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Political Crisis / Fiscal Crisis:

The Collapse and Revival of New York City

by Martin Shefter

Basic Books, 1985 and 1987
Columbia University Press, 1992


xxix all 5 fiscal crises prior to 1933 happened with a strong industrial base, without suburban flight, without non-white immigrants, without unionized municipal labor.

xxviii NYC's Crises: 1856, 1871, 1907, 1914, 1932-3, 1975

Part I: Machine Politics, Reform Movements, and Urban Fiscal Crises

CH 1: The Political Economy of the Urban Fiscal Crisis

CH 2: Fiscal Crises and the Machine/Reform Dialectic

Fiscal Politics and the Emergence of Tammany

p16 Tammany appealed to support from immigrants, particularly Irish. Public jobs, beat back protestant proselytizing, defeated election law reforms, and worked to reduce anti-immigrant forces.

p17 William Tweed obtained the mayoralty in 1860's because Mayor Fernando Wood being expelled from the Tammany Hall organization. Wood proposed giving jobs to unemployed and building public housing plus selling food at wholesale. Tweed power from sponsoring uptown development: roads, water, sewer, streetcar lines. Kickbacks from which were distributed to other politicians to keep them in line also the program generated a lot of jobs.

p18 Tweed brought down by:

The Machine/Reform Dialectic

p22 Tammany overthrown 4 times from 1894 to 1933.
Reform vanguard: organizations with $ (City Club, Citizens Union)
Members are social scientists, social workers, clergy and journalists.
Worked to shape public opinion in order to wrest the status quo.
Fraud/corruption used as a tool to upset public.
Fiscal crisis concerned business community, so they supported change.

To put in order, city has three options:

  1. Raise taxes,
  2. Cut expenditures,
  3. Cut capital expenditures

p24 Businesses want them to:

  1. Stop borrowing for current expenditures
  2. Balance budget by cuts rather than taxes
  3. Borrow to improve transportation rather than schools
  4. Cover cost with user fees.

New immigrants cause strife that middle/upper classes find objectionable, so if law and order is not maintained adds fuel to reform fire.

New immigrants also form a new base for reformers to organize, especially if party is reluctant to get involved with that particular nationalities of immigrants due to prior alignments with other nationalities.

p25 If national party opposed by local machine wins office the national party will provide resources to locals working to oust the machine.

All these things come together as a "fusion" movement which overthrows the machine. Once in power, various parts of coalition inevitably become upset by something or another the administration does, so the coalition gradually breaks apart. This degradation reopens things for the machine, plus machine works to coopt and/or address the concerns of the fusion members.

Machine/Reform Dialectic and the Creation of the Pluralist Regime, 1945-60

explain lga coalition and ascendence??? p30 LaGuardia (LGA) first mayor to win three four year terms and first reform mayor to win reelection. Prospects of fourth term not good, so didn't run in '45. The bleak prospects for the fourth term in part due to Democrats coming to terms with members of the LGA coalition.

One such force that the Democrats came to term with was Robert Moses. Tammany rejected his plans for highways. Moses then Long Island Parks Commissioner. LGA appointed him as Commissioner of NYC Parks as well as the Triborough Bridge and Tunnel Authority. Projects had strong business support. O'Dwyer, the next Democratic mayor, kept him on and gave Moses the position of Construction Coordinator. Mayors Impellitteri and Wagner did the same. Moses gave contracts to Democratic machine supporters.

p31 Came to terms with those concerned about city finances. Budget increased steadily from 1945 to 1960, but moderated due to "economy block" on Board of Estimate, comprised of Borough Presidents, concerned about small business and home owners. Board of Estimate has to approve the budget. [Fuchs argued that the decentralized process of NYC budgeting, ie Borough Presidents on Board of Estimate, caused increases in spending, and kept mayor from cutting spending. Probably Fuch's point is for the crisis period in seventies.]

Dems also came to terms with elite civic organizations by giving their heads commissionerships.

Italians and jews were a big part of LGA's base. The were brought into Democratic fold by nominating Italians and jews to city wide offices.

p32 Italian and jewish ties to underworld linked Dem district leaders to it too. To overcome this, Carmine DeSapio, Tammany's first leader to be an Italian American, had such district leaders replaced.

In the 30's and 40's the American Labor Party (ALP) was a jewish stronghold. Being listed on the ALP ballot line provided several candidates the margin they needed for victory (notably Congressman Vito Marcantonio). Mid to late 40's ALP had communist influences. This was embarrassing to Dems with ties to ALP. Liberal Party was formed by ALP anti-communist faction in 1944. Election laws were modified to work against the ALP. Dems and Liberals nominated same candidates. After ALP destruction, Dems agreed to support Liberal ideas/patronage if Liberals supported Dem candidates. Lib had major jewish support. Terms of alliance re/negotiated by DeSapio, Alex Rose (Liberal chief strategist) and Robert Wagner, who's career they promoted. Jews and Italians therefrom gained/granted political influence in exchange for keeping radicals and criminals out.

p33 Dems and Republicans joined forces to eliminate proportional representation on the City Council [in the 40's???] in order to reduce means for Dem opponents to influence system. This reduced republicans on the Council, but Dems supported Republicans for judgeships and gave reps some patronage.

Made moves to support municipal employees. LGA supported Civil Service Forum, so Dems had to do better. They supported independent organizations and tightened rules regarding civil service equality -- promotion from within -- and reduce retribution/patronage.

p33-4 Moved toward blacks. District leaders, council members and Manhattan Borough Presidents were black. At same time there were negative moves too: minorities homes were razed by Moses projects, hard to get jobs due to civil service recruitment procedures. Low black turnout and little Dem outreach to blacks to avoid demands for equality.

p35 Post LGA was a "pluralist" era. Prior to LGA liberals had influence via [Tammany boss???] Al Smith and his Kitchen Cabinet. 1929, John Curry, Tammany boss, hostile to Smith, gained power. Post LGA Liberal party provided moderate left a forum. Dems seeking to gain access to Liberal line had to give concessions to Liberal causes.

Wagner was a focal point of liberal contact. He was moderated by the Board of Estimate. Bd of Est owed positions to the regular democratic organizations.

Part II: The Political Sources of New York City's Fiscal Crisis

CH 3: The Reform Attack on the Pluralist Regime

An Overview of New York City Politics, 1961-65

p42 Young reformers organized against entrenched interest of the party and Moses. Attacks resulted in many incumbent losses. Wagner decided to drop his affiliation with DeSapio before running for a third term in 1961. Ran against Arthur Levitt, who was backed by all five Dem county leaders. Wagner won big in primary.

Wagner's third term was tumultuous.


Didn't run for reelection in '65.

'65 Democratic Primary. Wagner backed City Council President Paul Screvane, who ran on Wagner slate in '61. Machine backed Comptroller Abe Beame, who also ran on Wagner slate. Congressman William Fitts Ryan, a leading reform Dem also ran. Beame won.

'65 General Election. Beame had two opponents. John Lindsay, supported by the Liberal and Republican Parties, made fighting the "power brokers" the focal point of his campaign. William F Buckley ran on the newly formed Conservative Party line. Lindsay won with 44% of the vote.

The Reform Vanguards

p44 Carmine DeSapio made several concessions to the reform movement

None of this impressed the reformers though. In part due to them blaming DeSapio for Adlai Stevenson not carrying NY, as well as the feeling that Dem clubs were run by hacks that are staid in their old world opinions.

Reformers joined with/by notable individuals associated with the New Deal, including Elanor Roosevelt and former Governor Herbert Lehman, in forming the Committee for Democratic Voters (CDV), an umbrella organization for reform Democratic clubs.

p46 Criticisms of Robert Moses. Tried to put a parking lot in Central Park by Tavern on the Green. [From my understanding, there was one there already and the opposition came when he tried to build another in the spot where there was/is now a playground.???] He also wanted to kick out the Shakespeare in the Park performances. [Moses' proposal to improve vehicular flow through Washington Square Park was also a focal point for reformers.] Moses' oversight of slum clearance projects was also questioned due to scandals involving the developers of the proposed Manhattanville Houses milking rent money out of the tenants in the existing buildings obtained with federal funding through condemnation proceedings.

Reporter of the World-Telegram pushed the issue, but coverage was waning. This reporter decided to work together with other young reporters, parcelling out scoops. This kept the editors publishing the pieces. They eventually convinced the public of Moses' ills.

Advocacy Professionals
p49 Welfare/community services became decentralized due to pressures by social reformers allied with secular charities. Opposed by sectarian agencies. Used juvenile delinquency as the key to get going. Formed Mobilization for Youth (MFY).

p52 MFY's employees were radicals. Formed school boycotts for racial integration, staged demonstrations at worksites to garner jobs for minorities, organized rent strikes, campaigned for a Civilian Complaint Review Board to handle police brutality charges.

Major opposition arose. Wagner tried to placate conservatives which upset liberals. William Fitts Ryan and Lindsay supported MFY. p55 Liberals felt that welfare agencies perpetuated poverty. Wagner also tried to placate liberals.

Business Elites

p56 Push for capital projects to improve real estate values. They push for budgetary balance, prudence and prioritization of programs which help them. Two major construction projects the business community advocated were the Second Avenue Subway, running the length of Manhattan's east side, and Lower Manhattan Expressway, which would link the Holland Tunnel with the Manhattan and Williamsburg Bridges. Wagner squandered funding for the subway [wasn't it the MTA using funds to maintain existing system ???]. Couldn't get act together on expressway. Took forever to get it in front of the Board of Estimate. Community wanted it below ground. Bd of Est agreed to put it below. Mayor pushed for it to be above ground due to pressure from Moses. Then he vacillated and said it should be below ground. This inability to get projects going reduced business support for Wagner.

Blacks

p67 3 main issues in 60's.

Wagner tried to stall/put off all these issues by commissioning studies or saying it wasn't his responsibility.

Municipal Employee Unions

p73 Wagner advanced civil service unions and won their support. That gave his protege in '65, Screvane, their support too. After the primary, labor switched to Beame, since Lindsay attacked the ties between the unions and the Mayor.

Republicans

p75 Nelson Rockefeller became dominant Rep figure upon being elected governor in 1958. During the '61 mayoral race he worked to split the reform and machine Dems, which helped him in his race. Formed committee to investigate NYC and propose charter revisions.

Wagner used it to run on reform issues. Wagner and Rockefeller then worked together to get bills authorizing mayor to pay for charter revision commission without Board of Estimate approval and barred City Council from forming their own commission. In exchange, Wagner did nothing to support Rockefeller's Democratic opponent. Rock & Wag supported each others' taxation proposals.

GOP chair, Ray Bliss, wanted a rep in democratic strongholds to counteract Johnson victory in white house. Urged then Congressman Lindsay to run for Mayor. Lindsay demanded he needed $1.5 million to run a serious race. Rock and Walter Thayer, of the NY Herald Tribune, pledged to raise $.5m. Senator Javits pledged $.25m. A month before the election Leonard Firestone (Los Angeles), HJ Heinz (Philadelphia), Charles Taft (Cincinatti) sent letter to moderate Reps calling for $ for Lindsay campaign. The effort paid off. Lindsay won.

The Organization of Reform

p78 pre '60's reform run by wealthy elitism. 60's reformers were Dem activists, journalists and advocacy professionals.

'61 Comptroller Lawrence Gerosa ran for mayor as independent on a low tax platform. '65 Buckley ran on the Conservative Party line. Both garnered about 13% of the vote. Prior to then, such efforts were part of reform movements.

Earlier reform candidates brought up by citizens committees. Now the mayoral candidates themselves declare they are reformers, bring other candidates onto the reform slate and run their own campaigns.

CH 4: Reform and Accommodation

Reforming Municipal Policy

p84 Mayor Lindsay played major role in creating the Urban Coalition. Composed of national executives, nonprofit organizations and civil rights groups. Lacked connection with working class whites who compose the majority of NYC residents.

Lindsay's work focused around helping companies come/stay in NYC and helping the poor escape from poverty.

p86 He was a hard negotiator with municipal unions. Strikes ensued.

Reforming Municipal Administration

Dethroning the Opposition
p87 Reduced Borough Presidents' patronage by centralizing construction of streets and sewers. Called for changing the TBTA into the Transportation Administration, under Mayoral control, a move which would oust Moses and provide significant cash. Created Office of Collective Bargaining to depoliticize labor negotiations.

Gaining Control of the Municipal Government
Centralized agencies. Contracted out consulting work. Model Cities Program paralleled city services (in Harlem, Bedford Stuyvesant and the South Bronx) by hiring sanitation aides to sweep up [sounds similar to current Business Improvement Districts ???]. Decentralized poverty programs, created power below that could not be controlled.
Reallocating Public Benefits
p90 Expanded non civil service (exempt) jobs, especially in antipoverty programs, to ensure distribution to those desired. Consultants and social service workers didn't aspire to lifelong civil service. Lindsay's constituents didn't push to expand civil service.

Increasing Government Capacity
Sought to increase efficiency of gvt through technical analysis. Tried to bridge gap between bureaucracy and community. Had School Boards created.

The Reaction to Reform

p92 Municipal workers staged strikes, the blame for which fell on the mayor.

UFT staged 2 month strike in the fall of '68 due to Ocean Hill-Brownsville school board removing several teachers.

Lower/middle class whites, the base of the GOP, upset by redistribution to blacks and wealthy whites. Thus, Lindsay blew the Rep nomination, loosing the '69 primary to John Marchi in all the outer boroughs.

Lindsay alienated many city residents because he focused on looking good nationally in order to run for higher office.

'69: 80-85% blacks and 63% of Puerto Ricans supported Lindsay, but this was not much help. Blacks and PR's are 30% of the population but are 21% of those who voted.

Didn't mobilize minorities, in part because they obtained their benefits if they showed up on election day or not.

Post-reform Accommodations, 1969-74

Alliance Patterns
p95 Lindsay gave generous contracts to all unions in '69. All backed him or stayed neutral for reelection bid.

Made many appearances in white middle class neighborhoods. In year before facing reelection he focused on issues affecting "neighborhoods," including crime/police action, sanitation and constructing schools, libraries and playgrounds.

Struck deal with Brooklyn, Queens and Manhattan Dem leaders.

Lindsay won reelection in '69, against a weak Dem candidate, Mario Procaccino

Beame formed a coalition for '73 race out of people Lindsay alienated. Also forged alliance with black politicians in return for endorsing Percy Sutton in the '77 race.

Rockefeller looking toward the Presidency wanted to shed his big spender image, while Lindsay was pushing him to give more aide to cities. Rock backed Beame.

Beame won in '73

Patronage and Party Organization
p99 neighborhood antipoverty programs became patronage mills for locals. Ramon Velez was head of the Hunts Point Multiservice Center and a District Leader. Sam Wright was Ocean Hill/Brownsville School Board, Assembly Member and District Leader.

Beame used patronage to strengthen the Dem Party organization.

Dem orgs would not sponsor challengers to black incumbents who had initially been elected as insurgents as long as the insurgents didn't join forces with white reformers seeking to depose the incumbent party leaders.

Herman Badillo viewed by Puerto Ricans as their representative, even if they weren't in his district. He chastised the Dem party organization. Beame tried to diminish Badillo by supporting the DelToros and Velez through the antipoverty programs. Beame also worked to strengthen Dem orgs in hispanic neighborhoods.

County Dem organizations didn't play as large a role now as compared to previous postreform eras. Outer boroughs doing okay with the county seats though.

p102 Although Lindsay formed an alliance with Dem County orgs at the end of his first term, and Beame strengthened his links with them upon becoming Mayor, county orgs played less significant role compared to other reform periods. The county orgs' grips were not as strong. Party regulars were threatened by serious/determined challengers.

Dems warded off threats using three means: collusion with Rep orgs, striking deals with insurgents and trying to overwhelm them at the polls. '71 Queens Supreme Court Judges, the Dems and Reps swapped endorsements for each others' candidates. Meade Esposito, Brooklyn Dem Leader, struck deals with insurgents: won't endorse challengers if they don't push for dethroning others.

p104 Mayors brokered deals to keep coalition together, not parties. Matthew Troy, Queens Dem leader, and chair of the City Council's Finance Committee, refused to approve Beame's Budget in 1974. Got booted by county org at Beame's request. Beame had direct patronage, not via party. Couldn't get tax proposals through.

CH 5: Sources of the Fiscal Crisis

An Overview of Fiscal Politics in New York City, 1965-75

p106 Lindsay raised taxes and intergovernmental aid to balance his spending increases. Second term, major deficits covered by gimmicks and borrowing. Comptroller Beame advocated even more gimmicks. Did same thing once he became mayor. Shut out of Bond markets in 1975.

New York in the National and International Economy

p107 Economic downturns in '69-70 and '73-5. Manufacturing on a global scale reduced demand for NYC products [and NYC job base]. '72 Lindsay got Rockefeller and State legislature to authorize more taxes but Board of Estimate approve them. Made up the difference via borrowing. Banks were willing to do so because they found it profitable. Economic downturns and major debt in NYC made the banks think again.

National-Local Political Linkages

p109 Federal policy

p110-12 Aid to Families with Dependent Children (AFDC): '64 $151 million in local funds spent for it. Then Kennedy and Johnson came into office. Middle class influence on policy to deal with poor.

Prior to this welfare roles kept down by lack of promotional programs, many rejected who applied, systematic purges of the rolls, staged midnight raids on homes of recipients. Court cases made much of this illegal. Such advocacy and legal work which brought about such court cases done by those not responsible for the budget.

Local Political Coalitions and Institutions

Racial Minorities and their Allies
p113 '61-76 basic function expenditures increased far less rapidly than redistributive. Done to acquiesce/woo opinion leaders and middle class blacks and liberal whites and avoid civil disorder. ('71 riots in Brownsville for three days.) CUNY students granted open admissions due to sit ins.

Middle Class Whites and Municipal Employees
Programs for nonwhites not balanced by reductions/slowed growth in other areas so budget increased dramatically.

Table 5.2
NYC Operating Expenditures by Object:
Percentage Increase and Proportion of Total Increase, 1961-75
                                                                    Proportion
                                    Expenditures in mil.   Percent    of Total
                                         1961       1975  Increase    Increase

Wages, Pensions and Fringe Benefits  $1,334.7   $5,520.6     313.6        45.1
Social Welfare                          303.9    2,822.0     828.6        27.1
Hospitals                               159.4      631.5     296.1         5.1
Debt Service                            386.7    1,383.5     257.7        10.7
Contracts, Supplies, Equipment, Other   180.2    1,296.7     619.6        12.0
                                     --------  ---------                 -----
Total                                $2,364.9  $11,654.3     392.7       100.0



p117
New York City Municipal Workforce

     Employees   Cost per Employee

1961   200,706        $8,234
1975   294,522       $22,283


p118 Labor relations apparatus set up by Lindsay ended up increasing labor costs. Unions learned that the "impasse panels" generally split the difference between the last offers of the City and union, so the unions jacked up their requests.

Rising labor costs not unique to NYC.


Table 5.3
Municipal Labor Costs in Twelve Largest U.S. Cities in 1975

                           Employees                Labor Costs As
             Labor Costs   per 1,000  Labor Costs    Percentage of
            per Employee  Population   per Capita  Personal Income

New York          19,543        45.5          889             19.9
Chicago           15,102        15.4          232              5.5
Los Angeles       18,638        17.1          318              6.8
Philadelphia      14,013        20.4          286              7.4
Detroit           23,424        14.8          346              8.4
Houston           10,387        10.8          112              2.9
Baltimore         11,278        46.2          521             14.1
Dallas            11,411        16.3          186              4.0
Washington, DC    16,724        62.4        1,044             20.7
San Diego         15,326         9.1          140              3.6
San Antonio        8,709        14.6          127              4.7
Indianapolis       8,244        15.8          130              3.1


Service-Demanders versus Money-Providers
Table 5.4
Per Capita Operating Expenditures
in Twelve Largest U.S. Cities, 1974-75

               Common        All
            Functions  Functions

New York          215      1,330
Chicago           163        226
Los Angeles       183        247
Philadelphia      227        423
Detroit           215        370
Houston           113        155
Baltimore         269        823
Dallas            144        196
San Diego         143        186
San Antonio        96        131
Washington, DC    392      1,710
Indianapolis      122        264


p121 Mentions Peterson: special interests play important role in NY politics.

NYC extraordinarily high non common function expenditures.

Money Providers include homeowners and small business interests, represented by the county Dem orgs, and real estate/banking/business interests, represented by Citizens Budget Commission.

Service Demanders growing in influence while opposition became less cohesive. Wagner and Lindsay brought in as reformers via Liberal Party, not by the elites. These Mayors had to spend money in order to stay in office. Opposition made it hard to get funds to keep those programs going, but not hard enough, so the programs continued with borrowed funds.

p123 and earlier... Outerborough Dems are representing tax conscious homeowners so want to restrict expenditures. [These folks are on Board of Estimate, which Fuchs says is another place to leverage more spending. He concedes that increases due to Mayor needing to prop up image, maintain coalition, to win election in large part because Dem organization not powerful enough to elect a Mayor.]

Part III: The Political Consequences of New York City's Fiscal Crisis

CH 6: The Fiscal Crisis and Its Budgetary Consequences

1975: A Year of Crisis

p128 Shut out of credit market in March 1975. Laid off workers and cut salaries. Transit fare increase. Cutting services.

Banks blackmailed city: make changes or get no money.

Unions withdrew $15 million from First National City Bank and held a demonstration at the banks headquarters, where 10,000 protestors showed up. Unions threatened a general strike in October.

Police threatened to distribute flyers at tourist entry points saying that NYC is not safe. They also held a protest which disrupted traffic on the Brooklyn Bridge.

Highway workers blocked the Henry Hudson Parkway.

Mayor Beame threatened to cut services in districts of the seven Republican State Senators in order to get their support for a tax increase. Mayor had to pledge there would be no police or fire layoffs since many such employees lived in the districts of those seven Reps.

p 130 Default and bankruptcy were not viable options. Bankruptcy would mean that a Federal judge might say city services are more important than the bankers investments or they might demand work rule and collective bargaining be discarded. The legal proceedings would also take forever, causing major strife amongst service recipients.

Default could result in the banks being held liable for investor losses.

These bleak prospects made the bankers, unions and government work together and reach agreements.

p132 Governor Hugh Carey created the Municipal Assistance Corp (MAC), the Emergency Financial Control Board (EFCB) and the Office of State Deputy Comptroller for NYC.

Fed Treasury opened Office of NYC Finance to make sure NYC was getting its act together in order to repay the $2.3 b in short term loans President Ford finally agreed to give the city.

Mayor created the Mayor's Management Advisory Board and the Temporary Commission on City Finances (TCCF). The TCCF produced 16 studies and a 300+ page final report during the years of 1975-77. They recommended long range revenue/expenditure policy.

Took on the three big sacred cows: the low transit fare, CUNY tuition and subsidized housing.

25,000 employees cut and deferred raises for others.

p136 Feds called on unions to invest their pension funds in MAC securities and pushed banks to exchange short term bonds for 10 year MAC bonds or face a three year deferral. Washington also prodded the City/State to levy an additional $200 m in taxes.

City was able to directly float short term notes in '79 and long term bonds in '81 and in '85 the MAC sales were no longer needed.

The Budgetary Consequences of the Fiscal Crisis: 1975-84

'81 expense budget balanced
'75-84 28% increase in intergovernmental aid

State relieved City burdens by taking over CUNY Senior Colleges, State Supplemental Income payments, some court expenses, tightened medicaid reimbursement and the state committed itself to gradually assuming the full costs of the program.

Banks: had to spread out the time it took to be repaid and purchase MAC bonds.

Municipal Employees: got pay cuts and layoffs but made up by pay hikes in early 80's so by '84 wages in inflation adjusted terms had gone up for most workers. Median was 3%-4% with highs of 13% for clerks and lows of negative 7% for police. Many of the layoffs done by attrition.

Business Community: Public sector shrunk v. private sector. Real estate taxes stable and some local business taxes repealed. Tax abatements for construction/renovation of buildings. Displeased that there weren't enough nonessential services eliminated, city failed to adopt many of the TCCF and MMAB recommendations and that capital investment was reduced.

p143 Service Consumers: Payroll cuts determined by several factors, including laws/regulations/legal decisions, whether they were paid using local or fed/state funds, attrition (civil service laws forbid transferring between job titles) and which services are most/least dispensable. Police and sanitation cut significantly due to them being completely locally funded.

p147 Dependent Poor: '74-81 frozen level of benefits while the cost of living increased 68%. The number of people obtaining services were cut too.

CH 7: The Fiscal Crisis and the Reorganization of New York City Politics

New Institutions

"The City has improved its information systems and integrated them into a financial planning process with a long term perspective. This system is probably one of the best MIS among large American cities and rivals the practices of well managed private firms." --Brecher and Horton.

FCB generally working with the city, nudging it in the right direction. It didn't seize the city's accounts or take control as it could have.

New Sectoral Alliances

p151 Municipal Employees: Union leaders unified int coalition bargaining with the city. Allowed them all to make concessions and not get shot by their members for being weak. They were all in it together.

p153 Business/Banking Community: NY Clearinghouse Assoc, composed of 11 banks. Banks joined in refusing credit to the city so could tell city what to do to get back in. Feds requiring bankers to buy city securities reduced banks leverage. Bankers demanded tighter monitoring agencies yet again. Unions refused to go along. Beame sided with the unions. Banks and unions began meeting to strategize. Chamber of Commerce and Industry convinced business executives to volunteer with the Office of Operations to improve government's management practices. Citizens Budget Commission opposed MAC refinancing. Called for renegotiating union contracts to obtain work rule concessions. 1980's shifted toward improving efficiency of services.

p158 Vanguards of Reform: Good gvt groups, Dem clubs and civic organizations declining in stature. University based think tanks increased in stature. Management skills more important than dedication to an agency and its mission.

[Perhaps good government groups not involved in the reforms of 1975 because the banks and business interests had direct access to City Hall so didn't need to go through or cloak themselves as good government groups. ???]

Governor Carey's first Exec Dir of MAC was Herbert Elish, did operations research for Dept of Sanitation as Commissioner under Lindsay. Put Dick Netzer on MAC Board. Netzer directed a study of NYC finances for the commission established by Wagner in '65 and he also helped design the EFCB along with Peter Goldmark, Carey's budget Director. Goldmark was Lindsay's budget director for program planning and analysis. The EFCB's first head was Stephen Berger, who was staff director of the Scott Commission which investigated NYC in the early '70's. He also laid the groundwork for a series of amendments to the City Charter in 1975. [What were these amendments ???]

p160 Setting Municipal Priorities (SMP) project. Operated via New School and Columbia U plus NYU joined in later. Raymond Horton, Columbia Business School, served as staff dir of TCCF. Charles Brecher worked at both schools and TCCF. The SMP's writings focused on altering managerial practices to increase service quality/quantity and to improve capital work to increase private productivity and improve the business climate. Some articles in the 1984 volume, little reason to believe that tax abatements in the CBD really work. Also called for increases in tax assessments and basic welfare grants.

p162 These forums held little influence. Didn't act as forum for top players to work things out, but rather for lower level officials to talk. They were heard, but not listened to, by decision makers.

Horton and Brecher plus another SMP'er, James Hartman, brought into the CBC after its reorganization.

Three Centers of Power

The Bank/Union Nexus
p163 Coalition of unions and bankers that bailed out city joined as Municipal Union-Financial Leaders (MUFL) group. Included leaders of the six largest unions and six largest banks. Jack Bigal, the union's finance guy, and Felix Royhattyn, of MAC were notable figures. Worked to make sure each other didn't pursue self interests that would get the city cut off from the credit markets.

Created better understanding of each other's needs. Together they agreed, after much consternation, to extend the FCB to the year 2000, which the unions initially opposed, and to have wages return to normal and have no work rule changes, which the bankers were pushing for.

Public Creditors and Fiscal Monitors
p166 US Treasury, MAC and FCB had tremendous power, but didn't utilize it much.

p170 FCB didn't set the city's priorities, just made sure the budget stayed in line. Compelled Beame to adopt the Integrated Financial Management System in '75-'76.

p172 Beame out, replaced by Koch who was backed by Carey. Donald Kummerfeld replaced Berger as exec dir of FCB.

The Mayoralty
p174 Koch '77 came in on retrenchment and balance the budget platform with the backing of the business and real estate community as well as Gov Carey. Worked to improve efficiency, such as transferring jobs from highly paid uniformed employees to lower paid nonuniformed employees. Koch obtained the primary win as an independent but made ties to the Dem county orgs once in office, but these relations were not very tight.

p177 talks of parties and strengths

p178 Koch staged well publicized meeting with presidential hopeful Ronald Regan during the 1980 race. Endorsed two Rep state senators too. GOP nominated Koch for their '81 primary by 4 of 5 county orgs. They figured if you can't beat him, join him. So Koch was on both the Dem and Rep lines in his race for reelection in '81.

[Individual taxation in NYC isn't too bad.]

Racial Minorities
p184 Koch not so conciliatory, actually inflammatory at times. He hired lots of blacks.

Author says blacks getting more city jobs because decreased wages for city jobs making them less attractive so whites don't want them.

Reconciling Fiscal and Political Viability
p189 Bank/Union Nexus created situation where unions don't push against reforms and banks don't push for work rule changes, thereby, neither side joined with other forces pushing those agendas, thus, the strength of other groups is diminished.

FCB served to moderate tempers between politicians and the financial markets.

CH 8: Fiscal Politics in New York City: Past, Present and Future

Contemporary New York City Politics: Old Wine in New Bottles?

p201 Mayors came and went but Borough Presidents stay in office longer, so they dominated the Board of Estimate. Talks more of the "economy block" mentioned earlier. Budget directors looking to maximize their tenure thus ended up serving the BP's rather than the Mayor. The Bd of Est met in executive session to hash out the issues and reach agreements and then met in public to take the vote. They generally voted unanimously.

p195 Today's regime, aka Koch, survived by meeting the four major imperatives of municipal politics. This includes a comparison of how Koch's meet these imperatives with how the post-war regime did so.

  1. Mobilizing the electoral majority. Koch did it himself, w/o party or civic organizations used by prior regimes.
  2. Promoting economic growth. Koch undertook major capital investments, as Moses did in the post war era. Koch implemented Industrial and Commercial Incentives Program (ICIP) and other tax breaks. Post war politicians were reluctant to increase taxes.
  3. Maintained city's credit. Board of Estimate pushed to keep budget balanced during post war era. Koch pushed/supported by the EFCB, he also used them as an excuse for his measures.
  4. Moderating political conflicts. Post war era had pushes by organizations for increased spending hemmed in by "economy block" and party. Make some concessions but not so much as to put budget out of whack. Koch has relations with minorities and municipal labor but contains the conflicts. Reshuffled political alignments, keeping minorities from coalescing. Coalition bargaining amongst unions as well as MUFL's bank/union has helped moderate things too.

Looking Forward

p205 The future holds three potential scenarios:
  1. Neopluralism if the city's economy/revenue remain stable. Meeting fiscal balance while including increased expenditures.
  2. Loss of home rule if economy sours and city doesn't take corrective action.
  3. Neoreformist era if the city's economy sours but dealt with via improved management efficiency to improve services. p208 talks of MTA attempts to do so.

Municipal wages didn't keep pace with inflation. Other unions fared better than police. Police looking to regain parity in their standard of living when compared to other unions. This blew apart coalition bargaining.

Part IV: The Political Implications of Urban Fiscal Crises

CH 9: Can Cities be Democratically Governed?

 


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Last updated: 4 April 1999