Many New Yorkers who may consider themselves middle class will be paying higher effective marginal rates than billionaires under the "temporary" state and city income tax hikes recently approved by the State Legislature.
Governor Pataki's 2003-04 budget proposal calls for smaller spending cuts than the budgets he proposed during his first two years in office—even though the current budget gap is more than twice as large.
Just how big is the New York City Transit Authority's deficit? The answer to that question appears to be (a) not nearly as big as the NYCTA would have had everyone believe going into the TWU talks, but also (b) not nearly as big as it will be once the Authority gets through paying for the wage and benefit increases in the new transit workers contract—unless a fare increase is approved soon.
If the new transit workers deal is used as the “pattern” in the next round of collective bargaining with New York's public employee unions, the result would be $725 million in added labor costs for the state and $1.2 billion a year in added costs for the city, not including any offsetting productivity concessions.
The collective bargaining table will be the most important field of action for Mayor Bloomberg over the next 18 months. Bloomberg's tenuously balanced Executive Budget assumes little change in the size of the city workforce in the year ahead and no net wage increase for city workers in the three years after current contracts expire. If this assumption proves overly optimistic, next year's budget will be knocked out of balance, and huge projected budget gaps in subsequent years will grow by another $1 billion or more. Clearly the mayor cannot bring city finances back under control unless he wins significant concessions from municipal unions—and reduces the employee headcount in the process.
Mayor Bloomberg's preliminary budget was surprisingly easy on city employees, even though personal service costs comprise more than half of the total budget. His proposed workforce reduction of 5,000 to 7,000 positions out of a total workforce of 306,000—20% higher than was previously reported—is many fewer than the number Mayor Giuliani proposed to cut in 1993 when he faced a similar budget gap.
By eliminating 5,000 state government jobs through attrition and early retirement incentives, Governor George Pataki’s proposed 2002–03 budget would return the total executive branch headcount to its lowest point in nearly two decades and ultimately save about $275 million a year, according to an analysis of quarterly full-time employee (FTE) estimates from the state comptroller’s office. Not counting the prospective job cuts, taxpayers are now saving $676 million annually as a result of the net reduction in the state workforce over the past seven years.
New York City’s post-9/11 fiscal problems are prompting fresh calls in some quarters for reinstating the city’s commuter tax, which could generate as much as $500 million, to help close a projected budget gap of at least $3.6 billion. But the usual arguments for the tax just don’t stand up to scrutiny.
Reimposing the full 14 percent surcharge on New York City’s resident income tax will cost New York’s battered economy 10,700 badly needed private sector jobs, according to the Manhattan Institute’s tax policy simulation model. As a result, our model indicates the revenue gain from a restored surcharge will be about $30 million less than has been projected.
Tax cuts emerged as a major issue early in the 2000 Presidential campaign, with George W. Bush and Al Gore each emphasizing the savings he would deliver to middle-class taxpayers. Tax policy is also a sharp point of contention in New York’s Senate race, where Rick Lazio and Hillary Clinton have sparred over whether large scale tax relief is either desirable or affordable.