Just as Washington is planning an infusion of spending on construction and infrastructure, Mayor Bloomberg has proposed a substantial cutback that would shrink the city’s five-year capital plan by more than $6 billion, or 30 percent.
What’s in the capital plan? Money goes to roads, police stations, economic development projects (such as revitalization of Coney Island and the development of Atlantic Yards). These cuts to the plan come on top of what equated to a 20 percent reduction enacted last year, which spread out the four-year plan into five years.
Mr. Bloomberg has been a mayor who apparently loves capital spending, and for the past two years, the city has allocated record amounts to capital projects. New below-market-rate housing, new parks, improved infrastructure—all have been strongly emphasized in the Bloomberg administration’s early years, but all have come at a cost, bringing up the city’s debt burden as almost all the money was borrowed (this is a common practice for capital projects).
Higher debt levels mean higher debt service payments—payments that continue year after year, often for 20 or 30 years, until the loans are paid off.
Just last week, City Comptroller Bill Thompson released a report warning about the city’s rising debt level, as tens of billions in added debt could leave taxpayers with an increasingly unmanageable burden each year in the form of debt payments. Debt payments are especially burdensome as they stay the same even if tax revenue shrinks, eating up a larger portion of the budget.
The announcement about the capital plan came as the mayor unveiled his budget for the fiscal year starting July 1, calling for cuts in spending, increasing the sales tax, and shrinking the city workforce.