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Newsline: March 2006
City, State and Federal Budgets Aim to Bolster the Economy at the Expense of Working Families
 It is budget season, and City Hall, Albany and Washington have submitted budget proposals that supposedly will strengthen the economy and restore fiscal responsibility, when in fact the proposals will likely strip millions of low and middle-income Americans of vital services and benefits.
City Budget
When Mayor Michael Bloomberg released his $52.2 preliminary fiscal year 2007 Executive Budget, Jan. 31, he targeted as priority items reducing the cost to the city of debt servicing, Medicare and employee pension and fringe benefits, all of which he said “threatens the city’s long-term solvency.”
Calling the cost of fringe benefits “scary,” Bloomberg explained that “When a city worker says he is earning ‘x’, he is actually getting 150 percent of ‘x’ because of the value of the fringe benefits. For uniformed workers, they are actually getting 200 percent of their salary based on fringe benefits.” He added that in addition to the $260 million in salaries to employees, the city pays $1 billion a year for their fringe benefits.
The mayor referred to the growing number of companies who have replaced their pension plan with 401(k) plans and demanded employee contribution to health care and said, “Everyone’s got the exact same problem…People are living longer so it takes longer to pay for pensions and the cost of medical care even though salaries are growing more slowly.”
He added: “When we hire, we put enough money away in pension funds for the employee until retirement,” but “no such reserve” exists
for the employee’s health care.”
While Bloomberg did not propose any reductions on agency budgets, the mayor said he is asking city agencies to “find alternative revenue
sources or find ways to do more with less.” He is also investing $2 billion of the city’s unexpected surplus of $3.5 billion in a trust fund for city retirees to cover their future health care costs. The rest of the surplus will be set aside to cover the cost of long-term health care costs, ongoing capital projects and debt reduction.
The city has until June 30 to adopt a budget for the 2007 fiscal year.
NY State Budget
It was bad news all around for New York City in Governor Pataki’s $110.7 billion 2006-2007 Executive Budget plan, which increased
spending by four percent and included a litany of tax cuts for businesses, individuals and homeowners to the tune of $15 billion in annual
tax cuts instituted since 1995.
After declaring that “Today, New Yorkers are safer, more secure and more prosperous than they were when we began our course of
progress in 1995,” Pataki laid out a budget plan that expands charter schools but shortchanges NYC public schools by providing considerably less than the court-mandated increase in school aid. The budget also significantly cuts spending on hospitals; a move which The Healthcare Association of New York State said “would cost public hospitals a staggering $432 million in just one year alone.”
The Governor’s 2006-07 Executive Budget includes:
a “STAR Plus” direct property tax rebate of $400 and provides a new STAR COLA for seniors;
pro-family tax cut package that cuts the income tax rate, eliminates the marriage penalty and estate tax, and provides a $500 heating
tax credit for lower-income seniors;
$500 per child tax credit for parents of kids who live in districts with underperforming schools;
comprehensive plan to encourage the development of renewable energy, reducing reliance on imported energy;
more than $1.1 billion in new job-creating business tax cuts;
Medicaid anti-fraud initiative to combat waste, fraud and abuse;
$634 million increase in school aid statewide.
Federal Budget
No surprises here. President Bush’s proposal slashes everything from housing, health care, medical research programs, education, job
training, food programs, child care, and programs for the disabled and elderly over the next five years for about $65 billion in savings, and
calls for “major reductions in, or total eliminations of 141 federal programs, saving nearly $15 billion,” said Office of Management and Budget Director Joshua B. Bolten at a press briefing on the President’s Fiscal Year 2007 Budget, Feb. 6.
According to the Center on Budget and Policy Priorities, an independent watchdog organization, implementing these reductions
would force states to reduce the services they provide or increase their own taxes to make up for the federal costs being shifted to them.
Study Reveals Budget’s Disaster
After analyzing Bush’s budget, the Center on Budget and Policy Priorities determined that “Over five years, veterans’ benefits would be
cut 13 percent, or $10 billion. Housing, fuel, child care and nutrition programs for the poor and elderly would lose 13 percent, or $24 billion.
Topping this surreal concoction is a 13 percent cut — $53 billion — in education and job programs by 2011.”
These cuts follow almost $40 billion in cuts left over from last year, which the U.S. House of Representatives and the Senate approved
last month.
President Bush’s budget may spell bad news for everyone from babies to seniors, but it spells relief for the Defense Dept. and Americans
making over a million dollars.
The 2007 budget, which Director Bolten said “keeps the economy strong and restrains spending,” includes substantial tax cuts for the
wealthy. It makes permanent Bush’s $3 trillion tax cut over 10 years, a program which he began five years ago and signed into law in 2001 and 2003.
The Defense Department also receives a major boost to it budget for the ongoing war in Iraq and Afghanistan and effort to democratize
other parts of the world. The Pentagon, for instance, is requesting $70 billion “in supplemental spending for war costs” from now
until September 30, 2006. This comes on top of the Defense Department’s $410 billion base budget, Bolten said. This request does not
include other war-related expenses down the road.
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City Demands Fair Share of State and Federal Aid
Mayor and Council Speaker Quinn Urge Residents to Call Elected Officials
With term limits staring him in the eyes, Mayor Bloomberg is aggressively
demanding that Albany and federal legislators do the right
thing by their constituents and put more money into city coffers.
Charging that the city pays $11 billion more in state taxes than it
gets back in funding, Bloomberg is seeking $250 million from the state,
and has recruited City Council Speaker Christine Quinn to join forces
with him in lobbying the state for the city’s fair share of state aid.
To protest the state’s education funding, the mayor shelved plans to
build 21 new schools throughout the city to compel state lawmakers to
cough up the money to build them. “The reason is pretty obvious: It’s
the state’s shameless shortchanging of our city’s children out of the billions
of dollars we need for capital school funding,” Bloomberg said.
The city is also demanding more from the federal government and is
requesting $100 million of assistance from Washington based on the $13
billion New Yorkers send to the federal government in federal taxes.
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