be given a third term. Give us a break!