The Streets Were Paved with Gold - Ken Auletta [44]
Voters Reject a New State Constitution
It’s easy to condemn politicians for the fiscal crisis—and Lord knows, they deserve blame. But it would be a form of buck passing to assume that a handful of individuals partook in a giant conspiracy. It would also be misleading to excuse the public from blame. Many bad decisions were popular. Some good policies were vetoed by the public.
On November 7, 1967, the voters of New York State rejected a new state constitution by the lopsided margin of 3,487,513 to 1,327,999. The reasons were varied. The Convention was a partisan affair, composed of traditional politicians who created a hodgepodge of amendments designed to protect various interests. A key factor, however, was the proposed repeal of the Blaine Amendment, which strictly prohibited state aid to church-related facilities.
The 1967 constitutional convention was the first in twenty-nine years and likely the last for quite some time. But for the city of New York—which cast 56 percent of its ballots against the constitution—passage would have meant dramatic budget savings. New York City pays much more for services than do other cities partly because New York State—unlike other states—does not assume a larger share of city costs. The constitution would have corrected much of that.
No other state, for instance, requires its cities to swallow 25 percent of welfare costs. The closest state is New Jersey, which requires cities like Newark to pay 12 percent. Article X, Section 16 of the proposed constitution would have required the state to assume the full local costs of welfare over a ten-year period. In fiscal 1979, the city would have been relieved of more than $500 million, or half its cumulative deficit.
Most states assume the full cost of their court systems. Not New York—at least not until 1977 legislation agreed to phase these costs into the state budget over three years. Article V, Section 25B of the proposed constitution required state assumption over ten years. In fiscal 1976, the city spent $94.2 million for its courts.
Over many years, the city Board of Education has complained that the state school aid formula discriminated against densely populated areas. Because the formula was pegged to attendance rather than registration, large cities with high absenteeism receive proportionately less aid than suburban school districts. Article IX, Second 1d would have switched the formula to school registration, generating hundreds of millions of additional dollars for the city.
Admittedly, nothing is free. Since city taxpayers are also state taxpayers, additional state costs would have entailed some additional city costs. But those costs would have been spread over the broader tax base of the state, resulting in significant city budget savings.
Redlining
Jean Loretto lives on a lovely Manhattan block. So lovely that West 105th Street, between Riverside Drive and West End Avenue, was declared a city landmark in 1973. But when Jean Loretto sought refinancing for her five-story brownstone, she found that the banks thought her block an unlovely investment area. It was considered too far uptown, too near them. “I was turned down cold,” she told Tom Rosenthal of the weekly Westsider. “One banker told me I had invested in the Titanic. Another banker said that a person who lives in the city must have a summer home, and must send their kids to private schools. These bankers all have suburban mentalities. They all live in the suburbs and take the train in and never see an area like 105th Street. They all think we’re crazy to live here.”
Though her building generated ample rents, Ms. Loretto was turned down by three neighborhood banks. Her travail is common. Beginning in the late sixties, neighborhood residents throughout the city—particularly in Brooklyn and the Bronx—encountered difficulty wrangling mortgage money for homes and stores or new insurance policies. Financial institutions, including