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 T
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 THE
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, NY 10007
FOR IMMEDIATE RELEASE
January 22, 2009 No. 35www.nyc.gov
MAYOR MICHAEL R. BLOOMBERG TESTIFIES BEFORE THE STATE ASSEMBLYWAYS AND MEANS COMMITTEE AND STATE SENATE FINANCE COMMITTEEABOUT IMPACT OF PROPOSED STATE BUDGET ON NEW YORK CITY
The following is Mayor Bloomberg’s testimony as prepared. Please check against delivery:
“Good morning. Thank you, Chairman Farrell, and thank you, Chairman Kruger – andcongratulations to you and Vice Chair Liz Krueger on your recent appointments. This is myeighth year testifying before this joint committee. Seated with me are Michelle Goldstein,Director of State Legislative Affairs for the City of New York and Mark Page, the City’s Director of Management and Budget.“When we came before you last January, dark clouds of uncertainty already hung over our economy. Because we knew that no boom lasts indefinitely, New York City was already battening its hatches by pre-paying debt and putting billions of dollars aside to close future budget gaps.“But economic conditions have since deteriorated beyond what anyone anticipated. Weare now in the 13
th
month of a national recession and deep into a global financial crisis centeredin our city.“In the past two years, firms on Wall Street – major contributors to our state’s economy – have reported losses of more than $36 billion and may eventually lay off one-quarter of their workforce. Two months ago, we forecast that City revenues from economically sensitive taxes inFiscal Year 2010 would be at least $4.9 billion lower than they were in Fiscal Year 2008 – a 20%drop. But that’s just in Fiscal Year 2010. The hard truth is the losses on Wall Street will affectour tax revenues for many years to come.“In such grave economic times, government is obliged to budget wisely – to stretch everydollar to maintain services and to focus on speeding economic recovery. In New York City,we’ve taken these responsibilities very seriously.“Since my testimony 12 months ago, City agencies have, at my direction, taken $2.2 billion in actions designed to help close the City’s still-looming budget gap in Fiscal Year 2010,
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which begins July 1st. Last month, I directed City agencies to identify an additional $1.4 billionworth of cuts for the coming fiscal year.“The results will appear in the City’s preliminary budget that I present next week. Butsince most of the City’s expenses are for personnel, you can be sure that it will forecast a smaller workforce. And because cost-cutting alone won’t preserve essential services, we’ve also had toraise revenues.“Last month, as proposed by our Administration, the City Council voted to move up theexpiration of a 7% property tax reduction to January 1
st
from July 1
st
. This action will generate$600 million in our current fiscal year, which will be used to help close the budget gap we facein Fiscal Year 2010.“The Governor also understands the severity of this fiscal crisis, evidenced by his presentation of an Executive Budget a full month before our state’s constitutional deadline. This budget includes some smart proposals – but unfortunately, it also contains serious flaws. In toomany instances, it uses the fiscal crisis as an excuse to shift State expenses to New York’slocalities – in many cases, permanently.“Also, and even more distressing, New York City residents would shoulder adisproportionately heavy share of service cuts and changes in revenue sharing, which could forceus to raise taxes locally.“All localities are being asked to take a bitter pill; New York City is being asked toswallow an entire bottle.“In total, the Governor’s proposed budget would produce a loss of $1.6 billion for theCity. But let me stress that I am not here today to give the typical “tin cup” speech mayorsalways make in Albany. We understand that closing a $15 billion deficit requires major cuts – and the City can’t be exempt.“But these burdens must be shared fairly. The City certainly shouldn’t be penalized for showing the good sense we have in anticipating this recession and trimming our own budgetalready. Nor should Albany overburden a city economy that, while straining, remains the state’seconomic engine.“In the short term that would mean both higher City taxes and also thousands of fewer cops, firefighters, and teachers – all compounding the local effects of the recession. And in thelong run, it would make it that much harder for the City’s financial services industry to rebuilditself. Make no mistake about it: Raising taxes on those with the flexibility to move their  businesses – as was done in previous crises – will lead to an exodus that will hurt us for decadesand have devastating consequences for the entire state.“There is a strong likelihood that Congress and President Obama will agree on a federalstimulus package that could help relieve some of our fiscal deficits. To the extent possible, weare working to have this money go directly to cities so that we can put it to use as quickly as possible.2
 
“Funding coming to the State should also be shared quickly and fairly with localities,including New York City. For instance, the City’s Department of Transportation currentlyreceives 19 percent of federal funding sent to the State for road and bridge work – and that’s theway it should remain with stimulus funds. But it’s important to note that such stimulus funds – whether they’re capital or expense – are no panacea for our budget problems. They’re onlyintended for two years. And the State’s situation is so severe that we cannot ignore our primaryresponsibility, and the surest course of action: reining in spending.“Before suggesting some potential cost-saving measures, let me turn first to items in the budget that require your most urgent attention. Without a doubt, the most pressing is theGovernor’s disappointing proposal to exclude New York City – and only New York City – fromState revenue-sharing.“This is, actually, the second time in three years that we face the prospect of having our share of State revenue-sharing funds eliminated completely. Because our revenues from taxes onreal estate, financial services, and other industries have dropped so sharply, this couldn’t happenat a worse time. And that’s especially true because revenue-sharing funds provide us withwelcome spending flexibility even as the discretionary spending in our budget shrinks year after year. Since the City generates nearly 50 percent of all State tax revenues, it’s hard to justifycutting us out of revenue sharing entirely.The Governor’s budget suggests that additional taxes on city residents could make up thedifference. But that would only exacerbate our ongoing imbalance of payments with the State – which already is equivalent to about $1,300 for each New York City resident.“For New York City, the consequences of the proposed elimination of revenue-sharingare in fact much worse than they appear in the Governor’s budget. Because of the way thesefunds are paid to the City, payments of $328 million would be lost in both our current andcoming fiscal years. $656 million isn’t chump change; it’s enough to pay the salaries of roughly9,000 police officers or 10,000 teachers or 11,000 correction officers or 12,000 sanitationworkers. Our own budget problems leave us with no cushion to soften a blow of this magnitude.So without a restoration in revenue sharing, we face an additional two-thirds of a billion dollarsin new taxes and service cuts, including thousands of State-sponsored layoffs.“What makes this situation even more difficult is Albany’s continued practice of  postponing certain payments owed to the City. This year, the State is delaying $522 million,including funding for our public colleges. In good times, these delays are just a nuisance. Butthis year, combined with the elimination of revenue-sharing funds, they’re creating intolerable pressure precisely when we must draw up our budget.“Members of the Legislature: That’s not treating the City fairly, and it’s not leading theState properly. Yet again, we’re counting on you – our local representatives – to fully restore therevenue sharing that the City needs and deserves.“Let me now turn to education.“I want to set the record straight about precisely how much the City is losing in educationoperating aid from the State. At the very least, we ought to be honest about that. If you read the3
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