The Streets Were Paved with Gold - Ken Auletta [146]
Yes, as we’ve seen, the system failed. But New York’s leaders failed as well. When it came to long-term decisions, New York was ruled by political midgets. To assist his political ally, Democrat Robert Wagner, Governor Rockefeller approved the first scheme to hide expense items in the capital budget. Amendments to the State Local Finance Law, which were required to approve much of the city’s budgetary legerdemain, won bipartisan approval in Albany. As did most pension sweeteners. Conservative members of the legislature, including Senator John Marchi, voted to enrich the pensions of cops and firemen, two groups which tended to support conservative candidates. Governor Malcolm Wilson, a knight in the conservative cause, urged Mayor Beame in 1974 to borrow $800 million to paper over the city’s budget hole. He couldn’t, he said privately, raise taxes or appear to be helping New York City too much in an election year. His base, you see, was the suburbs and upstate.
Governor Rockefeller manufactured “moral obligation” bonds—sticking future taxpayers with debts he told present taxpayers they wouldn’t have to pay for. In 1974, the Republican-controlled legislature approved and Governor Wilson signed a record $307 million school aid increase. To pay for it, they opened what has come to be called “the magic window,” frontloading the cost into the first quarter of the state’s fiscal year, which begins on April 1—the last quarter of the fiscal year for most school boards and municipalities. After the November election, Wilson’s successor, Hugh Carey, inherited a $250 million deficit because of this trick.
To win favor with their lower- and middle-income constituents, the City Council skewed the property tax system to extract lower rates from homeowners and apartment buildings and higher rates from commercial property in Manhattan. To show they favored education—and the powerful teachers’ union—state legislators timidly voted for the Stavisky-Goodman bill imposing city educational costs. One of the sponsors of the bill, Republican State Senator Roy Goodman, who would later run for mayor as the “fiscally responsible” candidate, admitted at a Daily News editorial luncheon that the bill was “irresponsible.” Nevertheless, he meekly told startled editors, it was “good politics.”
Among its many distinctions, New York boasts its own foreign policy. Justifiably outraged at the Arab boycott of American firms doing business with Israel, the state legislature in 1975 passed and Governor Carey signed an anti-boycott statute, preventing firms from complying. Proudly, New York politicians proclaimed they were the first to do so. But because the federal government did not pass a similar statute, New York politicians took their bows while New York’s port took its lumps. After one year, according to Clifford B. O’Hara, Director of Port Commerce for the Port Authority of New York and New Jersey, the port lost 300,000 tons of export cargo—mostly, he said, because of the anti-boycott law. Much of this business merely shifted to American ports with no such law. The business, he feared, was permanently lost: “Once a shipper and a buyer set up a way of doing business, it’s hard to change the pattern.”
Similar political posing is fundamental to New York’s past housing policies. This reporter once phoned John Heimann—then the state housing czar and now federal Comptroller of the Currency—to solicit his thoughts on the abbreviated housing platform of an unnamed political candidate. The office-seeker promised: (1) “to assure that mortgage assistance loans can be granted to existing Mitchell-Lama housing to keep rents down”; (2) to “change the formula for income limitations for Mitchell-Lama tenants which, because of inflation, are now unrealistically low”; (3) that all Mitchell-Lama tenants could “withhold rents if the apartment