New York City’s Buried $2.5 Billion Treasure

While Henry Paulson and Ben Bernanke wrestle with Congress over the Bush administration’s proposed $700 billion bailout for financial firms, Mayor Michael Bloomberg is taking steps to inoculate New York from the nation’s fiscal trouble.

For starters, he’s floated the idea of raising the residential property tax by 7 percent in January, a wise move that would increase revenues by $600 million and cost co-op and condo owners about $350 more a year. Indeed, while no one can say with any certainty what the “new” Wall Street will look like, New Yorkers can be reasonably assured that the mayor’s characteristic fiscal restraint will help us weather the current storm with less damage than we might have had under other City Hall administrations.

That said, it is dismaying that Mayor Bloomberg appears unwilling to eliminate the city’s $400 homeowner tax rebate, a politically popular but policy-flawed gimmick the mayor put in place in 2004. This page took issue each time the mayor decided to include the rebate—which drains $250 million from the city treasury—in his budget. Had the rebate never made it on the books, the city would have an extra $1.2 billion in the coffers in 2008, a nice piece of change when facing economic uncertainty. We urge the mayor and Council to eliminate the rebate in addition to raising the property tax.

We would also ask the mayor to get on the bully pulpit and demand that Albany reinstate the commuter tax. Several years ago, before the legislators in Albany repealed the commuter tax in an idiotic game of political chicken, the 0.45 percent tax was bringing in $400 million annually to the city. The tax was hardly prohibitive; those making $100,000 were paying only $450. Most commuters didn’t even know they’d been paying it until it was repealed. That percentage was in fact too low, considering how much time commuters—who pay zero income tax to the city—spend in the five boroughs under the protection of our police, fire department and emergency-medical services. A more equitable commuter tax would be 1 percent, from which the city would realize almost $1 billion a year. Commuters owe their jobs and high incomes to the city. Asking them to contribute 1 percent of their income to the city that employs them, to the city that protects them, to the city that provides them with inspiration and aspiration, is entirely reasonable.

The mayor should press again for congestion pricing. Recall that last spring this increasingly necessary plan to impose a toll on cars driving into midtown Manhattan during business hours failed despite the mayor having bipartisan support from the Democratic governor, the Republican State Senate, the Council and 60 percent of New York City voters. The obstacle, of course, was Assembly Speaker Sheldon Silver, who has consistently maneuvered against the best interests of the city he claims to represent. At a time when the Metropolitan Transportation Authority is projecting a staggering budget deficit of almost a billion dollars next year, it’s time for Speaker Silver to get with the program. Congestion pricing would reduce air pollution, free up gridlock and pump $500 million a year into the city’s mass transit infrastructure.

Mr. Bloomberg can’t do all this himself. It can get lonely on that pulpit. Senators Chuck Schumer and Hillary Clinton should join him in pressuring Albany. The city is the economic engine that powers New York State, and elected officials who care about the solvency of the state will surely want to do whatever it takes to shore up the city’s finances in a time of instability.

New York City’s Buried $2.5 Billion Treasure