The Bloomberg Borrowing Binge
MAYOR Bloomberg will give a high-profile speech today on the city's "sustainability challenges" through 2030. Here's hoping he finally starts paying attention to one major and growing "challenge" - New York's ballooning debt.
Gotham is groaning under the weight of $55 billion in debt - more than $6,800 per resident. That's 60 percent higher than the per-capita level of Chicago, the second-worst U.S. city in this regard.
And, as figures from city Comptroller Bill Thompson show, much of the pile-on took place on Bloomberg's watch. When Mayor Rudy Giuliani left office, debt was $43 billion, or less than $5,300 per resident. Borrowing rose at about 5 percent a year in the last five Giuliani years; the rate's jumped to nearly 7 percent a year under Mayor Mike.
The mayor needs to start getting choosier when it comes to picking city infrastructure projects, and more sensible in financing them.
Some debt is perfectly prudent. The city benefits when it invests taxpayer money in roads, bridges, trains, parks and schools - all reliable projects that promote the economy and support a growing population.
Even then, care is needed. Under Bloomberg, the lion's share of capital spending goes to school construction. Between today and the end of his second term, the mayor will add nearly $5 billion more in school debt, for a total of about $20 billion outstanding.
But Gotham doesn't get the biggest bang for its buck here. Depending on who is counting, school-construction costs are twice to three times as high per square foot here as elsewhere in America.
Another way to save: Don't spend on things that aren't the government's job. Before Bloomberg leaves office, he'll add nearly $3.5 billion more in debt for housing and "urban development." But why should Gotham be spending any money here, when most people - working-class, middle-class and rich - live in private housing?
Bloomberg claims public spending on housing helps working-class and middle-class New Yorkers. But mass-transit investments (e.g., more express tracks to Brooklyn and Queens) would improve the quality of life for millions, rather than for a few who live in subsidized housing.
Even after floating nearly $2 billion in bonds two weeks ago to fund a subway extension to jumpstart investment on the far west side of Manhattan, the city is set to devote fewer resources to mass transit than to housing over the rest of Bloomberg's term. Even ever-vital roads, bridges and tunnels are set to get only about $500 million more than will housing.
The city also needs to pay more of the cost of such projects up front, rather than taking out debt for nearly all of it. It's considered fiscally prudent, after all, for a homebuyer to put down 20 percent before borrowing the rest. By shifting to a similar rule, Bloomberg would shave about $2.5 billion off the total debt tally by the time he leaves office, saving taxpayers $200 million-plus a year in interest.
Paying more capital costs up front does require finding nearly $1 billion a year - so the mayor would have to cut back on something else. A good place to start is the city's $5 billion Medicaid program; Gotham should work with Albany to cut costs aggressively here. Another promising place for savings: Negotiate future labor contracts so public-sector workers pay about what their private-sector peers do toward health-care benefits.
Difficult steps - but vital. Once the city takes on debt, it can never renege; if it doesn't get a handle on the problem now, some future fiscal crisis could force a mayor to cut services like fire and police to pay for today's borrowing.
This piece originally appeared in New York Post
This piece originally appeared in New York Post
