Budget Gap Looms, City Spends More
This article is from the archive of The New York Sun before the launch of its new website in 2022. The Sun has neither altered nor updated such articles but will seek to correct any errors, mis-categorizations or other problems introduced during transfer.
The City Council and the mayor quietly approved $87 million in additional education spending last week as part of a modification to the budget.
The money, which was mostly for fifth-grade academic programs and the opening of new schools, is part of a $682 million city surplus, stemming mostly from higher-than-expected tax revenues.
The changes, which also include $40 million in increased energy costs and $201 million for programs that were projected to be paid for by the state, were largely overshadowed last week by the council’s override of Mayor Bloomberg’s veto of a campaign-finance bill and a new tax credit for movie studios that do business in the city.
While the council and the Bloomberg administration characterized the changes as routine housekeeping items, some independent budget experts portrayed them as a telling referendum on public policy.
“These are important policy decisions involving hundreds of millions of dollars,” the research director at the Citizens’ Budget Commission, Charles Brecher, said.
“You ought to treat a surplus as a one-shot deal and hence use it in a way that does not build up your ongoing commitments,” Mr. Brecher, whose independent group monitors city and state financial policy, continued. “But instead, what they continually do with these surpluses is roll them into the next year and increase ongoing expenditures.”
“So here’s a city facing a $3 billion budget gap in six or seven months, and what are they doing? They’re spending more money. It’s not prudent,” Mr. Brecher said.
Both the council, which passed the modifications, and the Bloomberg administration said the city was handling the surplus responsibly.
The director of the council’s financial division, Larian Angelo, explained that $354 million of the surplus was put into what’s called a Budget Stabilization Account. Some of that gets rolled into next year’s budget to help offset future expenses, and some helps pay down long-term debt.
That action, she said, was a way to narrow the gap next year, not increase spending. The revision also included shuffling smaller-ticket items between and within city agencies.
“We are very prudently setting some of those revenues aside for a rainy day in the only way we can, which is to put it in the BSA,” Ms. Angelo said.
A spokesman for Mr. Bloomberg, Jordan Barowitz, pointed out that the city recently slashed millions of dollars in spending to reduce the deficit. The mayor has also said he plans to cut $600 million in the next fiscal year.
A senior fellow at the Manhattan Institute, Steven Malanga, said, however, that the city should be putting more of the most recent $628 million surplus into the Budget Stabilization Account, paying down the debt, or returning surplus money to taxpayers.
“Some of this money that is considered quote surplus is the result of the fact that the city raised taxes by more than $1 billion,” Mr. Malanga said, pointing to the 18% property-tax increase adopted early last year.
Mr. Malanga said plunking $87 million more into education would not make for improvements in the city school system. “The question that we keep asking is: Will it ever by enough?” he said. “Every time there is extra money, whether it’s from Wall Street or wherever, it just goes into education, and it doesn’t seem to have much of an effect.”
His view comes in stark contrast to a recommendation made a few weeks ago by a court-appointed panel. The recommendation, which is not related to the $87 million modification, called on Albany to increase funds for New York City schools by $5.6 billion over the next four years and to invest another $9.2 billion in construction and renovations. It grew out of a court decision last year, which found that not all students in city public schools were getting the “sound, basic education” guaranteed by the state.
A spokesman from the Independent Budget Office, an independent watchdog agency that is part of city government, said much of the $87 million in education spending was made up of one-time costs. The IBO released a report last week predicting that the city would post a $1 billion surplus – almost twice the original projection – and have a smaller budget deficit. Other agencies had projections that were more grim.
Yesterday, the IBO spokesman, Doug Turetsky, said the budget is constantly in motion.
“Budgets are not static sort of things, “he said. “They are constantly in motion. They are always being revised.”