Now is the time for Mayor Bloomberg to start thinking about how he wants to be remembered in four years’ time. If he wants a legacy as one of New York’s greatest mayors he needs to seize his mandate and the momentum his victory will provide and tackle the city’s biggest problems. The enormous drain on the city’s budget from the costs of pensions, Medicaid, and debt service is one big problem; others include the city’s high tax burden. The big success of his first term, a start on education reform, can be built on and is a lesson that big battles can be won.

New York City is infamous for having a budget of more than $50 billion – fourth only in size behind that of the federal government, California, and New York State – for just 8 million inhabitants, which is why those inhabitants have one of the heaviest tax burdens in the country. A Manhattan Institute “Fiscalwatch Memo,” authored by Nicole Gelinas and released in July, detailed how 70% of the new spending in this fiscal year’s $51.8 billion budget is spent on Medicaid costs, interest payments servicing the city’s debt, and pensions and benefits for city employees. All of which, the Fiscalwatch detailed, had risen since the mayor took office.

Unless the mayor takes action, New York is set for fiscal woes in the years ahead, especially with the new teachers contract the mayor recently signed increasing costs even further. The mayor and the city’s other politicians like to claim these costs are “uncontrollable” and out of their hands. But that brings to our mind the talk of how, in the pre-Giuliani era, crime couldn’t be controlled. Certainly not without a political battle, but with a political battle, why can’t they be controlled?

The mayor has taken on Albany before – and won. His greatest first-term success was taking control of the public schools system from Albany and implementing his reforms, which have been a success. Education is not an area for him to rest on his laurels by any means. He has signaled he intends to battle Albany to lift the cap on charter schools – positive news for New Yorkers. Building on the principle of school choice he could really revolutionize schools in New York by introducing a school voucher system, offering real choice to poor and middle class parents.

In respect of fiscal reform, there are plenty of ideas, such as switching future city employees to a pension program similar to personal 401(k) accounts. The mayor can also do battle on taxes. He promised in the election not to raise taxes or fees through June of 2007, announcing in the mayoral debate that New Yorkers can “expect to see a continued focus on doing more with less.” But he promised not to raise taxes in his first election campaign, only to put through enormous increases in taxes on property and on cigarettes. He also introduced “temporary” increases in the city’s sales and income taxes. He allowed the sales tax hike to expire on time as promised, and the income tax is set to expire at the end of 2005. The mayor’s abuse of excise remains.

But his opponents are worse. Proponents of tax increases – his Democratic opponent, Fernando Ferrer, being one – claim New York’s budget is too big to permit overall reductions in taxes. Spending does need to be cut, but as President Bush demonstrated on the federal level, cutting the marginal tax rate does not mean that tax revenue decreases. Supply-side tax cuts spur growth and generate government revenue increases. Teaching New York’s Keynesians how supply-side economics works is one of the great battles that awaits a leader of vision in this city.

Yet, aside from pledging to fight to raise the limit on charter schools, none of the mayor’s campaign ideas meet the “big ideas” bar. And some of his ideas are wrong, such as his plan for more “affordable housing,” where he appeared to be trying to outdo Mr. Ferrer whose campaign was tainted from the start with a socialist way of thinking. On “affordable housing” the mayor would do well to take as an adviser Joshua Yablon, a Republican running for City Council for the Upper West Side’s 6th District whom the mayor endorsed, who grasps the issue.

Mr. Yablon recommends allowing free market housing so housing is affordable to all New Yorkers. Mr. Bloomberg likes to boast that because he has financed his own campaign he doesn’t need to worry about pleasing any special interest groups after that election. We’d like to think that will free the mayor to champion the big ideas in his second term. If he does he could become a New York legend, and the mayoralty could serve as a stepping stone for other political offices. It’s not too early to think about four years hence.

Endorsements

The New York Sun has endorsed the following in today’s election. Polls are open from 6 a.m. to 9 p.m.

MAYOR
Michael Bloomberg (Republican-Liberal).
Progress on policing and schools, the low-tax alternative to his Democratic opponent

PUBLIC ADVOCATE
Jay Golub (Conservative)
A supporter of tax cuts and school vouchers

BALLOT PROPOSAL ONE
Vote NO to the legislature’s attempted power grab over the state budget

BALLOT PROPOSAL TWO
Vote NO to this attempt to add $2.9 billion to the state’s already staggering debt

BALLOT QUESTION FOUR
Vote NO to this charter revision that would mean tax increases to balance the budget

CITY COUNCIL
Joshua Yablon (Republican) Upper West Side, Sixth District
Yvette Velazquez Bennett (Republican, Conservative) Brooklyn, 39th District
Joel Zinberg (Republican) Upper East Side, Fifth District
Jody Hall (Republican) Staten Island, 49th District