Fun City's gilded ride is over.
The subway fare is jumping, maybe 33 percent. Property taxes could go up 18 percent. The official unemployment rate noses toward 8 percent; the mayor wants to put tolls on the Brooklyn Bridge; and eight firehouses sit on his chopping block.
Protestors scream the mayor's name and threaten voter mayhem. But New York City and state face a combined $15 billion deficit, a fiscal crisis of historic proportions, and the horizon holds only dark clouds.
"We are in a lot of trouble, no way around it," said state Sen. Liz Krueger, a Democrat representing New York's silk stocking district on Manhattan's East Side. "We're facing billion-dollar deficits, and that's not chopped liver."
New York has lots of pinched company. From the rocky coast of Maine to California's Pacific Palisades, cities and states are stumbling through the hangover of the 1990s boom. Maine legislators no sooner filled a $229 million deficit than officials warned last week of an additional $40 million budget hole. Pittsburgh and Boston each face budget gaps of more than $60 million next year. In Philadelphia, the mayor has begun laying off city workers.
California faces an almost unimaginable $21.1 billion state shortfall next year -- and the resurgent Republican minority in that state has returned vowing to hang any tax increase like a millstone around the neck of Democratic legislators and the governor. This is a familiar pattern. After a campaign season spent mostly avoiding the fiscal crisis, governors, mayors and legislators find themselves consumed by talk of cuts, deficits and layoffs or tax increases.
"Most of the nation's cities and states are in the same shape as New York City," said Chris Hoene, research manager at the National League of Cities. "For the first time in 10 years, you have to talk about cities facing a genuine recessionary economy."
Only two states forecast fiscal blue skies: Hawaii and Idaho. In a report released Friday by the National Conference of State Legislatures, two-thirds of the states reported declining revenues, and more than half face budget deficits. For this fiscal year, states face a collective budget hole of at least $17.5 billion.
The District government closed a $323 million gap in its $5.8 billion budget in September by raising taxes and paring spending on social services and schools. Maryland reduced spending last week by cutting services, tapping the state's reserve fund and canceling bonuses for some workers. But that $500 million cut won't affect a shortfall of $1.2 billion expected in next year's $22 billion budget.
Virginia, which had reduced its two-year, $50 billion budget by more than $3 billion this year, cut state services and laid off 1,837 employees last month. But the state still must find a billion dollars more in savings this winter.
Throughout the 1990s, most cities and states could cut taxes and rely on a buoyant national economy to keep overall revenues soaring. In New York City, then-Mayor Rudolph W. Giuliani slashed taxes, and spent his second term adding thousands of employees to the payrolls and building the two most expensive minor-league baseball stadiums in the United States.
It was the best of all possible worlds -- until it wasn't. Last year, 18 states broke with recent practice and raised taxes by more than 1 percent to cover budget deficits.
"If we continued to cut taxes, we might as well turn off the lights in American cities," said Harvey Robins, a top-ranking aide to two former New York mayors. "[Mayor Michael] Bloomberg's problem is that for years, no one made any tough choices."
The turnabout is particularly striking in New York, not least because the city stood as a golden symbol of the nation's boom time. Gov. George Pataki blanched at any mention of "budget deficit" during his recent reelection campaign. Bloomberg, a fellow Republican, pointedly avoided much discussion of how to close New York's looming $6 billion budget deficit.
"Until Election Day, there was no incentive to be candid," said John Mollenkopf, director of the Center for Urban Research at the CUNY Graduate Center in New York. "Now the chickens are really coming home to roost."
Two weeks ago, just after Election Day, Bloomberg unfurled proposals for two large tax hikes: a 25 percent property tax increase and a $3 billion personal income tax increase for suburban commuters. (The state Legislature abolished the city's commuter tax years ago.)
A billionaire media mogul and a political novice, the mayor has surprised many with the artfulness of his politics. But his budget moves have begun to draw catcalls. The Citizens Budget Commission, a business-backed watchdog, gave Bloomberg's first budget a grade of D. It noted that the city was "spending far beyond its means."
Many budget analysts also shook their heads when the mayor declared that the city workforce and budget were streamlined.
"It was a very amateurish statement," said Steve Savas, a Baruch College professor, whose Privatization Research Institute analyzes state and city governments around the world. "Raising taxes and slashing services before you've even attempted to refashion the workforce is the wrong starting point."
The size of Bloomberg's proposed income tax levy on suburban commuters also has proven problematic. New Jersey Gov. James E. McGreevey (D) threatened to declare a cross-river tax war, and suggested the commuter tax could be DOA in Albany, where the state Legislature must give its approval.
Bloomberg wants to use about $1.1 billion from the commuter income tax to underwrite a cut in the personal income tax for city residents. But that move would mostly benefit the city's wealthiest residents, and that led to more headaches for the mayor. The New York Daily News summarized the equation thusly: "The rich would get richer while the poor would pay more."
The Daily News then did the math and found that Bloomberg would come out perhaps a million dollars ahead, because his rising property tax bill would be offset by a much larger cut in his personal income tax.
As his administration raises fees on everything from tennis permits ($100 a year) to the city's none-too-swank public swimming pools, Bloomberg has found himself becoming something of a political pinata. A poll last week found that the mayor's political approval rating had dipped from 65 percent to 41 percent.
"There's no shared pain, and the gap between rich and poor just gets wider and wider," said Bertha Lewis, executive director of the Working Families Party, an influential third party that released a critical study of the proposed personal income tax. "Mayor Bloomberg LLP comes from the wealthiest class, and it hasn't escaped our notice that he is cutting their taxes."
New York's City Council seems certain to pass an 18 percent property tax increase. But if Bloomberg's commuter tax proposal dies, it's not clear where the city might turn for help, other than starting to lay off some of its 250,000 employees. Some have suggested that the city reinstate a stock transfer tax, which Tokyo and London use to raise millions of dollars. But Bloomberg argues that this would register as another injury to an industry that dominates the city economy.
The state can't offer much fiscal balm. Last week, Pataki's budget chief asked state agency chiefs to draw up lists of cuts, warning that the budget problems "are likely to be more daunting" than once envisioned.
"The city needs the state, but we've done a terrible job of managing our money for decades," said Krueger, who is no less critical of Democrats than Republicans when it comes to fiscal management. "With an $8 [billion] to $10 billion state deficit, where . . . is the money going to come from?"
Still, the crisis has stopped short of fiscal apocalypse. The underlying economy in most major cities is weak but not disastrously so. In the recession of the early 1990s, for instance, New York bled 280,000 jobs -- this time around, the city has lost 150,000 jobs. Fortune 500 companies are not, by and large, fleeing the big cities, whether in New York, Boston or Los Angeles. And the social plagues of earlier eras, from AIDS to crack to homicidal violence, seem in check.
Posed against such optimism is this danger: Every level of government, from federal to state to city, is facing a landscape marked by budget deficits and tax cutting. Should the economy continue to muddle along, government coffers will remain dangerously low.
"This isn't a problem for just one level of government; we're all tied together," Hoene said. "There is the uncomfortable feeling right now that we might be at just the beginning of this crisis."