Tuesday, February 09, 2010

Budget Gimmickry

Adam Lisberg had an interesting column on Sunday that detailed some of the budget gimmicks used by the mayor-focusing in on the money set aside for the 7 Line: "Mayor Bloomberg stood in a muddy tunnel last week to show off one of the big construction projects that have been a hallmark of his administration: An extension of the 7 train. City taxpayers are picking up the tab for the $2.1 billion project, he bragged, because it's an investment in the far West Side that will pay for itself by spurring new growth. In fact, the city hasn't had to pay a dime yet. But that doesn't mean Bloomberg will use the savings to avoid laying off workers, closing fire companies or shutting pools."

No, it's just that Bloomberg has found other ways to fund the construction which leaves a pool of money for the mayor to magically pull out of his hat. We were amused, however, by the following insider comment: "Conservative and responsible budgeting has kept the city's bond ratings high through crisis, saving taxpayers tens of millions of dollars," said Bloomberg spokesman Marc La Vorgna."

Au contraire, Mr. La Vorgna, what has really kept the city's credit rating high is the fact that the mayor has soaked city residents with higher taxes and a tsunami of fines and violations. This doesn't stop the preening, though: "If Bloomberg didn't set aside enough cash to pay for all the interest on the 7 train bonds each year - even if none of it gets spent - the bankers who sell those bonds might start to worry, and charge the city a higher interest rate. "That shows the market that the money is there to pay the interest," said one city budget insider. "It would really be damaging to the city in the marketplace if we were not to appropriate these funds."

And then, the back patting: "There are other pots of money stashed away in the $63.6 billion budget to pay for things that may never happen - just like there are lowball estimates for some taxes and other income. As one city official quipped, "If you do it the other way, you know who you are? You're the State of New York."

Very droll! And a great example of crackpot realism in the midst of the city's economic crisis. As one observer, crediting the late C. Wright Mills, remarks about such serious thinking: "Trouble is, Mills explained, these serious people are fools. They seem to know what’s going on, and how to right what’s wrong with the world, only if one accepts their own view of how the world works. So “practical” are these serious people, however, that they understand nothing beyond their noses and outside the circle of their own constricted understanding and experience.

So, the serious people who are in charge of responsible budgeting fail to understand that their work is being done in the context of an irresponsible taxation and regulatory environment that makes the city just a bad place to do business-hence the crackpot nature of their realism. In fact, given NYC's even more onerous add-on taxes and regulations, simply being the State of New York might not be such a bad thing.