May 3, 2004

MONEY, MONEY, MONEY...

By James Eugene*

One of the more interesting things about City budgets is the amount of lobbying that gets done in good years versus bad years. This topic has become relevant as Mayor Billionaire has declared that the 2005 fiscal year City budget will have a $1.3 billion surplus. And the vultures are out.

The City budget in my early years of government were pretty basic. The City had no extra money, although major cuts were not required. In many respects, this type of budget seemed the norm to me. I was wrong. More common is the period that is not a typical baseline year. More common are hard-times or good-times.

Intuitively, I originally figured that hard times would require more lobbyists. My logic was quite simple. People and organizations would fight scratch and claw to keep what they have. And to some minor extent this happens, but only really among well-organized groups.

Ironically, it is good budget times that bring out the lobbyists and every Tom Dick and Harry. The pie is cooked and ready and everyone wants their piece. So everyone descends upon City Hall looking for their piece.

In good budget times there is no shortage of groups with absolutely fantastic ideas about how the City should spend its money. If that City has it, they can spend it. And each justifies their need by claiming that not funding them would be unjust, imprudent, or politically harmful, if not all three. And of course, if they are not funded, the sky will fall down.

But what should the money be used for? Should there be some set of guidelines to govern how we spend our surpluses? I think there should some guidelines so that we can properly plan our future surpluses.

A friend of mine suggested one methodology. His three guidelines are that budget surpluses should be used among (i) paying down capital debt, which will lessen future debt service payments and help future budgets; (ii) pay as you go capital projects, which will prevent an increase in future debt service payments; and (iii) prevention programs designed to reduce future expenditures. Each guideline is designed to reduce future expenditures without bloating the current budget.

I think my friend has some good thoughts, although I would take issue with his second item. Certain types of capital projects carry their own future costs. For example, if the City builds a library (and it is not replacing an old library), then it must pay or subsidize the future operation of that library in its expense budget in future years. Thus, I would only allow capital projects for replacements and repairs within my friendís second criteria.

Moreover, I would add a fourth category: a true rainy day fund. All too often, the City adds to its rainy day fund, but never takes from it during hard fiscal times. In fact, Governor Patacumoís rainy day fund raid of two years ago is the only use of the rainy day fund that I have ever seen. Moreover, there should be rules for the rainy day fund. For example, no more than 25% of it should be used in a given fiscal year. Use of the entire rainy day fund in one budget year would allow profligate spending to continue without the necessary cutbacks required during bad budget times (which is what Governor Patacuomo did). Usually, bad budgets last two or three years, and it makes little sense for all the money to be used at once, possibly placing a government budget even more structurally out of balance (which is what happened with Governor Patacuomoís budget during his reelection year).

Will this ever happen? Of course not, because your elected officials have to show you how much they are doing for you and they do that with money. Just remember that in the bad budget years you should punish your elected officials for not planning to save for that rainy day.

THE DUMBEST THING I HAVE EVER SEEN

I must confess that I have never seen anything dumber than the great debate on what John Kerry did with his Vietnam medals and/or ribbons. As you all know Kerry is a decorated soldier who became an anti-war activist. And because it is unclear whether he threw away his medals or not (over 30 years ago no less), the Republican Party is making a mountain out of a molehill.

Kerry served, Vice President Cheney did not and the level of Bushís National Guard service is under serious questioning. The Bush campaign has decided to make an issue over medals versus service. I guess when you donít have something good to say about yourself deflect people from your own failures. The problem is, whether he threw away his medals or not, Kerry faced the very real life or death scenario of combat. Bush and Cheney did not.

This all proves one thing. If Bush and Cheney are wasting their money on this issue, then they have too much money in their campaign warchest. Having that money may be the biggest problem for that campaign, because they will focus on matters that are best left alone, like the Kerry Medal situation. As for the Bush approval ratings going up lately. Donít think that this is a long-term thing. The ratings have gone up while Americans has been under attack in Iraq. There is something about a rally around the President position in those poll numbers. Continued high casualties (and we are beginning to see this) is not a good thing, politically or militarily.

Ultimately the key months in this campaign will be July, August and September. Those are the last three months of economic data that will be digested before the election. The campaign is off to too early a start.

* James Eugene is the pseudonym of a veteran of NYC government affairs. Inside The Big Apple will appear exclusively on the Empire Page. If you want to send tips or column ideas to James Eugene, email them to jameseugene@empirepage.com.