The Streets Were Paved with Gold - Ken Auletta [102]
The final report of the Temporary Commission on City Finances, issued in June, 1977, sums up the import of past mismanagement:
The City’s relations with its organized employees were symptomatic of the increasingly near-sighted character of local political and managerial decision-making. Organized City workers began to make major gains at the collective bargaining table, particularly—though certainly not exclusively—in the area of retirement benefits. Because pension improvements, unlike salary increases, do not have to be funded immediately, officials were able to defer payments into the future while reaping short-term political benefits such as municipal union support in electoral politics. The more than $8 billion in unfunded pension liabilities that exist today, much of it resulting from negotiated pension improvements in the post-1965 period, represents a not-frequently mentioned form of debt that New Yorkers are carrying above and beyond the $13.4 billion that currently is owed for outstanding notes and bonds.
The growth of debt in the decade prior to 1975, particularly after 1969, also bears witness to the increasing propensity of local political decisions to reflect short term political needs rather than long-term economic needs.… The short-run orientation of local political decision-making also was evident in the City’s tax policy. New taxes were introduced and existing taxes increased to the point where the City’s taxes contributed to the wasting of another important long term asset: businesses and individuals of means who were a major source of local revenues.… Essential services were consciously reduced in the early 1970’s when the City chose to limit its expenditures by reducing the number of police, fire, and sanitation employees rather than moderating salary and other benefit increases.… In short, the City’s political management was exacerbating rather than easing the City’s problems.…
The financial implications of the City’s management failures were enormous. During the 1961–1975 fiscal period, the average annual increase in labor costs was 10.65 percent. If through a combination of slightly better collective bargaining and slightly more efficient management, the City somehow had been able to hold the average annual increase in labor costs to just one-half of one percent less than actually occurred, the City would have saved $1.9 billion cumulatively.
The city’s management, while improved since 1975, was by its own testimony pretty primitive in 1975. A Productivity Council report, approved by First Deputy Mayor Cavanagh, concluded, “The writers of this report consider the most crucial deterrent to effective service to be management. Adequate management—at the top as well as in the middle-level positions—is lacking in almost every City agency.… The staff of the Productivity Council has found that for all intents and purposes middle-level management does not exist.”
One reason it didn’t exist is that mayors carved out or gave jobs to people whose political connections exceeded their abilities. It was forever thus. Under the office of Superintendent of Streets, for instance, there were once six manure inspectors. That was in 1840. Throughout 1975, the first year of the fiscal crisis, it was an open secret that Sanitation Commissioner Robert Groh and Transportation Administrator Michael Lazar were inadequate managers, to put it kindly. Yet Groh clung to his job until September 1975, and Lazar until early 1976, because Mayor Beame felt an obligation to both—to Groh because he was backed by Donald Manes, the Queens borough president and