Mayor Spurns a Tax Increase for the City

By GRACE RAUH, Staff Reporter of the Sun
January 17, 2008

Defying expectations that the city would increase property taxes to help close a projected $3.1 billion budget gap, Mayor Bloomberg will argue today that the budget can be balanced without the pain of a tax hike.

In his annual State of the City address, Mr. Bloomberg will propose extending the 7% property tax cut he instituted last year, initially presented as a one-time bonus, an aide familiar with the speech said.

Mr. Bloomberg also will call for an extension of a $400 property tax rebate for homeowners, the aide said.

Backing away from a property tax increase as the city heads into an uncertain fiscal period may be seen as a sign Mr. Bloomberg is attempting to differentiate himself from the Democratic presidential candidates in advance of a possible White House run, and to avoid being characterized as a politician who would rather raise taxes than find savings in the city's budget.

"The mayor always said that we have to keep a constant eye on whether we can afford these tax cuts and, based on where were are right now, they're still alive and moving forward," a source who said he is familiar with the mayor's thinking and the speech's content said. "The mayor feels that he can propose this in part because when the storm clouds were still distant on the horizon he started making hard calls about cutting government spending."

The leading Democratic candidates, senators Edwards, Obama, and Clinton, have all promised federal tax increases. Mr. Bloomberg raised property taxes by 18.5% in 2002 to combat ballooning deficits and is urging state lawmakers to block a scheduled reduction in the city's sales tax that would save shoppers more than $1 billion a year.

The mayor is expected to present the city's preliminary budget after the speech, next week. Maintaining the 7% property tax cut would cost the city $1 billion, and keeping the $400 property tax rebate would cost $250 million. Last year, when the property tax cut was introduced, the city had a record $4.7 billion surplus.

The city's Independent Budget Office is projecting a $3.1 billion shortfall next year, a $4.6 billion shortfall in 2010, and a $6.3 billion shortfall in 2011. The market value of properties in the city is growing at a much slower rate than in comparison to recent years, having increased by an estimated 1.44% last year, the city's Department of Finance reported on Tuesday. In 2006, the market value of properties grew by 18.1%.

City agencies were asked last fall to find areas in their budgets to cut.

A source said the proposal to keep property taxes at their current level is contingent upon the economy maintaining some strength, continued support from the state and federal governments, and the success of efforts to do more with less in the city.

This year's budget is $59.3 billion. It includes $5.6 billion from the federal government and $11 billion from Albany.

The speech, at the indoor pool and rink complex at Flushing Meadows-Corona Park at 1 p.m., is an opportunity for Mr. Bloomberg to review his record at City Hall.

A former Republican consultant who is a founder of the Draft Bloomberg Committee, Douglas Bailey, said there is interest in whatever the mayor says today about the presidential election and about the economy.

"Not that anyone would wish economic hard times on anyone, but if the economy is not going well, the notion of a Bloomberg candidacy becomes all the more important to the country," Mr. Bailey said. "He has obviously a unique background which would make him remarkably well-suited to ease the public's concerns and help us through tough economic times."

The billionaire mayor founded Bloomberg LP before running for office in 2001.

Further fueling speculation that Mr. Bloomberg is laying the groundwork for a presidential campaign, he is traveling this week to two states rich in electoral votes: Texas and California.

On Friday, he is scheduled to appear with cyclist Lance Armstrong and a former surgeon general, Richard Carmona, in Austin, Texas, to make an announcement "about the war against cancer," a spokeswoman for the Lance Armstrong Foundation, Katherine McLane, said.

On Saturday, he will meet with Governor Schwarzenegger, a Republican, and Governor Rendell, a Democrat, for a joint announcement in Los Angeles about the "need for more infrastructure," a spokesman for Mr. Schwarzenegger, Aaron McLear, said.

Mr. Bloomberg has called for an end to partisan gridlock in Washington and is likely to promote the infrastructure announcement as an example of using nonpartisan collaboration to tackle problems.

Mr. Schwarzenegger, who advocates a nonpartisan, pragmatic approach to government, has described Mr. Bloomberg as his "soulmate" and "a true environmental warrior."

They saw each other last month when the mayor stopped in California on his way home from a United Nations conference on climate change on the island of Bali in Indonesia.

Mr. Rendell is a former chairman of the Democratic National Committee.

Mayor Koch, who is planning to attend today's speech, defended Mr. Bloomberg's travel schedule and said those who argue the mayor needs to spend more time in the city in case of an emergency, need not worry.

"He has his own plane and he'll be back in the twinkle of an eye," Mr. Koch said. Besides, he added, every New Yorker feels "a certain amount of happiness in seeing our mayor applauded across the country." Mr. Koch has been supporting Senator Clinton's presidential bid.