“Everyone wants some of [the money]: the unions want it, the council wants to go and spend it, but I would argue first and foremost that it is the public that stepped up to the plate. It is their money and they should get some of it back.”

— Mayor Bloomberg

It is nice to hear Mayor Bloomberg, in an interview with our Dina Temple-Raston, start talking about the economic principles he championed during his 2000 campaign. But words are cheap, especially around the holidays, and the next test of whether the mayor really means what he says will be in January, when he delivers his annual budget message. It will be an opportunity for him to mark the tax issue as a central plank in his campaign for a second term, and there is no better time to start than now.

From a tax perspective, his first term has been a disaster, with new tax brackets on personal income and a rise in sales tax in additional to the infamous 18.5% hike in the property tax, the largest property tax increase in the city’s history. To put things in perspective, regard the fact that in the third quarter of 2003, tax burdens in the city increased 11% — as they decreased 12% nationwide, cutting New Yorkers out of the benefit of the tax cuts President Bush gained nationwide. This is certainly one of the key factors in why New York City’s economy grew an anemic 0.3% during that same period, while the rest of the nation enjoyed robust 8.3% growth.

In his interview with the Sun, the mayor again advanced the notion that, as he put it, “no one is going to leave this city because our tax rate is a little higher than it could otherwise be.” If the mayor is set down by the voters as out of touch, that will be one of the most damning pieces of evidence. It flies in the face of studies such as “Engine Failure,” the recent report by the Center for an Urban Future on the city’s predicament, which catalog the decline in the city’s manufacturing, retailing, and financial services businesses in recent years as big companies have moved elsewhere. A more winning line for the mayor would be to admit the damage that high taxation rates are doing to the city and vow to keep them as low as he possibly can.

If, however, his interview this week is a signal that he is getting ready to do something it will be a welcome one. It is not too late for the mayor to seize control of his legacy with a bold tax-cutting proposal in the next State of the City address. This will doubtless be resisted by many of the Koch-era permanent-government-type advisors that cluster the bullpen. But the mayor will be running against such types if he runs in the next election. His best bet will be on economic recovery and a search for new ways to cut spending to reduce the absurd cost of New York City government. He will find that he can do well by doing good, re-establishing his Republican credentials, redefining his mayoralty, and positioning himself for a second term.