New York's New Governor Leaves Bloomberg Begging

It has been Mr. Bloomberg, by virtue of his jurisdiction, who has been most vocally opposed to Mr. Cuomo’s spending cuts, practically standing in for what surely would have been the Democratic opposition to the Cuomo budget, if there were any concerted Democratic opposition to speak of. Mr. Bloomberg said the state cuts impacting New York City were “an outrage.” He wrote an op-ed in the Daily News, headlined, “How the State Budget Unfairly Singles Out NYC.”

The mayor’s outspokeness is also coming at a time when he’s suffering from historically low approval ratings. To pump those up, and get his story out, Mr. Bloomberg is running ads saying he’s protecting the city.

Mr. Bloomberg is largely blaming the governor for what he says will be a 6,000-head reduction in the city’s workforce of teachers. Mr. Cuomo’s aides have said that the mayor is exaggerating. Cuomo spokesman Josh Vlasto said in a March 28 public statement that “the City Department of Education has a surplus of over $300 million” and “the city revenue position has improved, so they have much less pressure on their overall budget.”

Unions representing teachers and municipal workers are running ads saying the city is greedily hoarding a $3 billion surplus while threatening layoffs.

The issue would seem to be one of semantics. The mayor’s aides say there is no surplus-especially not one in their Department of Education-and they stop just short of calling those claims flat-out lies. The $3 billion surplus is already earmarked to plug the budget gap in the upcoming fiscal year-which the city is legally required to do-starting in July. Using it now, Bloomberg aides say, will only lead to more layoffs and deeper cutbacks when those later expenses come due. 

When asked to verify the education surplus claim, a spokesman for Mr. Cuomo pointed to the Financial Plan Statements for New York City, issued by the city’s Office of Management and Budget. The report does in fact show a $271 million surplus. But the figures are from December, and have since been updated. The latest report, showing January figures, says the $23 billion agency has only a $17 million surplus, hardly enough to make a statistical dent.

When asked about the January figures, the Cuomo spokesman, Mr. Vlasto, said the December figures represented an end-of-year surplus, and thus were valid. Not so. The calendar year (January to December) does not line up with the city’s fiscal year (July to June). Doug Turetsky, a spokesman at the Independent Budget Office, said the December figures were “outdated” and that with the December figures, “you’re halfway into the fiscal year.” 

Even City Comptroller John Liu, whose office is obligated under the city charter to comb through the city’s finances and issue reports on it, and who is not exactly shy in airing his opinions, has been thoroughly muted in his assessment of the facts at issue in this argument. 

The city’s habit of rolling over surplus created a “fiscal cushion” that “masks the City budget’s structural imbalance,” Mr. Liu’s office wrote in a March 21 report. “While the City has provided $83 $853 million in additional funding to the DOE to mitigate the impact from the expiration of [federal stimulus funds] at the end of FY2011, these funds will not
be adequate to prevent addition pedagogical layoffs.” [corrected

So Mr. Cuomo is right about Mr. Bloomberg.

And, “as a result of the State’s fiscal problems, the financial burden in support of [the city's Department of Education] operations has fallen squarely on the City,” Mr. Liu’s office wrote in that report.

So Mr. Bloomberg is right about Mr. Cuomo.

But Mr. Liu, who managed a team of actuaries at PricewaterhouseCoopers and holds a degree in mathematical physics, says the existence of a surplus at the Department of Education is a matter of interpretation.

“Both sides are correct,” Mr. Liu told The Observer. “No side would make an incorrect claim, all right? No governor is going to make an incorrect claim. No mayor is going to make an incorrect claim. But things are subject to interpretation, and therefore both are correct.” It depends on what you mean by “surplus.” 

Seated in a cushioned chair in the basement of the Legislative Office Building the morning of the Somos dinner, Mr. Liu said, “The dispute notwithstanding, the bigger issue is that the negotiations have moved from Albany to City Hall. We’ll see what happens in the next few months. There’s three months to go. A lot can happen in the next three months.”

He went on: “Keep in mind that between the mayor’s November plan, and the mayor’s February plan, three months, $2 billion materialized, O.K.? So, we got another three months to go. A lot could happen.”

How Mr. Cuomo handled his budget is a marked contrast to how Mr. Bloomberg handled his, said Fred Siegel, a historian with Cooper Union who is also associated with the conservative Manhattan Institute think tank.

Both Mr. Cuomo and Mr. Bloomberg are settling their budgets in absence of huge federal stimulus dollars. Mr. Cuomo, bravely, opted to restructure expenses, such as Medicaid, and charged headfirst into the state’s other major expense, education.

Mr. Bloomberg, now handling his 10th budget, is only now getting to structural changes, said Mr. Siegel.

“The easy thing is to cut services and blame it on someone else,” said Mr. Siegel. “The hard thing to do is structural reform.”

Without another injection of federal stimulus money, and with Wall Street still recovering from his epic implosion, “it’s hard to see a deus ex machina that pulls us out of this,” said Mr. Siegel. “What Cuomo is doing is responding to that lack of deus ex machina.” Mr. Siegel, who is no fan of Mr. Bloomberg, is skeptical of Mr. Cuomo as well.

“I’m one of those people who describes Cuomo’s budget as the tallest building in Topeka. Cuomo leaped over the low expectations,” said Mr. Siegel. “Tactically, politically, he did a brilliant job. I’m just not sure where the substance is here.” How exactly does the governor go about closing 3,700 unused prison beds, and where specifically do you find the millions of dollars in Medicaid savings, wondered Mr. Siegel.