Bloomberg’s Hidden Debt

“Yes, it’s a subject of concern—that’s why we’re embarking on this effort basically to spread the current program away from us,” said Mark Page, the city’s budget director.

Exercising restraint on the capital budget is difficult, Mr. Page said, given rising costs and the widespread desire for projects. “It’s very hard to avoid the creep of people wanting to do more,” he said.

The city has received near-top bond ratings from all three major bond-rating agencies, which monitor the city’s debt; interest rates are low; and the mayor has used recent budget surpluses to pay down more than $3 billion in future debt payments, and paid some capital expenses straight out of the operating budget.

But even with the city stretching out the capital plan, the proposed level of city commitments for next year’s capital budget—$11.5 billion—is the highest ever and more than double the level of commitments in the first two capital budgets of the Bloomberg administration.

The billions in capital spending are spread around through an array of city agencies, with much going to education, housing, water and sanitation-related projects—both for repair and replacement—but also with significant money going toward new expansion projects. In the coming year’s capital budget, proposed commitments include $949.5 million for a new police academy, $424.5 million to repair East River bridges, $157 million for a Staten Island Supreme Court building, and $278 million to acquire land and build infrastructure at Willets Point near Shea Stadium.

The ever-rising price of construction has helped swell the capital budget as well. Projects like the Newtown Creek sewage-treatment plant and the Bronx water-filtration plant have required literally billions in new money to cover cost overruns.

For now, many legislators say the city has exhibited control over its finances, given the extraordinary number of necessary projects with the population growing rapidly, and with the city still having to fix infrastructure that was poorly maintained during the fiscal crisis of the 1970s.

“I think we have a handle on it,” said Councilman David Weprin, chairman of the Council’s finance committee and a candidate for city comptroller. “It’s a balancing act. Yes, you want to reduce debt service, but not at the expense of providing for our future and allowing for routine maintenance, which would prevent accidents and major crises in the future.”

Overall, city spending has risen substantially in the Bloomberg administration, as the mayor saw city expenses jump 23 percent, in inflation-adjusted numbers, during his first six years in the job; the budget grew from $41 billion in 2002 to $59 billion in 2007.

The Council has until the end of June to work out a final budget with the mayor.

Bloomberg’s Hidden Debt