Budget Deal Reached; Now the Waiting for Albany and D.C.

Friday, June 25, 2010

At a late-night press avail, Mayor Michael Bloomberg and City Council Speaker Chrsitine Quinn tried to put the best face on their $63 million budget "handshake" deal.

Surrounded by most of the City Council, Bloomberg and Quinn said it would preserve the city's core services, despite some $1 billion in cuts. But there are still a lot of asterisks, and blank spaces that need numbers.

Quinn said New Yorkers would feel the cuts. Library service will be cut from six to five days and some daycare and senior centers still face closure. But Quinn said all of the municipal pools slated for closure or a reduced season had been restored. "All the pools, including those that were slated for closure, will open this Sunday and will remain open for the entire season," she said.

What's different from last year is the presence of an underlying anxiety about what the official press release defined as a "persistent econonmic downturn" that is failing to produce the city revenues needed to stave off program cuts and more tough choices. 

The $63 billion spending plan restores funding for 20 firehouses slated for closure. But that's only accomplished if the city is successful in moving ahead with a controversial plan to abandon sidewalk alarm boxes and getting the size of crews on fire trucks reduced from six to five.

UNCERTAINTY ABOUT STATE AND FEDERAL FUNDING
Still unresolved is just how much of Gov. David Paterson's $1.3 billion in cuts to city aid actually come to pass whenever Albany has a budget. "We have assumed in this budget not the worst of the governor's budget but a good chunk of the cuts he said he was going to make" says Bloomberg. "Where we thought it was more likely that they would restore some of those cuts we tried to be optimistic but to provide a balance and be fiscally responsible."

And the "handshake" budget still counts on $600 million in federal support of city Medicaid costs currently hung up in Congress by incumbents increasingly anxious about getting hurt in November by voter anger over "out of control" government spending. The federal aid is contained in a second round of White House stimulus spending aimed at bailing out local and state governments sinking in red ink.

Bloomberg says all local budget bets are off if Congress refuses to fund billions of dollars worth of aid for the local governments. "We have said to the congressional delegation that if we don't have that money by October, we'll start cutting back dramatically," says Bloomberg. "If they were to turn to us and say there is no chance, we would start addressing the issue even earlier."

Bloomberg says 40 states are depending on money from this spending bill pending in Congress. He says not getting the money would make waves across the city's 300,000 person workforce. "$600 million out of budget, $300 this year, $300 the year afterwards, is a significant number of people in every agency. There would be no sacred cows." 

THE DEVIL AND THE DETAILS
Assistant Council Majority Leader Lew Fidler says so far programs for kids dodged the budget bullet. "Shelter beds for homeless youth was restored -- every penny," says Fidler. "We did pretty well in afterschool programs. I think the Council stood up for children. I honestly don't think we will be closing any afterschool programs in the city, which is terrific since one-quarter of them were on the chopping block."

Fidler says the city has tried to make up for state cuts to its Summer Youth Employment program, but a lot depends on whether Congress agrees to fund a national jobs program  that would send $23 million the city's way. Last year 52,000 kids got a city-funded summer job. More than 140,000 applied. 

Despite the handshake deal reached last night, there are still a lot of details important to local neighborhoods still to be fleshed out. One open question is just how senior centers slated for closure will actually be shuttered. Both Bloomberg and Quinn said efficient consolidation was necessary. Bobbi Sackman with the Council On Senior Centers says until an actual closure list is formalized, it will be hard to predict the impact of the cuts.

"However, even the smallest center, somebody went there and these are people in their 80s, often in their 90s," warned Sackman. "We don't know if they will get on a van to go to another center because they are quite elderly."

Initially, advocates for seniors were bracing for the loss of 50 centers citywide. A final number should be out by early next week.  

Now the Council works through how best to divvy up hundreds of millions of dollars in discretionary funds they get to target for non-profits and additional budget restorations.

LOOKING AHEADA CLOUDY BIG PICTURE
Bloomberg and Quinn both said that as difficult as this year's budget was, next year's would be much worse. If government budgeting is about managing public expectations, they both worked hard to keep them low.

Both the mayor and the speaker highlighted their decsions this year not to raise taxes or dip into a $2 billion reserve fund for retirement health care costs for city workers. The bottom line is that both debt service--the cost of borrowing money--and pension costs continue to eat into potential operating revenues. And next year federal stimulus goes away and Albany's budget gap only widens.

Bloomberg said long-term he remained optimistic about the city's prospects, yet he noted growing skepticism among economists about the status of the "recovery." He said as resilient as New York City remains, it could not wall itself off from the impacts being felt across the country of a stalled economy.

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