• Choose a category
• All
• Classic-Fiction

By Root 1173 0

“wars” cost money, and the Mayor presented a record $3.87 billion budget—up $514,299,699—plus a first-time fiscal trick to pay for it. Unlike subsequent mayors, Wagner did not hide his tricks. It was debated on the floor of the legislature, where State Senator John Marchi called it “bad budget practice” and prophesied, “We can do it next year, we can do it ten years from now, this is the effect of the proposal.” Candidate Lindsay exploded: “New York has tried to climb to prosperity on the Indian rope trick and, when the whole fantastic illusion threatens to crumble, it is propped up with the fiscal magic of borrowing $256 million against nonexistent collateral—a reckless gamble on the future to pay for mistakes in the past.” The New York Times scolded Wagner, Rockefeller and city and state legislators: “What we have here is an election-year refusal to impose unpleasant taxes to balance the city budget.”

Ignoring the criticism, Republican Governor Rockefeller joined with Democrat Wagner and rounded up sufficient Republican votes to pass the borrowing plan in June by a narrow margin. The Local Finance Law was amended. Instead of requiring that all revenue anticipation notes (RAN’s) be pegged to the previous year’s actual receipts, from now on they would be pegged to the mayor’s own estimate of the next year’s revenues.

With this decision, mayors were granted a new budget weapon. In addition to using the capital budget to hide borrowing for expenses, they could now use the expense budget to borrow. But short-term borrowing is fraught with danger. Unlike bonds, notes are repayable within a year. If revenues grow slowly, or if growing expenditures are not moderated, money must be borrowed again the following year to repay earlier borrowing. Soon the client is borrowing to repay not principal but interest, and is trapped like most loan-shark clients.

This is what happened to New York. In 1965, the city’s short-term debt was $526 million, or 10 percent of the total debt; its annual debt service costs were $470 million. By 1975, its short-term debt was $4.5 billion, or 36.9 percent of the total debt, and annual debt service costs were $2 billion. Almost one-third of the city’s entire budget was set aside not for the delivery of services but to pay for borrowing and pensions.

Mayor-elect Lindsay foresaw the problem. On December 21, 1965, he declared, “I face a budget gap of almost a billion dollars for the first fifteen months of my administration.” Four and a half years later, Lindsay prepared to close his own budget gap by borrowing. Reminded of his earlier criticism by Martin Tolchin of the Times, Lindsay said, “It’s a lot easier to criticize when you’re not there.… You find out things aren’t as simple as you thought.”

The Transit Strike

John Lindsay was a tall, handsome prince who swept much of New York off its feet. “He’s fresh and everyone else is tired,” Murray Kempton wrote during the 1965 campaign. “He’s gorgeous,” women shrieked. After twelve years of Wagner, the city was ready for change. And change is what the idealistic Republican/Liberal candidate promised. An end to “cozy deals” with labor unions and “party bosses.” A return to “fiscal responsibility.” A regeneration of spirit—“Fun City.”

But not everyone was in love with the Mayor-elect, as his narrow election proved. Labor unions, for instance, fumed that he was “anti-union.” Concerned with the approaching January 1 deadline for the transit talks, Lindsay sought to cool tempers by journeying to the Americana Hotel on December 27, 1965, to meet with representatives of the Transit Workers Union and the Transit Authority. In a conciliatory gesture, he mildly requested that both sides negotiate a “fair settlement.” Then, with unaccustomed humility, he conceded, “I am not an expert on labor matters.”

Over the next sixteen days he proved this. On January 1, 1966, 34,400 transit workers struck, immobilizing New York. It was the first time the transit workers had gone on strike, and it was the most damaging strike in the city’s history. Until then, labor negotiations