Soften the budget blows

There is no doubt that even the most essential city services are going to be subjected to painful cuts. But the question remains whether New York City and State are exercising revenue options to make those cuts less brutal?

A few of the effects of the staggering 1.3 billion in proposed city cuts: the closing of 50 senior centers, dozens of public libraries and 20 firehouses. With Governor David Paterson's proposed budget eliminating $493 million in funding for city schools, the quality of education for children is frighteningly at risk.

The Progressive Caucus of the New York City Council is calling on Mayor Bloomberg to look at revenue generating options. These include taxing hedge fund interest as ordinary business income (an adjustment that may happen on the federal level).

The Caucus is also calling for eliminating a tax loophole for the insurance industry, a progressive income tax on the wealthiest households, and fees on vacant properties.

The administration raises a practical point about these proposals - that they require state approval. At the rate and politics of Albany, this is no easy task.

But they still merit consideration. The deficit for next year is projected to be worse, which means that leaning on the approach of cutting more—at the expense of the most vulnerable people—instead of revenue generation just won't do it.

In these crisis times, Bloomberg's rigid opposition to taxing the rich begs scrutiny. His administration argues that the financial sector pays a disproportionate share of business and personal taxes to the city -40 percent- and forms a core tax base that should not be jeopardized. In other words, a heavier tax burden could trigger flight from the city.

But this is questionable. The Fiscal Policy Institute (FPI) says there is no evidence that income tax increase drives the wealthy away from New York. It also points out that despite record income gains by the city's wealthiest five percent, Bloomberg has hiked regressive taxes and fees.

The state, of course, bears a huge responsibility for the city's predicament. For years, Albany has been shortchanging the Big Apple, which sends more dollars to the state than it receives back. Albany appears to be penalizing the city for its fiscal prudence by ordering deeper cuts in comparison to other municipalities.

Besides not rallying for the city's fair share, too many state legislators also fail to support revenue generating measures that could help. These include a soda tax and allowing the sale of wine in grocery stores.

A sugar tax or taxing the wealthiest may not be palatable measures for some but they should be preferred in the face of cuts to HIV/AIDS services.

There is no doubt that even the most essential city services are going to be subjected to painful cuts. But the question remains whether New York City and State are exercising revenue options to make those cuts less brutal?

A few of the effects of the staggering 1.3 billion in proposed city cuts: the closing of 50 senior centers, dozens of public libraries and 20 firehouses. With Governor David Paterson's proposed budget eliminating $493 million in funding for city schools, the quality of education for children is frighteningly at risk.

The Progressive Caucus of the New York City Council is calling on Mayor Bloomberg to look at revenue generating options. These include taxing hedge fund interest as ordinary business income (an adjustment that may happen on the federal level).

The Caucus is also calling for eliminating a tax loophole for the insurance industry, a progressive income tax on the wealthiest households, and fees on vacant properties.

The administration raises a practical point about these proposals - that they require state approval. At the rate and politics of Albany, this is no easy task.

But they still merit consideration. The deficit for next year is projected to be worse, which means that leaning on the approach of cutting more—at the expense of the most vulnerable people—instead of revenue generation just won't do it.

In these crisis times, Bloomberg's rigid opposition to taxing the rich begs scrutiny. His administration argues that the financial sector pays a disproportionate share of business and personal taxes to the city -40 percent- and forms a core tax base that should not be jeopardized. In other words, a heavier tax burden could trigger flight from the city.

 

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