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By Root 1011 0

government, stung by the backlash to the callous statements of President Ford and Treasury Secretary Simon in 1975, adopted a more behind-the-scenes role, gently prodding the local partners toward further reforms. And the municipal unions, whose members’ wages and fringe benefits form the largest share of the city’s budget, made significant sacrifices. For the first time since the Depression, they acceded to 25,000 layoffs. They agreed to defer a pay increase for one year. City workers earning more than $15,000 would defer a full 6 percent raise. To save money, the unions consented to “give back” over $40 million of previously won fringe benefits. At grave risk, employee pension funds also committed to invest $3.8 billion over the three years to keep the city afloat. It became city/union policy to shrink the work force through attrition—a tacit acknowledgment by the unions that there were too many employees. Without courageous leadership from Governor Carey, without MAC chairman Felix Rohatyn’s financial wizardry or Mayor Beame’s temperance or the sense of responsibility demonstrated by city labor leaders, New York would have gone bankrupt.

But the public made the greatest sacrifices. Their taxes went up while their services went down. Free tuition and open enrollment at the City University, library hours, sanitation pickups, city hospitals, day-care centers, the city work force—were cut back or eliminated. The transit fare zoomed 40 percent. According to an analysis for the City Almanac by Charles Brecher and Miriam Cukier, between 1975 and 1977 total funding for the Board of Education rose 9 percent while the staff was reduced by 20 percent and pupil enrollment by 6 percent; total refuse collection by the sanitation department dropped 2 percent; police arrests declined by 6 percent; the budget of the Board of Higher Education remained about the same—while the number of college students plunged 24 percent. In his second management report, Koch conceded that streets were dirtier, the city’s parks were in a state of “disrepair” and over half the $1.1 billion in back taxes and bills owed the city could be collected but wasn’t.

The city government also changed. The growth rate of its budget slowed. The city’s bookkeeping system was overhauled. Under a new computerized system—called IFMS, for short—New York will soon enjoy perhaps the most advanced financial management system of any municipality in the world. Gone were the days when a Jim Cavanagh or Abe Beame could project Off-Track Betting revenues on the back of an envelope, as they did in urging the state legislature to create OTB in 1970. Gone too was the myth of “the expert”—that one individual who, alone, knew where funds were buried. Today, there are seven different auditors, including those from the Control Board, MAC, the federal Treasury and the Congress, peering over City Hall’s shoulders. The press, more attuned to the nuances of budgets, polices City Hall with greater vigor. “Two major things have changed,” observes Sidney Schwartz, Deputy State Comptroller and the Control Board’s chief auditor. “One is a change of attitude—I’m referring strictly to fiscal matters. The top management under Zuccotti and Kummerfeld, and now under Koch, realized they had to cut down. They slowed the spending rate. The other thing is, despite all the different numbers, the numbers given out are more reliable.”

Even the city’s official documents changed. Greater candor was evident, for instance, in the city’s May 1977 official prospectus to investors. Mindful of the SEC’s scathing criticism, New York’s problems were not sugar-coated. The prospectus acknowledged that that year’s pensions were underfunded by $160 million, warned that “no assurance can be given that the City will realize the projected amount of funds” from the sale of Mitchell-Lama mortgages “in a timely manner,” sketched how real-estate taxes were declining, debts rising, and how future city deficits would also grow. Displaying his commitment to the new candor, Mayor Koch announced soon after his election that he would