Jan 31, 2009 10:34 am US/Eastern
Bloomberg Proposes Tax Hikes, $1 Billion In Cuts
Mayor Strikes Somber Tone While Addressing The Big Apple's Economic Crisis
Wall Street Losses Could Top $47 Billion
City Employees To Pay Part Of Healthcare; Pension Reform
NEW YORK (CBS) ―
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Mayor Michael Bloomberg officially announced Friday the city's $4 billion budget gap and unveiled a new budget filled with painful cutbacks that will impact every New Yorker.
CBS
Mayor Michael Bloomberg officially announced Friday the city's $4 billion budget gap and unveiled a new budget filled with painful cutbacks that will impact every New Yorker.
Wall Street got sick and now New York City residents have to take their medicine, and Bloomberg's budget solution will probably be hard for most of us to swallow. New taxes, a smaller workforce, and reduced city services – all the ingredients of Friday's "Doomsday" budget plan.
"This is a very tough time for our city and nation," Bloomberg said. "We have a $4 billion budget gap. It is serious, I think it is manageable."
In the Bloomberg playbook tough times mean everyone will have to reach into their pocketbooks to bail out the city. The big question is, how?
For now, Bloomberg is proposing $894 million in new sales taxes, including:
-Increasing the sales tax by one quarter of one percent from 8.375 percent to 8.625 percent
-Repealing the sales tax exemption on clothing purchases under $110
-And new taxes on lots of things that are now tax-free, like music downloads.
That's right – download a song or movie on your iPod and you pay new sales taxes. Also slated for new sales taxes are movies, sporting events, satellite radio, cable TV, concerts, bowling alleys, racetracks, golf courses, and – if you're looking to be taken for a ride to those events – taxis, limousines, and pedicabs will cost you more too.
"I would love to not have any sales tax, it's not good for business here," he said.
That's the mayor's plan for now, except even he admits it might not be his plan in the end. If the Legislature decides to put a surcharge on the personal income tax for taxpayers who make over $500,000, he told CBS 2's Marcia Kramer he might piggyback on that.
"We'd have to find a billion dollars more revenue," he said.
The budget also calls for eliminating 23,000 jobs through layoffs and attrition. That includes 15,000 teachers, but that might be a red herring. There seems to be money in the federal stimulus package to save most of the jobs.
"I'm optimistic that we will get the federal monies. I'm optimistic we will be able to maintain our classrooms, but obviously it's not done yet," said Chancellor Joel Klein.
But it's not a red herring that the city plans to cut the size of its police force by 2,067 cops and 469 civilians. The approved headcount will be about 34,700, down from a high of 41,000 in 2001. NYPD Commissioner Ray Kelly admitted that smaller police academy classes and attrition would make it hard for him to reach 34,700.
"I expect officers to do more with less. They've responded, I believe they'll continue to respond. Would I like more police? Absolutely," said NYPD Commissioner Ray Kelly. "Am I happy with this budget? No, but this is the hand that we've been dealt and this is the hand we have to play."
The budget also calls for 20 more red light cameras and a pilot program to set up speed cameras, that way cops can say "caught on tape" to motorists who go too fast.
City tax revenues have fallen nearly 400 percent since November, forcing Bloomberg to make the painful choices.
"When Wall Street catches a cold, it's a serious illness for us," Bloomberg said.
So serious that his plan is also calling for:
-$955 million in agency cuts
-$1 billion from labor
-Making city employees pay a portion of the health care costs
Bloomberg's big hope now is that the fiscal picture doesn't get any worse between now and June, when the budget is approved. Otherwise there will be even more pain for New Yorkers.
"We're trying to help more families stay in their homes and more small businesses keep their doors open," he said. "We want them to keep their doors open and in fact expand their employment because that's where the jobs are going to come from."
Wall Street and the spiraling out of control economy have dealt New York City a bad hand. The mayor has no trumps to play as he lays out the spending plan with a gap that has grown nearly 400 percent in three months.
Shrinking tax revenues have turned the $1.3 billion November budget hole into a now-$4 billion chasm.
"Are we going to go through some difficult times? I dont think there's any question about that, but keep in mind we do have a plan to balance the budget," said Bloomberg. "The current economic climate requires us to act and protect our quality of life and get ready for our budget that we have to come up with in June."
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