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Don't Blame Wall Street for NY Services Cuts

Cutbacks in public services in New York are the result of lower state and federal investment in the city, rather than lower corporate tax revenues from Wall Street, mayoral aides said on Thursday.

Outside the New York Stock Exchange in lower Manhattan.
Photo: Oliver Quillia for CNBC.com
Outside the New York Stock Exchange in lower Manhattan.

If the state and federal government had given New York City the same percentage of its total budget that it did in fiscal 2002, New York City would have gotten an extra $6.1 billion, they said.

Business tax revenues have now topped the levels hit before the financial industry's 2008 collapse, the aides said.

Reflecting Wall Street's swift return to profitability, business tax revenue is expected to climb to $5.75 billion in the new budget that starts on July 1.

That contrasts with the $5.41 billion collected in fiscal 2008, the aides said.

Mayor Michael Bloomberg, a political independent, on Friday plans to unveil an approximately $65 billion budget plan for the city.

For months, he has warned that he will have to layoff nearly 5,000 teachers, cut services for older people and make a host of other cuts, including reducing capital spending.

"While the City's economy and fiscal situation continue to improve, Albany and Washington continue to face serious challenges and their cuts are real and will have a serious impact on our budget," said Deputy Mayor Howard Wolfson in a statement.

The mayor's office declined further comment. On Friday, the mayor will unveil his tenth round of budget cutbacks since 2008, to save $5.4 billion in the new fiscal year, his aides said.

The size of the police force and fire department would fall to decade-lows under Bloomberg's austere plan, a fiscal watchdog warned in March.

The importance of these cutbacks was underscored on Thursday when President Barack Obama visited Ground Zero just days after the killing of Osama bin Laden, which has prompted calls for increased security.

The mayor plans to announce at least one boon on Friday: all of the children who now get subsidized day care will have seats next year, according to his aides, who requested anonymity.

Some 16,000 slots were to be cut in the previous plan, due to the loss of federal aid and rising costs.

But Bloomberg will likely go ahead with some of the harsh measures he previously outlined, including squeezing cost savings out of unionized public workers.

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