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Winter 1995
City Journal Winter 1995.
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Steady As She Goes
Peter D. Salins
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New York City's government is enduring its most stringent budgetary belttightening since it narrowly averted bankruptcy two decades ago. Shortly after taking office, Mayor Giuliani slashed the city's expenditures by $1 billion; in November 1994, he ordered additional cuts of $800 million.

But while the city battens down its fiscal hatches, how bad is the economic storm into which it is sailing? Historically speaking, not so bad. The city may indeed face a multibilliondollar gap between anticipated revenues and expenditures, but it has no multibillion dollar debt to pay off, as in the seventies. And the mayor, in contrast to predecessors Abraham Beame and David Dinkins, has faced his budgetary problems with alacrity, before they could swamp him. Perhaps most surprising of all, those most directly affected by the cuts, municipal labor unions and specialinterest groups, have accepted the cuts without their customary noisy outrage.

But danger lies ahead, in a balmy economic climate rather than a blustery one. Gloomy economic forecasts notwithstanding, New York City's economy is reviving, and tax revenues will soon increase substantially. When this happens, it will take heroic determination for the administration to keep the city sailing straight past the familiar, tempting sirens. Having presented austerity as an exigency of tough economic conditions, the mayor will be sorely tempted, when good times return, to increase spending again, just as Mayor Koch did 15 years ago. The urge will seem all the more compelling because of the need to restore essential services eroded by the current round of budget cuts.

When new revenues materialize, as they surely will by 1996, they should go entirely to reducing the city's taxes and debt. Meanwhile, to achieve fiscal stability in the long run, Mayor Giuliani should forgo acrosstheboard cuts in basic services like education, transportation, and parks (on which New York doesn't spend that much more than other cities) in favor of deeper, structural changes in the city's health, social service, and housing programs, extraordinarily costly by national standards.

 

 


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