NYC mayor offers tax hikes to stem deficit
NEW YORK (AP) – Mayor Michael Bloomberg, facing a possible $6 billion shortfall next fiscal year, said Thursday he will move to reduce the city work force by 8,000, through layoffs if possible. He also reiterated his call for an income tax on commuters. “I believe we can continue through early retirements and buyouts to downsize the labor force without layoffs,” the first-term Republican told a City Hall news conference. Layoffs would come “if we cannot get through this any other way” by 2004. The city’s work force is around 250,000.
He called for increased property taxes and the imposition of an income tax on commuters to help the city battle a budget deficit that could climb to $6.4 billion in the next fiscal year.
Bloomberg stressed that he did not want the city to face the fiscal crisis of the 1970s, when citywide layoffs led to increased crime and decreased services.
“We cannot let that ever happen again in this city,” said Bloomberg. “We have to proactively go and take the steps necessary so that this city does not lose control of our own destiny.”
The proposed cuts and tax hikes come as the city faces a $1.1 billion deficit in the current fiscal year, which ends next June. In the coming fiscal year, that gap could soar to $6.4 billion, Bloomberg said.
The city’s dire economic straits came relatively abruptly, following a six-year stretch of prosperity dating to 1995. Its booming economy, fueled by unprecedented Wall Street profits, led to projections of a record $3 billion budget surplus last year.
Instead, the city was forced to borrow $1.5 billion, to make service cuts and to scrap a number of plans – including bankrolling two new baseball stadiums and a new New York Stock Exchange.
The sudden downturn was caused by the national economic slowdown and exacerbated by the attack on the World Trade Center, a tumbling stock market and deep tax cuts enacted during the administration of Bloomberg’s predecessor, Rudolph Giuliani.
Though the city’s $42.9 billion budget is larger than all but a handful of states, most of the money is dedicated to paying off debt service and mandates from the state and federal governments. The city controls only about $15 billion of its budget.
Bloomberg’s plan, initially outlined by the administration on Wednesday, would include taxing 750,000 to 800,000 suburbanites who work in the city – even those who live in neighboring states. It requires the approval of the state Legislature.
A previous commuter tax was repealed by the Legislature in 1999; Bloomberg’s proposal could sock workers even harder.
Property taxes for city homeowners could go up by as much as 25 percent, but there would be an income tax cut to partially offset the blow.
Gov. George Pataki had not yet reviewed the plan, a spokesman said.
An official in suburban Westchester County opposed the move.
“While we certainly sympathize with Mayor Bloomberg’s fiscal problems – because Westchester County faces a similar plight – the county executive is unalterably opposed to this commuter tax,” said Susan Tolchin, chief adviser to County Executive Andrew Spano.