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Bloomberg’s budget cuts spending

January 24, 2008

Mayor BloombergAmid fears about the nation’s economic woes, Mayor Michael Bloomberg presented a $58.5 billion budget plan for the city’s next fiscal year on Thursday that showed more cuts and no flashy new projects.

Bloomberg, a billionaire and former chief executive of financial information company Bloomberg LP, proposed a plan with just 1 percent growth in controllable spending from this fiscal year, a leaner figure that reflects the tough times.

For the current fiscal year, spending went up by nearly 8 percent.

But windfalls from real estate transactions, Wall Street profits and surging tax revenues that gave the city a record surplus in fiscal year 2008 have largely disappeared, Bloomberg said.

Record losses on Wall Street last year are particularly significant for the city economy, which depends heavily on the financial services industry. Last June, the city had projected $16.8 billion in profits for the 2007 calendar year; on Thursday, Bloomberg said that number now stands at just $2.8 billion.

In 2006, when Wall Street surged in the last quarter of the year, the city’s profits from Wall Street were $20.9 billion, twice what they were the previous year.

Bloomberg has long warned that multibillion-dollar deficits lurked around the corner, and last fall began ordering city agencies to make cuts. His plan on Thursday showed that those belt-tightening measures have resulted in nearly $1.5 billion in savings.

Despite the grim news in the city, Bloomberg said the city was on stable enough ground to continue a $1 billion property tax cut for a second year.

The budget plan, which will go through negotiations with the City Council, must be adopted before the next fiscal year begins July 1

Source: AP

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