Mayor
Bloomberg stood in a
muddy tunnel last
week to show off one
of the big
construction
projects that have
been a hallmark of
his administration:
An extension of the
7 train.
City taxpayers are
picking up the tab
for the $2.1 billion
project, he bragged,
because it's an
investment in the
far West Side that
will pay for itself
by spurring new
growth.
In fact, the city
hasn't had to pay a
dime yet. But that
doesn't mean
Bloomberg will use
the savings to avoid
laying off workers,
closing fire
companies or
shutting pools.
Over the last five
years, Bloomberg has
budgeted $315
million to pay back
the bonds that have
financed
construction for the
7 train.
But every year, the
bond payments have
been
covered by
other sources - like
fees from developers
building in the area
and interest earned
on unspent subway
construction cash.
That has left
Bloomberg with $315
million to play with
as he wished -
paying for new
ideas, covering
unexpected
shortfalls or
storing as a surplus
for the next year.
This is not a bad
thing, the mayor's
team says. Just as a
family with no debt
and big savings can
qualify for a
low-interest credit
card, a city that
manages its money
well pays less in
interest for
everything it does.
"Conservative and
responsible
budgeting has kept
the city's bond
ratings high through
crisis, saving
taxpayers tens of
millions of
dollars," said
Bloomberg spokesman
Marc La Vorgna.
Bloomberg is haunted
by New York's fiscal
crisis in the 1970s,
when the city burned
through its
reserves, ignored
deficits and had to
surrender its budget
authority to outside
monitors.
If Bloomberg didn't
set aside enough
cash to pay for all
the interest on the
7 train bonds each
year - even if none
of it gets spent -
the bankers who sell
those bonds might
start to worry, and
charge the city a
higher interest
rate.
"That shows the
market that the
money is there to
pay the interest,"
said one city budget
insider. "It would
really be damaging
to the city in the
marketplace if we
were not to
appropriate these
funds."
There are other pots
of money stashed
away in the $63.6
billion budget to
pay for things that
may never happen -
just like there are
lowball estimates
for some taxes and
other income.
As one city official
quipped, "If you do
it the other way,
you know who you
are? You're the
State of New York."
It's a prudent way
to guarantee the
city will keep its
budget balanced over
the course of the
year. It's also a
way for Bloomberg to
find the money to
pull rabbits out of
his hat months from
now.
So next year's
budget includes
$83.3 million to pay
for the 7 train
extension, even
though it's highly
unlikely all of it
will be spent.
At the same time,
the budget closes
four FDNY companies
to save $5.6
million. It closes a
center for the
homeless to save
$2.4million. It
closes four swimming
pools and shuts the
rest down two weeks
early to save $1.4
million.
It also lays off 834
city workers.
The city can't
afford to pay their
salaries anymore,
but it can still
afford to set aside
money in reserve to
impress the bond
markets. It's cold
comfort to those
workers, but the
bankers will be
happy.
alisberg@nydailynews.com
