Here Come The Budget Cuts

Back in his State of the City address, Mayor Moneybags warned that all city agencies would be facing budget cuts both this year and next year as a result of projected declining tax revenues for the city.

With the nation either in a recession already or facing the prospect of one later in the year, with the financial markets on Wall Street turning bearish (at least before Tuesday's emergency rate cut of 75 basis points), with the unemployment rate rising to 5% last month (just 18,000 new jobs were added to the economy in December), with manufacturing contracting in December and with much of the nation's housing market in a recession (2007 saw the first decline in home prices since the Great Depression and existing home sales are at a 25 year low while inventories are near an all-time high), Moneybags expects the national recession to hit New York City pretty hard even though the city's economy, employment numbers and housing market seem to be doing better than the nation at large right now.

Falling revenues or even projected falling revenues usually mean budget cuts for the city (usually starting at the city libraries and parks first), but with the mayor planning to run against "fiscally irresponsible Washington" when he launches his 2008 independent campaign to buy the White House the way he bought City Hall, this year means especially stringent belt tightening:

A day after Mayor Bloomberg cast himself as a fiscally responsible leader and decried Washington's "reckless" spending habits, he is calling for cuts to all city agencies.

The cuts in his $58.5 billion budget proposal would reduce the Department of Education's budget by about $180 million this year and $324 million next year, and the plan calls for the police department to cut its budget by $33.8 million this year and $95.6 million next year. The cuts and new sources of revenue would yield $1.42 billion in savings. Overall, the budget proposal would increase spending by nearly 4%.

With inflation currently running at 4.1% (and expected to go even higher when the Fed interest rate cuts filter through the economy later in the year), the mayor's budget proposal increase of 4% doesn't really amount to increase.

And it's subject to change, of course.

Just a few weeks ago, the mayor thought the city's budget would allow for a proposed extension to a 7% property tax cut.

Now he says the extension is contingent upon future revenue and may have to be cut from the budget.

So much of the mayor's proposal is probably going to be changed before everything is said and done, and given the trajectory of the American economy these days, city agencies are probably subject to more cuts than spending increases.

Not to mention that now that the mayor has settled on a "I'm a fiscally prudent, post-partisan businessman who can solve the nation's economic ills that the current crop of politicians in Washington have ignored," you can bet he's going to lean toward more cuts rather than less so he can show just how "fiscally responsible" he is.

Here's what the budget cuts mean for those of us in the Department of Education:

On a list of about 20 line-item cuts outlined yesterday, principals are asked to shave $99 million in direct spending, an average of about $70,000 each; the Department of Education is to scale back a vaunted new program to test students regularly, moving to four tests a year from five, and, starting this June, an incentive program developed by the teachers union loses its central funding.

Principals who wish to keep the program, known as Lead Teacher, will have to pay for it with their own budgets, school officials said.

I won't cry to see the Lead Teacher position go the way of the reading rugs in most schools, nor am I sad to see one less "No Stakes" standardized test per year. Frankly, if that's the kind of stuff they're going to cut out of the education budget, count me in.

But remember that these cuts are just a start. As soon as the city's economy worsens (and it will - check out NY Post business columnist John Crudele for an inkling why), more cuts will be coming.

Will the mayor continue to cut his "vaunted" battery of No Stakes standardized tests when he needs to make cuts?

Doubtful.

So, let me throw this out there: if and when the mayor needs to make more budget cuts to city agencies later in the year, what additional cuts will the schools have to make?