Rising Costs
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The Manhattan Institute’s “Fiscalwatch Memo,” written by Nicole Gelinas and released yesterday, reminds New Yorkers just how much more of their dollars the city is spending every year in their name. The city’s budget for this fiscal year will spend $37.4 billion extracted from “local resources” (read: “city taxpayers”) – up 7.5% from last year, and twice the city’s 3.1% average annual rate of inflation since January 2002.The rest of the $51.8 billion budget comes from state and federal governments – also partly financed, just through a different tax, by city taxpayers.
Of the increase, 70%, or “virtually all new spending above the normal rate of inflation,” according to the Fiscalwatch Memo, will be spent on pensions and benefits for city employees, Medicaid costs, and interest payments on the city’s debt. Since 2003, when Mayor Bloomberg arrived at City Hall, city-funded pensions and benefits costs have risen to $10.3 billion from $6.4 billion, Medicaid costs have risen to $5 billion from $3.9 billion, and interest payments on the city’s debt have risen to $3.3 billion from $2.1 billion. Education is another area where taxpayers’ dollars are increasingly being burdened. Such city-funded spending soared an astounding 33.3% to $8.4 billion in 2006 from $6.3 billion in 2003, according to the Fiscalwatch Memo.
City and state politicians throw up their hands and plead that these costs are “nondiscretionary” and out of their control. That’s not true. One way to reform the growing pension problem, for example, is to switch future city employees into something similar to personal 401(k) accounts.
Yesterday, as our Julia Levy reports, Governor Pataki signed into law legislation from Mayor Bloomberg’s budget that will eliminate the city’s 4% sales tax on clothing and footwear of $110 and below – effective September 1.The mayor said the tax cut “will be greatly appreciated by hardworking New Yorkers,” and the governor added that it “is another example of our commitment to lowering costs and improving the quality of life in New York City.” But these are baby steps that will be overwhelmed if the mayor and the governor continue to be unable to control their spending.
