{"id":43627,"date":"2020-08-10T02:25:00","date_gmt":"2020-08-09T23:25:00","guid":{"rendered":"https:\/\/en.buradabiliyorum.com\/with-a-defanged-watchdog-nycs-fiscal-future-is-dicey\/"},"modified":"2020-08-10T02:25:00","modified_gmt":"2020-08-09T23:25:00","slug":"with-a-defanged-watchdog-nycs-fiscal-future-is-dicey","status":"publish","type":"post","link":"https:\/\/buradabiliyorum.com\/en\/with-a-defanged-watchdog-nycs-fiscal-future-is-dicey\/","title":{"rendered":"#With a defanged watchdog, NYC\u2019s fiscal future is dicey"},"content":{"rendered":"

“#With a defanged watchdog, NYC\u2019s fiscal future is dicey<\/strong>”<\/p>\n

\n Faced with the biggest New York City fiscal crisis in nearly two generations, the state\u2019s \u00adFinancial Control Board has punted. The board decided last week that the city\u2019s budget isn\u2019t balanced but not quite imbalanced enough to qualify as an emergency. The inaction demonstrates a grim reality: In the \u201970s, when the state created the FCB, New York state was in a political position to rescue the Big App<\/a>le. No more.<\/p>\n

The FCB is part of the fable that Gotham\u2019s Wise Men tell about the Bad Old Days. In 1975, when the city\u2019s lenders cut off New York City from borrowing, pushing it to the brink of bankruptcy, the state Legislature and Gov. Hugh Carey passed a law. The Financial Emergency Act enabled the new board, heavy with financial experts, to control the city\u2019s budget. (The governor controls four out of seven members.)<\/p>\n

For 11 years, the board did good \u2014 most importantly, freezing government wages. In the Ed Koch \u00adadministration, during the early \u201980s, the board served as \u201cbad cop\u201d when unions asked for high raises; Koch could say\u00a0the board wouldn\u2019t let him.<\/p>\n

But New York never got its fiscal house in order. The board was also a pioneer in what would become the global economy\u2019s mantra, starting in the \u201980s: If you\u2019ve borrowed too much already, just borrow more.<\/p>\n

In the mid-\u201970s, banks thought that New York had borrowed too much money, to pay for day-to-day expenses, not long-term infrastructure. The solution, approved by the board, was for the city to borrow more to pay off those bankers. We still owe that money.<\/p>\n

Longer term, New York got lucky. In the early \u201980s, Wall Street took off, ironically because of the global debt boom. In 1980, city spending, including only local dollars, not federal and state aid, \u00adadjusted for inflation, was $29 billion. In 2019, it was $69 billion.<\/p>\n

We still borrow for operating \u00adexpenses. The city owes $108 billion for future public-sector retiree health-care costs, money the city should have set aside when the \u00adfuture retirees were doing the work. In October, Mayor Bill de Blasio is set to pay teachers and civilian workers a $1.5 billion delayed raise he approved in 2014, for work they did a decade ago.<\/p>\n

Now that the city\u2019s luck may have run out, will the board step in? The board must certify that the city\u2019s budget is balanced every year \u2014 or else.<\/p>\n

Last week, at the meeting to make this determination, the board\u2019s report was tough \u2014 slamming de Blasio\u2019s plan, approved in June by the City Council, to close a projected $9.7 billion drop in revenues.<\/p>\n

The board picked apart de Blasio\u2019s pretensions, beyond his closing most of the gap with one-shot sources that won\u2019t be available next year.<\/p>\n

Of de Blasio\u2019s $1 billion in \u201cunspecified labor savings,\u201d the board\u2019s staff noted: \u201cWe have no details on .\u2009.\u2009. these savings.\u201d<\/p>\n

If threatened layoffs are \u201ca viable backup, the city must develop a \u00addetailed plan on how and when the layoffs would occur.\u201d Of nearly $400 million in overtime savings: \u201cThe city has never shown it can control overtime.\u201d<\/p>\n

On federal aid: \u201cThe city cannot wait.\u201d<\/p>\n

Overall, the staff determined the city likely faces a $2 billion gap for the fiscal year that just started July 1, an imbalanced budget.<\/p>\n

So, what\u2019s the \u201cor else\u201d? The board told de Blasio to try again \u2014 resubmitting a new plan. If the city is spending nearly $6 billion a month, nearly two months into an imbalanced budget, why not take over the city\u2019s finances now, imposing new wage freezes?<\/p>\n

Simple: The board has no powers. Effective with reforms to the Financial Emergency Act made nearly 20 years ago, the board can no longer re-impose a \u201ccontrol \u00adperiod.\u201d<\/p>\n

It must go to .\u2009.\u2009. the state Legislature. But left-wing freshmen lawmakers are highly unlikely to enact a \u201ccontrol period\u201d that enables wage freezes.<\/p>\n

Municipal bondholders may figure out that when it comes to a balanced budget, New York long ago defanged its \u201cbad cop.\u201d<\/p>\n

Nicole Gelinas is a contributing editor of City Journal. <\/em>Twitter<\/a>: @NicoleGelinas<\/em>\n <\/div>\n

\n

If you want to read more Opinion News<\/a> articles, you can visit our General category.<\/a><\/span><\/strong><\/p>\n<\/blockquote>\n

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Source<\/a><\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

“#With a defanged watchdog, NYC\u2019s fiscal future is dicey” Faced with the biggest New York City fiscal crisis in nearly two generations, the state\u2019s \u00adFinancial Control Board has punted. The board decided last week that the city\u2019s budget isn\u2019t balanced but not quite imbalanced enough to qualify as an emergency. The inaction demonstrates a grim…<\/p>\n","protected":false},"author":1,"featured_media":43628,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"fifu_image_url":"","fifu_image_alt":"","footnotes":""},"categories":[1],"tags":[51072,51071],"class_list":["post-43627","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-nycs-fiscal-future-is-dicey","tag-with-a-defanged-watchdog"],"_links":{"self":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/43627","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/comments?post=43627"}],"version-history":[{"count":0,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/posts\/43627\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media\/43628"}],"wp:attachment":[{"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/media?parent=43627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/categories?post=43627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/buradabiliyorum.com\/en\/wp-json\/wp\/v2\/tags?post=43627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}