Wednesday, January 05, 2011

Sanitizing the NYC Budget

The controversy surrounding the snow removal from last week's blizzard inevitably centered on whether or not the man and women of the Sanitation Department were involved in some kind of job action-and some saw in this targeting as a classic case of misdirection away from the mayor's ultimate responsibility. The credibility of this assertion, however, devolved from the undeniable fact that the current fiscal crisis has led to the Bloomberg administration's move for a reduction of the sanitation work force.

This move-emblematic of an entire across the board policy initiative involving layoffs and borrowing-may say more about the mayor's managerial skills than the snow removal failure itself, Nicole Gelinas lays this out: "Mayor Bloomberg suffered a governance meltdown last week, as unplowed snow blocked streets for days. But snow, at least, melts. The bigger disaster is still accumulating -- and New Yorkers haven't yet seen the extent of the damage. When Bloomberg took office, Gotham spent $1.3 billion annually on the Sanitation Department. Today, we spend more than $2.2 billion on "New York's Strongest." That increase is almost 3½ times the inflation rate. It follows that we should have a sanitation army sufficiently equipped to clean up the white (or gray) stuff fast."

But, alas, that is not the case: "Do we? Not quite. Today's budgeted sanitation force -- from supervisors to garbage collectors -- is 392 people smaller than nine years ago, a 4 percent decline even as New York City's population is up. And the department will shrink further, as Deputy Mayor Stephen Goldsmith knocks 200 people off the rolls to save $21 million by "modifying the supervisor span of control."

The reason lies with out of control pensions and city borrowing: "Where did the money go? To pensions, health care and debt. Taxpayers now spend $144,000 in salary and benefits for each sanitation worker, up from $79,000 nearly a decade ago. Nine years ago, taxpayers contributed about $10.5 million annually to support sanitation pensions. This year, it'll cost $240 million -- a more than 20-fold increase. Back then, health and other "fringe" benefits for the department cost $150 million; they've since more than doubled to $313 million."

And the borrowing is just as bad: "As for sanitation debt, in 2002, it cost $119.6 million. Today, it's nearly $265 million, a 121 percent hike. There's nothing wrong with borrowing to improve productivity, through, say, better trucks, but we've borrowed to avoid the reality of personnel costs."

What is the mayor's role in all of this? Here's Gelinas' take: "Bloomberg realizes full well that public-worker benefits are creating a permanent crisis for Gotham, as pension and health-care bills consume resources that should be going toward the services. As he has said, "The time has come to bring our municipal pension system in line with reality . . . It's costing taxpayers a fortune, and they're not getting any services or benefits from it." Problem is, Bloomberg said that two years ago -- and sanitation and other uniformed workers still retire after 20 years, with overtime money to pad their pensions."

This was a crisis that analysts like Gelinas have been screaming about for the past decade-and Mike Bloomberg, early on enamored by doing more with more-sat back and simply allowed it to fester until this very day. What is his response now? A game of three card monte with services: "To Gotham's detriment, though, the mayor's plan has been to try futilely to manage the impossible. That is, he's chopping spending on actual services and investment, bringing in people such as Goldsmith, an "urban innovator," to figure out how to do this smartly so that people don't notice a change. Sure, New York should ferret out waste, fraud and abuse -- and better manage costs and staffing, too. But this strategy is like using a plastic shovel instead of a snowplow -- it ain't gonna do the job."

But the snow storm was a clarifying moment that revealed the weaknesses of this approach: "Plus, the snowstorm has made it obvious that New York under Bloomberg has not perfected public-sector management to such an extent that it can cut and cut and cut to feed the benefits monster without harming the public."

Cutting back on services isn't the only pressing problem; capital spending is also being reduced by 20%-with some drastic consequences: "It's not just the crisis of snow removal. A month ago, the mayor asked city agencies to plan for 20 percent cuts in investment projects -- everything from fixing bridges to, well, buying garbage trucks. The results of these cutbacks won't be as in-your-face as dirty snow. But we need these projects if New York is to grow. It's not like the mayor's people are going to surgically find all the waste, fraud and abuse and make sure that cuts come from that."

What this also means is that the city can't be as profligate about its capital expenditures-and there needs to be a re-thinking of the entire Willets Point development, a project that will cost the city billions. In addition, we may not be able to afford to build three separate Manhattan waste transfer stations-and five years ago the projected cost of the 91st Street station was $185 million! It may be more cost effective to combine all three in one larger facility at Pier 76 on the West Side-and an anlysis of this should commence immediately.

The bottom line, however, is that the pension explosion must be contained-and it should be a priority for Governor Cuomo to do just that. We'll give Gelinas the last word: "Bloomberg should direct his innovators to focus on where the money is. He could run a media campaign to make sure that the public understands that Gov. Cuomo must make wholesale pension change so that new workers, not taxpayers, take more responsibility for their retirements. Further, as the mayor gets tough on labor, he needs an old-fashioned labor-war veteran to keep an eye on workers to make sure they're not "innovating" with stealth work slowdowns. There's no time to waste. Over the next three years, benefit costs will pile up by another 8.1 percent annually, and debt, 9 percent. Meanwhile, the services people demand will deteriorate. We don't need another blizzard to figure out that this isn't working."