Angry New Yorker

Thursday, July 24, 2008
I drink your milkshake! I drink it up!

There Will be Blood was a lousy movie. Great acting and cinematography, but the plot (such as it was) dangled more lost opportunities than your average Christmas tree has decorations. But there were a few memorable lines, the title to this piece being one.

And now that New York city and state have collectively emptied our milkshakes there's panic in the air because the glasses are bone empty. The front page of today's NY Post carries several stories about NY's impending self-imposed fiscal crisis (see Mayor Bloomberg Warns of $2.3B Gap in City Budget, and Gov. Paterson: Worst Crisis Since '70's). I have no sympathy for Paterson or the Mayor, or any NY elected officials. I do feel for NY's taxpayers and families, who will be sorely pressed even more so than they already are.

But a bit of examination is order. The 2008-09 New York State budget, as enacted, runs $80.5 billion dollars. Over the past 20 years officials have jacked state spending up annually at two or three times the inflation rate, largely due to the headlocks by unions leading to stiff increases in education and health-care spending. New York City has suffered the same fate. While Mayor Bloomberg has often been hailed as a practical businessman, he's been complicit in the steady increases in the city's budget and foolishly calling NYC a luxury product (as in, if you have to ask what it costs you can't afford it) highlighted his "che sara sara" attitude.

We've read enough reports about New York's Potemkin village-like finances, year in and year out, to have seen this coming a mile away. In fact, it's one reason we finally decided to move out of New York City, as have millions of others over the past decade (to be replaced by the never ending flow of low-skilled "immigrants").

But "we told you so" is never a gracious thing to say. Instead, we'll give the NYC Comptroller's just issued Budget Report, the final word:
Furthermore, in most years of the Financial Plan period, risks identified by the
Comptroller’s Office outweigh potentially favorable developments. On net, the City is
likely to experience a gap of $68 million in FY 2009, additional resources of
$295 million in FY 2010, and increments of $538 million and $334 million to the gaps in FYs 2011 and 2012, respectively. As a result, the Comptroller’s projected FY 2010 gap narrows to $2.049 billion while the FY 2011 and FY 2012 gaps widen to $5.696 billion and $5.442 billion, respectively.
The accompanying Press Release notes, dryly:
At the forefront of Thompson's concerns is the increasing burden of debt service on City taxpayers. Debt service is expected to increase 7.6 percent per year from FY 2008 through FY 2012, growth fueled by General Obligation debt borrowing that will average $6 billion per year and push the City’s debt burden from 13.8 percent in FY 2009 to 15.1 percent in FY 2012. New York City’s gross debt outstanding exceeded $7,000 per capita in FY 2007.
Any questions?

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