Thursday, January 29, 2009

Reality Hitting New York – Mayor Bloomberg does what he must…

Unlike most municipalities, New York is doing the right thing. Doing the right thing after so many years of doing the wrong thing is going to be painful, no doubt. Other cities and states need to be paying attention, as should all investors.

Slashing expenses and raising taxes is painful, no doubt. Yes, raising taxes is a further drag on the economy. We all should have thought about that long and hard - much, much sooner. But it reverses the bad math, a simple concept many are going to re-learn in the near future – Are you listening California? Washington, D.C.?

NYC Budget Axe To Carve Out $1 Billion

Slew Of New Taxes On Tap, Higher Fees For Services, Plastic Bag Charge; City Workforce To Lose 23,000 Jobs
City Employees To Pay Part Of Healthcare; Pension Reform

Mayor Michael Bloomberg was to deliver some devastating financial news to New York City residents on Jan. 30.

After sharpening his red pencils and spending long nights squeezing the treasury for every penny, Mayor Michael Bloomberg is set to tell New Yorkers on Friday that the budget for the next year will be excruciatingly painful.

Jobs will be axed, programs slashed and lots of things will cost more.

Wall Street and the spiraling out of control economy have dealt New York City a bad hand. The mayor has no trumps to play as he lays out a spending plan whose gap has grown nearly 400 percent in three months.

Shrinking tax revenues have turned the $1.3 billion November budget hole into a now-$4 billion chasm.

The only way to fix it, sources tell CBS 2 HD, is with:

* $1 billion in program cuts, affecting virtually every city agency.

* New taxes and fees, including more taxes on clothing, a fee for plastic shopping bags in grocery stores and higher fees for lots of other city services.

* The capital budget will be slashed.

* City employees will be asked to pay part of their healthcare costs.

* There will be a reduction of 23,000 jobs through layoffs and attrition. That's more than 7 percent of the city's employees.

Sources say expect fewer cops, firefighters and sanitation workers.

Schools Chancellor Joel Klein has already said he could be forced to eliminate 15,000 education jobs, one third by attrition. The federal stimulus package could save some of the teaching jobs.

"New York will get about $1.8 billion in education funding and that may not eliminate the need for cuts but it should make it much less severe," Sen. Charles Schumer said.

Deputy Mayor Edward Skyler said: "The mayor is cutting agency spending as much as he can without compromising our quality of life. But in order to close the deficit without destroying the core services New Yorkers rely on, the mayor will need help from all our partners, from the municipal unions to the leadership in both the state and nation's capital. We all have to do our part to get through these tough times."

The mayor will lay out the rest of the bad news -- yet more service cuts and fee hikes – on Friday.

Amazing how fast the world can change… I hope everyone reading this is ready – change is coming, it will be on us all in a New York minute:

Don Henley – New York Minute: