Mayor Will Propose a Sales-Tax Rollback in Executive Budget

Mayor Bloomberg will unveil a budget today that proposes rolling back the city portion of an “emergency” sales-tax increase on clothing and shoes, and lowering the city’s assessment on improvements to multi unit properties, aides said. The plan indicates that the city banked a significantly larger-than-projected surplus while balancing the 2006 budget.The executive budget updates the $48.3 billion spending proposal Mr. Bloomberg unveiled in March. It is the next step in a drawn-out process involving the mayor and the City Council. The situation is complicated this year because Mr. Bloomberg is seeking re-election and one of the Democrats challenging him for the office is the council speaker, Gifford Miller. Mr. Bloomberg will have to win Mr. Miller’s support for the spending plan to get it approved.In his preliminary budget, Mr. Bloomberg proposed to cut $500 million from city spending and promised to renew the $400 property tax rebate. Those proposals are expected to be resurrected in his revised spending plan. Mr. Bloomberg also said in March that he would work with Governor Pataki to make sure two “emergency” taxes – one on personal income and another on clothing and shoe purchases of less than $110 – would sunset on time this year.Albany didn’t cooperate. In the state budget, Mr. Pataki and the Legislature renewed both taxes until 2007. In response, Mr. Bloomberg proposes eliminating the portion of the clothing and shoe tax that the city controls. If the council and Albany approve the proposal, that would mean shoppers in the five boroughs would pay 4.625% on those purchases – instead of the current 8.625% – starting next month.“Reducing sales tax is the fairest way to ease the tax burden on New Yorkers since everyone pays it,” a Bloomberg aide familiar with today’s announcement, who spoke on condition of anonymity, told The New York Sun.The City Council had proposed a similar reduction in its April response to the mayor’s budget, and Mr. Miller’s spokesman, Stephen Sigmund, was quick to take credit for the proposal yesterday.“We’re glad the mayor has come on board,” Mr. Sigmund said.The proposal’s projected cost to the city is about $200 million.Mr. Bloomberg is also expected to propose a cut in unincorporated business taxes and a $50 million increase in the Department of Education’s spending for new school initiatives he is expected to unveil today.He also wants a 30% reduction in the assessments made on improvements to so-called Class 2 Residential Property – that is, property with four to 10 units. Right now owners pay a 45% assessment. Mr. Bloomberg would like to reduce that to 15%, aides said.He is also expected to announce a reduction in taxes on unincorporated businesses, though details were not immediately available. The council, in its budget response last month, had proposed a 5% across-the-board tax reduction for all businesses and a larger reduction for so-called S-corporations, or small businesses. It is unclear whether Mr. Bloomberg folded that proposal in his latest spending plan.He will also assure New Yorkers that the 2006 budget will be balanced. Mr. Bloomberg had been anticipating a $2 billion surplus in the current fiscal year, but the figure is coming in at more than $3 billion, officials said. That unexpected $1 billion will be rolled into the 2007 fiscal year, which is expected to carry a multibillion-dollar deficit, aides said.Mr. Bloomberg’s 2006 plan is likely merely to nibble at the edges of city spending. With an election looming in November, Mr. Bloomberg is sure to use the executive budget in an attempt to show that the city has done well under his leadership and services can be maintained.Critics of his earlier budget had groused that the mayor depended too much on the largesse of Albany and Washington.He had asked the state and city governments for about $750 million in assistance. He had also said he would find about $325 million in savings on health and pension spending, and it is unclear whether he has been able to do that.The concern continues to be the widening budget deficits in the fiscal years 2007 through 2009, analysts said. In particular, the city’s settlements with labor unions and the resolution of a lawsuit against the state for more education spending still cast long shadows.Mr. Bloomberg’s advisers glossed over the issue of labor contracts. The budget numbers assume the city’s police, firefighters, and teachers will agree to the same kind of contract accepted last year by District Council 37, a union of municipal workers. Among other concessions, DC-37 agreed that its workers’ future raises would be financed with productivity enhancements. It is unlikely the police, the firefighters, and the teachers would agree to that.Absent those enhancements, the city might have to find hundreds of millions of dollars more.That said, this is an election year, and Mr. Bloomberg is positioning himself to the best advantage as four Democrats – Mr. Miller, Rep. Anthony Weiner, C. Virginia Fields, and Fernando Ferrer – and two Republicans, Thomas Ognibene and Steven Shaw, work to put him out of office.Mr. Bloomberg’s approach has been to accentuate the positive, and the polls, which now show him ahead of his rivals, suggest that it may be paying off.

Mayor Will Propose a Sales-Tax Rollback in Executive Budget

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