Thursday, January 18, 2007


Michael Bloomberg -- Republican?

It's been a while since I wrote on local New York politics. So, let's take note of Michael Bloomberg.

Given the bulk of his "State of the City" speech Wednesday, one could almost be led to believe that the mayor really is planning on running for president -- as a Republican!!! What else are we to think when he actually champions tax cuts and education reform that starts moving perilously close to the land of vouchers?

With revenue rolling in because of the still-booming NY real estate market, Bloomberg announced a $1 billion package of property and sales tax cuts. It's only a 5 percent cut -- $750 million for one year, plus a $400 "rebate" for the third year in a row. But considering that the centerpiece for Bloomberg's first budget in 2002 was an 18.5 percent property tax increase, this is a marked improvement.

However, as Manhattan Institute scholar Nicole Gelinas points out, this is still not enough:
Bloomberg proposes only a one-year cut. He said yesterday, "It would be great if we can extend this in the years to come, but we can't know that we'll be as fortunate in the future with our revenues and expenses so right now it would not be fiscally sensible to commit to doing so."

Due to this caveat, while homeowners will no doubt put their savings to good use, New York's economy won't benefit from this cut as much as it could.

Why? Commercial-property investors and their tenants, as well as rental-property investors, will still have to budget new projects or renovations using the higher tax rate, since there's no guarantee the savings won't vanish next year.

If Bloomberg is set on property-tax cuts, he'd do better to at least enact a permanent tax cut - and then pledge to keep spending permanently in line to pay for it. But what the city's property-tax structure really needs is complete reform - rental-property owners and condo residents, for example, now pay far more than their fair share of property taxes, pushing costs up for free-market tenants and owners alike.

And in fact, to spur private investment in the city's economy, an income-tax cut would be better than a property-tax cut. A permanent cut in the city's top 3.6 percent income-tax rate, even a modest one, would have two positive effects.

First, it would encourage the creation of the new jobs the city constantly needs. Second, it would reduce New York's dangerous dependence on volatile tax revenue from Wall Streeters. These traders and others directly provide more than a fifth of city in- come-tax cash - but their incomes tend to fluctuate from year to year, creating wild swings in the city's annual surpluses and deficits.

As Nicole says -- make the tax cuts permanent. Whether commercial property or a single-family dwelling, it becomes very difficult to get people to come to NY to raise a family -- if there's not greater year-to-year tax relief. Why would someone move to New York if they knew that the odds were that they'd be facing a de farcto taxe hike, the following year?

Meanwhile, Bloomberg did even better for his ongoing school reform -- including accountability standards for principals, revising tenure eligibility for teachers (yep, that wailing howl you just heard was the city teachers union.

But most significantly, Bloomberg wants to:

overhaul a decades-old school funding system that, solely for political reasons, rewards some schools over others. You wont believe this, but today, funding gaps between comparable schools can top $1 million, or $2,000 per student, year after year.

That's not right and we're going to fix it.

Starting in September, we're going to fund students instead of schools, basing our investment on the number of students enrolled, and their particular needs. The goal is equitable funding among our schools and ensuring that each school has what it needs to teach its students.

The possible implications for this could be huge.

Tying funding formulas to students rather than schools has been a goal of school voucher advocates for years. As the New York Sun notes, Bloomberg's plan opens the door to a school choice/voucher discussion:
If the money is going to follow a student, why not let it follow him or her right into a private independent or parochial school?

So far the mayor and his schools chancellor, Joel Klein, have opposed school vouchers, while enthusiastically backing charter schools. But the change they are proposing could one day allow a mayor and schools chancellor who succeed them — perhaps emboldened by the disappointing record of only incremental improvement within the public monopoly system, even under capable management — to try vouchers. Or at least it could give them a wedge for opening up the issue in Albany.

In liberal New York, Bloomberg undoubtedly can't be as candid as he might wish to be. However, one can't ignore the fact that the cumaulative impact of all of the changes that the mayor and his school chancellor have been making over the years -- accountabilty, more freedom for principals and now this revised funding formula -- is to take apart the schlerotic parts of the public school system and insert something that is far more child- and parent-centered.

Right now it is taking the principles of charter schools and making it system-based. A few years down the line, however, and we could be looking at voucher pilot programs in the Big Apple.

Oh, as for my observation above that one can only "almost" believe that this combination of tax cuts and education reform means Bloomberg is thinking of running for president as a real Republican, be advised that he also devoted a significant part of his speech to his favorite inter-state concern -- "illegal" guns!

C'est la vie.

UPDATE: I appeared this morning on local public radio station, WNYC's Brian Lehrer show, discussing Bloomberg's tax cuts. Listen to liberal pundit Andrea Batista Schlesinger who is on right before me, as I respond to a few of her comments.

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