The Streets Were Paved with Gold - Ken Auletta [50]
After this legislation sailed through, the city did not act as if there were a “crisis.” Expenditures continued to swell. And the city continued to borrow. The Stabilization Corp. merely allowed the city to borrow to repay borrowing, to pay interest on interest. These notes helped turn New York into a short-term note junkie. The city’s short-term debt pyramided 350 percent between 1970 and 1975, from $1.3 to $4.5 billion. By the spring of 1975, the city faced a true “peril.” New York City accounted for almost 30 percent of all the municipal notes sold in the country—and within less than a year, needed a $7 billion fix of new securities.
The 1973–74 City Budget
1973 was a pretty good year for wine and a lousy year for city budgets. City budgets always suffer in mayoral election years. But this year was special in two respects. First, its deceit was to the art of budget ballet what Baryshnikov is to Lincoln Center. Second, the budget was unusual in that it was jointly crafted by two artists, outgoing Mayor Lindsay and incoming Mayor Beame.
The gimmicks pirouette across its pages and include: (1) the invention of $148.5 million of “increased revenues,” achieved primarily by postponing—with City Council support—the statutory repayment of $96 million to the “rainy day” fund; (2) a one-year rollover of the $308 million of budget notes issued in 1971; (3) the placement of $564 million of expenses in the capital budget, a $290 million jump from the previous year; (4) $100 million of “special” funds suddenly discovered by Comptroller Beame; (5) the assumption that the anticipated tax revenues meant the city’s economy was expanding, though it had not for the past four years; (6) the elimination of $17 million set aside for wage increases, though it was commonly assumed the increases would far exceed this; (7) at midyear, the city’s arbitrary termination of existing transit subsidies for schoolchildren and the elderly, pretending (a) that the need or the recipients would disappear or (b) that the state and/or federal government would spring to the rescue; (8) the budget’s authorization, to match a Beame campaign pledge, of the hiring of 3,000 more cops, though there were 2,250 police vacancies; and (9) the city’s outright declaration of a deficit of $211 million, summoning the state legislature, or God, to close it.
It is this 1973–74 budget that Mayor Beame blamed for his later difficulties, protesting that he “inherited a $1.5 billion budget gap.” His logic will be of greater interest to psychologists than historians. Since Beame had been the City Comptroller the preceding four years, his fingerprints were all over the document. He attended breakfast meetings with Lindsay on June 11 and 15, 1973, hoping to agree to what they announced would be “a balanced budget.” Beame was considered a budget expert, and since he was the clear favorite to become the next mayor, members of the Board of Estimate and the City Council deferred to his leadership. On June 18, a joint statement was issued: “Agreement has been reached on a proposed 1973–74 Expense Budget by the Mayor, the Comptroller, the Board of Estimate and City Council leaders.” Everyone was smiling, or, as the New York Post accurately reported, “This was the first year in the past four that Lindsay and Beame practiced budget politics of consensus instead of confrontation.” The next day, Lindsay issued another press release: “Like all budgets, it contains compromises. It includes a number of items and the use of some financial techniques which I would not have preferred.” He went on to thank Beame for his “cooperation.”
Looking back on this budget, a prominent official in the present City Comptroller’s office said, simply, it was “outright