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'We can't tax our way ot of $ crisis.' (New York City Council Speaker Peter Vallone)


|We can't tax our way out of $ crisis'

New York City's fiscal crisis is compounded by the "paralysis" of some of its leaders and an unsound proposed city budget, New York City Council Speaker Peter Vallone told a recent gathering of the New York City Chamber of Commerce.

"The mayor wants to raise $5 billion in property taxes over the next four years," said Vallone to the meeting at the New York Hilton. "And even with this crippling amount of taxes, the mayor says he still must close pre-natal clinics, slash aid to libraries and cultural institutions and leave our streets dark and dirty."

In the final days of budget negotiations, the council is standing firm that it will allow the mayor only $300 million in new property taxes -- the mayor has proposed property taxes be $800 million of his $1.1 billion budget -- and is suggesting $476 million in service cuts in addition to the $1.5 billion in cuts proposed by the mayor.

The Council realizes, Vallone said, that the city cannot "tax its way" out of its financial woes. And, they recognize, he said, that the city government is "too big, too expensive and too inefficient."

"The City Council has proposed a sound, four-year budget plan that can get us through this year's crunch and which can correct the city's structural imbalance," he said.

The administration fails to acknowledge, the speaker said, that property tax increases of his proportion would destroy the tax base making it impossible to provide services. The mayor is also unable, he said, to get the unions to make the productivity concessions it promised when he gave them $1 billion in raises.

There is also, Vallone said, a lack of "teamwork" and a feeling of "collective responsibility" today. In the fiscal crisis of the 70's, he said, business, labor, the state and city officials "all recognized that they could not flourish unless everyone did."

Vallone said the Council is a "partner" with the mayor and it wants to negotiate with him. And, while his policies are "fundamentally flawed", Vallone said, the mayor is a "fine person" and they are only criticizing his policies.

The Council's short-term plans for a balanced budget are:

* Lower tax increases -- Cut the mayor's tax package in half and keep taxes to a minimum over the next few years. * Productivity savings -- $350 million in productivity savings are needed for this coming year. Vallone said only the mayor can negotiate with labor and he must return to the bargaining table and get the concessions that he said were necessary when he gave the raises * Transitional funding -- The Council proposes using half the money to "plug" this year's gap, and putting the other half into the city's general reserve fund. The fund would be used for emergencies and at the same time the city would be cutting back on expenses. "The rating agencies need to see there's scale back government." said Vallone.

The Council's long-term plan, Vallone said, would get the city's revenues and expenses in line through:

* Productivity initiatives: Labor/management task forces in each agency to identify recurring savings. This could total $600 million by 1995. * Limited property tax increases over the next three years - $170 million in fiscal |92; 100 million in fiscal |93 and $50 million in fiscal |94. There would be no further increases in the fourth year of the plan. In addition, to these increases additional state aid, mandate relief and a tax package of approximately $300 million from Albany will be necessary. The Council agrees with the mayor that a temporary income surcharge will be a vital component of that.

* Consolidating and restructuring agencies could save $320 million over the next four years. "The point is we now spend $8 billion on the human resources agency alone ... For all that money, spending it well or that the poor and needy are truly cared for." * The city must restructure its long-term debt. Transitional funding must be available, not just in fiscal |92, but the next few years as well.

Vallone told the Chamber: "Business has to participate as well. Don't just tell us you don't want taxes. We know you understand the circumstances. Help us instead to fashion a tax package that's as fair as possible."
COPYRIGHT 1991 Hagedorn Publication
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Copyright 1991, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Publication:Real Estate Weekly
Date:Jun 26, 1991
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