WSJ Commentary: De Blasio Returning NYC to Old Days

Wednesday, 21 May 2014 12:23 PM

By Sandy Fitzgerald

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New York Mayor Bill de Blasio's first budget is taking the city back to its old days, and liberals and progressives should be the most concerned about the new mayor's agenda, an opinion piece in The Wall Street Journal says.

"Mr. de Blasio is the first New York mayor in two decades to hail from the left, which makes him the face of a new progressivism in America," author Fred Siegel and financial analyst Nicole Gelinas wrote.

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But while the new mayor calls the $73.9 billion budget "historic" and "transcendent," it shows the city is willing to spend beyond its means to keep labor unions happy for the first time since it nearly went bankrupt in the 1970s, Siegel and Gelinas write. For example, the new teachers' contract includes $4.3 billion in pay raises that are retroactive to 2009, according to the commentary.

De Blasio used his budget announcement to push his "progressive" agenda with a budget that adds money to enforce mandated sick leave, public housing, and education. But the most controversial portion includes the pay raises for the teachers, and also pay hikes for city employees, at an added cost of $9 billion over four years.

Under former Mayor Michael Bloomberg, the United Federation of Teachers saw their pay go up 48 percent his first eight years. But after the Lehman Brothers collapse of 2008, Bloomberg made clear teachers could not receive 4 percent raises in 2009 and 2010.

New York has used up the $8 billion surplus it had before the Lehman collapse, and Bloomberg said teachers could have raises after 2008 if they paid for their healthcare premiums and worked "productively," but they refused.

De Blasio balanced his budget for fiscal year 2015 because of unanticipated revenue of $1.2 billion. But the $9 billion labor costs over the next four years are pushing the projected budget deficit to $2.2 billion and the budget gap for fiscal year 2018 to $3.2 billion, Siegal and Gelinas wrote.

To pay the retroactive pay raises, de Blasio will need to borrow money, something that has not been done since before 1975, according to the commentary.

"The city will have to borrow well into the next mayoral term to account for and pay a current operating expense for a new debt that the city has freely chosen to incur," wrote Siegel and Gelinas. "Generally accepted accounting principles, which the city has adhered to since the 1970s crisis, dictate that the city account for an operating expense when it is incurred, not a half-decade into the future. Yet such a proposed delay could again be policy."

The mayor is already showing his "simple incompetence" as well, said the two opinion writers. On May 8, he said he had a balanced budget but two business days later it was revealed that the budget wasn't balanced, according to the commentary.

Independently elected Comptroller Scott Stringer flagged $725 million in retroactive raises for teachers who will retire soon, forcing de Blasio to move the sum to this year's budget in a plan that fixes only one-sixth of the $4.3 billion in payments that are coming.

But after the 1970s, New York state and city officials set up a system of checks and balances. Stringer and State Comptroller Thomas DiNapoli serve on New York's Financial Control board, which Gov. Andrew Cuomo controls.

The board can take over if an operating deficit of more than $100 million is being carried, or if the city is borrowing to pay for operating expenses.

"Proper accounting for the teachers' deal would expose the city as committing both of those sins," wrote Siegel and Gelinas. "Iif for no other reason, these Democratic politicians should act out of self-interest."

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