With an early-voting pilot in place, New Yorkers started flocking to the polls Saturday — wait, what election? We are voting to change the city’s constitution, or charter, deciding “yes” or “no” on five questions posed by a commission appointed by city grandees.
One question would supposedly add discipline to the city’s $95.6 billion annual budget — but the question is a muddle that makes “reform” meaningless.
The point of a referendum is to ask citizens to vote on one, clear thing. Question 4 on the ballot, though, doesn’t just ask people whether they would allow a “ ‘rainy-day fund’ to save money for use in future years,” which would be reasonable enough.
Instead, it bundles this issue with another: Voting “yes” on the same question is a “yes” vote on setting a minimum budget for the city’s public advocate and borough presidents, protecting these six offices from any future budget cuts, under a formula that increases them by the lower of inflation or the increase in general city spending.
It’s unnecessary, for starters. The public advocate’s budget, for example, has kept up with inflation over the past decade, jumping to nearly $3.6 million from $2.8 million. Yes, it suffered cuts after the 2008 financial crisis, but the ballot language would reserve the flexibility for such cuts in the future, allowing the mayor to “determine that a lower budget is fiscally necessary.”
There’s no reason to superficially protect these offices from the democratic process. People vote for the public advocate, but they don’t vote to reserve a specific portion of the budget for the public advocate, against all other priorities. The City Council already has leverage over the mayor — in signing off on the mayoralty’s own staff budget — to win higher budgets for these offices if the council thinks it’s important.
But what about the rainy-day fund itself? Setting money aside for a future recession is a sound idea: Unlike the federal government, cities can’t chronically borrow for operating expenses, only for long-term physical investments.
And as the city moves toward independence from the state fiscal controls imposed in 1975 — maybe someday, as the current controls expire in 2033, when state-backed rescue bonds for the city mature — it should be enshrining its own fiscal protections in the charter.
But this provision offers discipline without any constraints, a contradiction. The charter question only invites the city to create the rainy-day fund — but doesn’t require it.
And it offers no formula for compliance when the mayor and council have other priorities. For example, the city lost about $5 billion in local tax revenues over two years after the 2008 economic crisis, about 13 percent of revenues.
It would be reasonable to mandate that in years when revenues exceed inflation or another benchmark, the city deposit the excess into the rainy-day fund until it has amassed, say, 10 percent of revenues. (Right now, the city has about $1.5 billion in reserves, or about 2 percent.)
Charter-review commissioners were free to suggest any formula — but, in contrast with the formula to govern the public advocate’s future minimum budget, they left it to the mayor and City Council (the state Legislature would also have to sign off on a provision to create a rainy-day fund).
Another issue is what’s missing: No mention of the city’s huge health-care obligations to its current and future retirees, including people who retire when they’re still too young for Medicare. The city owes about $103.2 billion here, but has put only $4.8 billion aside.
The problem with not addressing this in the charter review is that unlike a minimum budget for borough presidents, these retiree liabilities are directly related to a rainy-day fund.
In the past, like after the 2008 crisis, the city has used the little money it has saved up for health- care liabilities as a flexible rainy-day fund in all but name.
But if it has an official rainy-day fund, there is nothing stopping the mayor and City Council from neglecting the health-care fund altogether. The charter commission should have asked voters, then, whether they would force the city to start making good on these promises, as well.
Voters can decide whether a “yes” on Question 4 is at least better than nothing — but either way, they had better hope it doesn’t rain soon.
This piece originally appeared at the New York Post
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Nicole Gelinas is a senior fellow at the Manhattan Institute and contributing editor at City Journal. Follow her on Twitter here.
This piece originally appeared in New York Post