Bloomberg announces cuts jobs, tax relief

November 5, 2008 9:33:26 PM PST
Mayor Michael Bloomberg warned on Wednesday of tax hikes as he announced dramatic cuts to city services and to the municipal work force and the elimination of two programs that provided relief to property owners. The billionaire mayor spared no one from the budget knife as he outlined an update to his financial plan. Two popular pieces of property tax relief, including a $400 per-homeowner rebate, will no longer continue. The mayor also is cutting hundreds of jobs, raising fees and fines, slashing funding to cultural institutions, closing health clinics and reducing nighttime staffing at five firehouses.

"Every city agency must push each dollar further ... and doing that involves making hard choices that will not be popular with everyone, or perhaps anyone," Bloomberg said. "But they are the right ones to see us through these very difficult economic times and will help speed our recovery down the road."

The updated budget plan shows that the city faces gaps of $303 million this fiscal year and $3.7 billion next year, partly because revenues have declined and are expected to "fall off a cliff," Bloomberg said. Even with the $955 million in savings realized by dropping the property tax relief and making agency cuts, the city still faces deficits.

The mayor laid out potential solutions for filling those gaps, including a range of tax increases. Income taxes could go up by as much as 15 percent, which would amount to an annual increase of $233 for a resident earning between $50,000 and $70,000 a year. The sales tax exemption on clothing and shoes under $110 might disappear.

"There will be pain, and there will be lots of people not happy," Bloomberg said.

Homeowners will feel the burden immediately. The city is yanking the $400 rebate checks that were scheduled to go out this fall. A temporary 7 percent property tax break put into place last year also will be eliminated.

The $400 rebate was implemented in 2004 after the Bloomberg administration enacted an 18.5 percent property tax hike across the board.

Bloomberg came up with the rebate to help owners of one- and two-family homes because of a state law that says when the city raises or lowers property taxes, it must do so equally for all classes of property.

The sobering budget update, delivered just as Bloomberg prepares to run for re-election, includes the decision to cancel the next class of more than 1,000 police cadets this January. The New York Police Department will go without those officers, and the next class will begin in July.

The citywide work force will shrink by 3,000 employees: 500 through layoffs and the rest through attrition. That includes 475 non-classroom jobs in the Department of Education.

The city will close a health clinic and a homeless shelter in Manhattan and dental health centers citywide that serve some 17,000 poor children each year. Funding to cultural institutions shrinks by 2.5 percent this fiscal year and 5 percent in fiscal 2010.

The unpopular moves set up a potentially difficult environment for Bloomberg to run for re-election next year.

Bloomberg has staked his campaign for a third consecutive term on his ability to turn around the economy, and therefore he has no choice but to make bold moves. But he will certainly be battling City Council members - two-thirds of whom also are up for re-election - and many others who oppose his cuts and potential tax hikes.

Council Speaker Christine Quinn, who has been a close Bloomberg ally, said she was troubled by the withdrawal of the $400 rebate.

"Many families may be counting on that money in their annual budget, and to withdraw it could cause a big hole in their pockets," she said.

Agencies have proposed a variety of ways to raise a few extra dollars, too. Those include starting a 5-cent tax on plastic bags, selling advertising on street trash cans and garbage trucks, raising parking rates in some parts of Manhattan and increasing fees for red-carpet events.