The Budget Buster
It's now apparent that Giuliani purchased the city's good times partially with borrowed money and left his successor, Mike Bloomberg, holding a bag of debt. New York City went from a $3 billion budget surplus in 1998 to a $4.5 billion deficit after Giuliani left office. This mismanagement of prosperity is a big part of his legacy. Giuliani left the city's finances in a mess that was aggravated by the collateral economic damage of 9/11--the loss of up to 130,000 jobs since 2001 and unexpected expenditures for relief, cleanup and overtime.
Tom Carroll is the president of the conservative activist group Change New York. He says of both Giuliani and Governor George Pataki: "There wasn't the fiscal discipline we had hoped to see overall. But on debt, there was no discipline at all."
Some fiscal watchdogs saw this coming, including State Comptroller McCall. In a report issued in July 2001, McCall declared: "As I've said time and again, the most responsible use of the record surpluses of the past few years would have been to reduce the City's mounting debt burden, and build a reserve fund for the rainy day that will inevitably come.... Record budget surpluses...afforded the City a golden opportunity to get on the path toward long-term fiscal stability. The opportunity has been squandered."
Most of the current budget deficit is Giuliani's responsibility. Tax cuts he enacted since 1995--benefiting mainly the wealthy--will cost the city $2.6 billion next year. He added 25,000 employees to the city's payroll, many of them patronage hires, after promising to cut the work force as a candidate of fiscal conservatism. On the day he left office, the head count of city workers was the highest in history.
Giuliani's borrowing practices increased the city's debt burden by 50 percent. New York City is now the biggest debtor in the nation outside the federal government, with $42 billion in loans outstanding. In comparison, the State of California has a debt of $25 billion. When Giuliani took office, the city was spending 15 cents of every dollar it collected in revenue to make the payments on its bonds. Fiscal monitors now project that New York will be spending 20 cents of every dollar to pay off its bonds by the end of this year. To the extent that debt service is rising, the city is forced to reduce spending on education, police and healthcare.
If a liberal Democrat had borrowed with such abandon, and converted a surplus into a deficit so swiftly, the bond raters and editorial boards would have demonized him as a drunken sailor on a binge. Giuliani was hardly criticized.
Yourself or anyone else who might be familiar with the situation. NYC had/has a large illegal population. One of the issues I think isn't addressed often enough is the status of FICA and tax witholding on compensation paid to illegals. Rudy was straightforward in preventing enforcement of federal law, so I guess I can't blame him for that. However NYC is one of the few cities with a city income tax. Were taxes witheld and remitted? If so, were the ID, I presume social security, numbers valid or false? Were employers of illegals prosecuted for any violation of the city tax laws. Non collecting, non remittance of witholding or maintainance of false ID records, all I which I presume is illegal in NYC.
I notice that's unsourced.
Everything I've seen says that Rudy took NYC out of a deficit situation and left with a surplus.
My understanding is that NYC prohibits the rolling over of a budget surplus from one year the next. The City effects a rollover by prepaying future expense (usually debt service). While this may reduce the future debt service burden, if also means the surplus is spent and no longer appears as a surplus.