The fiscal debate in New York City has been teetering between, on the one hand, those who reckon the problem is a shortage of tax revenues and, on the other hand, those who reckon the problem is the surge in spending. Mayor “You can’t just say let’s go cut out corruption, waste, and meaningless programs. Because fundamentally, they don’t exist” Bloomberg is clearly in the camp that reckons the problem is a shortage of revenues.

Now comes the Citizens Budget Commission with a new report, titled “The City’s Budget Gap Since 9/11: Factors That Caused It, and Plans to Close It,” that puts the issue into sharp relief. The report takes on the Bloomberg administration’s twin claims that the current budget gap was caused by September 11 and the slowing economy, and that the mayor is closing the gap primarily through cuts in the city government.

While expected tax revenues have declined $2.4 billion from what was expected for fiscal year 2004, projected spending in the city’s budget has risen $3.1 billion, according to the CBC. Further, in the mayor’s plan to balance the budget, the study finds that 54% of the money to close the gap is to be gained in new revenues to the city — read higher taxes, particularly the property tax and excise tax increases passed last year, along with such speculative revenues as the commuter tax.

Of the $3.3 billion the mayor is seeking in lower city expenditures, just $600 million is made up of actual cuts in city services. The rest is to be achieved by shifting funding obligations from the city to the state or federal governments, unspecified concessions by labor, and the re-estimation of agency outlays. The chances of a state or federal bailout for the city grow smaller every day. Still, the city’s gap-closing program calls for half a billion dollars in intergovernmental aid. Governor Pataki’s executive budget, as the CBC report points out, would actually increase the size of the city’s gap. One of these ways, as reported by our William F. Hammond Jr. on February 18, is in the restructuring of Medicaid so that the city will be forced to make up more than $200 million in lost revenue for the Health and Hospitals Corporation.

Even the service cuts that the mayor has incorporated into his budget are offset by increased spending elsewhere. Pointed out for treatment in the CBC report is the settlement with the teachers union — a generous agreement that not only threw the city further into the red but also sent a signal to the city’s other municipal unions that the city would be prepared to spend if pressed. Also mentioned are Medicaid increases and the need to cover pension fund contributions with city money because of the decline in the stock market. Overall, the report says, “the City will be spending $6,954 more in compensation per employee in fiscal year 2004 than had been planned in June of 2001.”

The CBC report comes as Comptroller William Thompson is predicting that the city’s budget gap is $500 million worse than the mayor has made allowances for. This coincidence only heightens the sense of urgency that New York’s policymakers must feel. Unless the mayor is planning on finding new things to tax — which we wouldn’t put past him — he is going to have to start making tough decisions.

Our own series on cutting the budget found more than $6 billion that the mayor could cut by reforming education, Medicaid, the corrections system, and a host of other areas in city government. The CBC has also done an admirable job of proposing its own ways to cut and ways to squeeze more productivity out of our existing workforce. To date, as the CBC report documents, the mayor has mainly spurned these efforts. He has been boosting spending and boosting taxes, which makes him a tax-and-spend mayor who has a long way to go before he’s closed the gap.