NYC: Budget Woes and Class Warfare

by StockJockey

Sunday, March 08, 2009 - 1:27 pm

NYC is in a world of hurt, and its near-term prospects are looking grim indeed. Things have certainly changed, and in a hurry. Financiers that were treated as rock stars not long ago are now the target of scorn. And while the ant-banker sentiment continue to print a series of 52-week highs you can bet than everyone from high-rise doormen to bartenders are missing the cash flow that routinely leaked from the pockets of even the most anonymous junior bankers.

It is remarkable that a city that was humming with activity two years ago is now courting startups, providing cheap office space and free Bloomberg and/or Thompson Reuters terminals:

To help entrepreneurs launch new start-up companies, the City is partnering with academic institutions, property management companies and commercial landlords to establish high-quality, ready-to-use office space that comes with basic business services and administrative support..... Beginning March 1, start-up companies will be able to sublease the space starting at $200 per person per month for six months with an option to renew. The space comes with basic business services like telephones, computers, fax machines, copiers, shared conference rooms and shared kitchen areas, and will accommodate about 100 people. Bloomberg LP and Thomson Reuters have agreed to provide data feeds at no cost. nyc.gov

Mayor Bloomberg is apparently pulling out all the stops, but not everyone is happy, and tomorrow the NYC Council’s Finance Committee will meet and discuss raising taxes from 3.65% to 4.3% on city residents earning 500k, and to 4.8% for those earning above $1 million.

The Mayor’s recent comments about “loving rich people” have the City’s Comptroller William C Thompson Jr. fixing for a fight:

New York City Comptroller William C. Thompson, Jr. today harshly criticized Mayor Bloomberg’s remarks dismissing imposing steeper taxes on the wealthy, charging that the Mayor is out-of-touch with the realities faced by many New Yorkers.

“The comments by Michael Bloomberg sadly illustrate that he just doesn’t get it,” Thompson said. “Our country and our city are facing one of the most difficult economic challenges in history. During these tough times, our working families, who make this city great, are struggling to keep their homes, their jobs and their health care. We need fair and balanced solutions that protect them. We need leadership that understands their needs and challenges.”

On Friday, during his weekly radio show on WOR, Bloomberg responded to a protest – attended by upwards of 40,000 people - outside City Hall in which demonstrators urged him to raise taxes on those who earn more than $250,000.

“We can tax the rich,” Bloomberg reportedly said, “except that, if you haven’t looked at the stock market lately, they aren’t making any money.” He later added: “You know, the yelling and screaming about the rich - we want rich from around this country to move here. We love the rich people.”

Thompson sharply faulted the mayor for being tone-deaf to the needs of many New Yorkers.

“This is one of the clearest defenses I’ve ever read of the Reagan-Bush Republican philosophy of trickle-down economics,” Thompson said. “For eight years, George Bush said virtually the same thing our Mayor said on Friday - we need to give tax cuts to the rich, because it will trickle down to everyone in society.”

“I have a very different philosophy. I believe that our working families and small businesses are the ones who drive our economy. I believe that government should be focused on helping the middle class. And I believe that the trickle-down philosophy has caused us to be in the mess that the country is in today.”

Added Thompson: “I think that at times, the Mayor’s wealth has caused him to be out of touch with what most New Yorkers experience every day.”

Thompson is poised to testify Monday before the New York City Council’s Finance Committee. During that testimony, he will recommend a 4.3 percent tax rate on taxpayers with taxable income of $500,000 and a 4.8 percent tax on taxpayers with taxable income of a million dollars or more, compared to the current rate of roughly 3.65 percent.

As with the State income tax, these rates would be flat rates rather than applying only to the margin of income. Based on estimates by Thompson‘s office, this would yield nearly $1 billion Calendar Year 2009 and a similar amount in the City Fiscal Year 2010.

Is the Mayor tone deaf? Or just realistic? Republicans are calling the latest proposals to raise taxes “Trickle Up Poverty” and one thing cannot be disputed.

It is a battleground out there, and Washington is not the only place with divisive budget issues.
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NYC Budget Woes - Budget Video from January 30th

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MAYOR BLOOMBERG OUTLINES 11 INITIATIVES TO SUPPORT NEW YORK CITY’S FINANCIAL SERVICES SECTOR AND ENCOURAGE ENTREPRENEURSHIP
nyc.gov

Office of the NYC Comptroller
Homepage

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