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Mayors and Money

by Esther Fuchs

University of Chicago Press, 1992


CH1 Toward a Political Theory of the Urban Fiscal Crisis

p1 ford: drop dead

p3 mayor is arbiter of fiscal policy: centralize control to make tough decisions and limit public demands.

p4 by 1930 cities provided water,schools, fire, police, transit, highways. These services brought about because local business in the 20's lobbied for them. 1930's depression the access to public services broadened to everyone: unemployment relief, housing, health care.

p6 chicago has democratic machine so didn't rely on politicians wooing voters directly. NYC each politician (BP & mayor) had to woo voters so spent money to do it.

chi also had special districts/authorities that shared expenses with suburbs NYC has more responsibility over more public services than any other city in the us

p7-10 nyc v chi fiscal crises [didn't mention long term debt by koch]

p13 off because global factors affected some cities more dramatically because they weren't structured to deal with them while other cities weren't affected because they were well run

p14 touches on City Limits

CH2 Fiscal Crisis and Fiscal Stress: a Comparitive Perspective

p17 1975 nyc insolvency while chicago was just fine.

p22 %below poverty increasing. cities have growing "non-white, poor, welfare recipient population" [Why does she have to equate the race with the welfare status]

median family income and other economic indicators going down in both nyc and chicago during 75 fiscal crises but only nyc entered actual crisis

p29 Municipal Finance Officers Assoc issues certificates for cities that are independently audited and adhere to GAAP. chi first got it in '63 and hasn't stopped while it took till '80 for nyc to get it.

p30 nyc major short term debt, peaked in '75 now much smaller but still major in '89 while chi and houston have none. Long term debt is massive in nyc

p35 "common function debt" similar in all three cities through '75 then houston takes major lead.

p38 overlapping debt: chi best. nyc was worst now it's houston. per capita tax burden nyc WAY larger

CH3 Depression-Era Fiscal Crises: Policy Lessons for Urban Policy Makers

Fiscal Crisis in Chicago, 1930-32


[snip]

p53 state income tax adopted with city support gained through state allowing consolidation of chi area assessment to the elected assessors

p55 major restructuring/consolidation of taxation authority and operating depts. fed $ to chi. major cuts in spending.

Fiscal Crisis in New York City: 1931-33

p56 same synopsis as chicago: exaggerated forecasts of expected real estate tax collections, borrowed against them, funds didn't arrive, didn't cut spending, so had to borrow even more, banks eventually refused credit

Mayor Jimmy Walker didn't want to cut budget since that would mean reducing patronage jobs.
financed subway construction on short term bonds
p60 city had nearly 150,000 employees

corruption investigation by Samuel Seabury's Joint Legislative Comm to Investigate the Affairs of the City of New York. Mayor walker resigned. Joseph Mokee (Bd of Alderman President) took over. He couldn't control his party. Special election John O'Brien to serve last year of mayor's term.

sinking funds and pension funds were drained of cash and filled with promissory notes.

p69-70 city proposes taxes on financial industry. banks threatened to move to NJ. deal struck to have them refinance city if city doesn't implement taxes.

p71-2 LaGuardia wanted to revise city finances and operations but the state hindered him. Board of estimate given more powers, including the final decision on restructuring/eliminate agencies.

The Legacy of the 1930's

p74 chicago cut spending and didn't have an unemployment program nyc big relief programs and little spending cuts.

both changes in chi and nyc came reluctantly, but chi had more centralized employment while nyc still diffused.

p81-2 chi party centralization keeps interest groups down by keeping activists and other politicians involved in the party

nyc interest groups flourished off decentralized decision making and weak party

p84 pre crisis chicago had several different authorities handing municipal services each with own electoral, taxation and spending authority.

post crisis mayor appointed heads to provide some control over waste and kept fingers in patronage hiring but mayor didn't have legal fiscal responsibility

p86 state mandated programs and debt service left nyc controlling only 27% of its budget in 1932. [Sounds like today!]

'75 crisis MAC William Ellinghaus, Chair, and Rohattyn on too. EFCB also contain Ellinghaus and Rohattyn

p91 ford reluctant to help out. pressure brought to bear in national election. Helped somewhat with $2b in loans at 1% above t bills

no major reforms in nyc after 1975 either

CH4: City Budgets and the Urban Fiscal Condition: Trends in Expenditures

p98 nyc budget increases last year of term to get reelected chi budget increases first year of term as a reward for being part of the machine [neither statement seems to be borne out by the budget graphs]

p100 Fuchs has a strange sense of service division, saying libraries, transit, water and education are considered "non common function" (redistributive)

p103-4 employees are not the problem for nyc, since workers are needed to carry out the policy. if there were less services we'd have less workers.

p108 nyc rapid growth in budget. lag only man to significantly hold/cut the budget on their own. Lindsay major spur upward in first and second term though flattened out during third. Beame sliced budget but had to due to EFCB. Koch jacked it up again.

Common and Non-Common Function Expenditure Trends in New York

p114 Lga non common big jump till '40, at which time it constituted 50% of budget. declined in '42 to 25% due to war

p114 Wagner increased common function faster than non common -- a record. Lindsay major decline in common function and major increase in noncommon fiscal crisis $ down % up. Koch common function increase in $ and % Lga did so with federal $. [didn't mention federal mandates on lindsay]

Common and Non-Common Funcion Expenditure Trends in Chicago

p118 (fig 8) '58-'61 major drop in % common but no reciprocal increase noncommon. '65-69 decrease in % common and non common. in both instances there is also a slight decline in debt service/capital outlay (fig 16). [So what part of the budget that went up???]

p122 chi keeps non common function low except during depression. increases have non city $ supporting it.

p122 subway construction '39-40 WPA projects and private companies then to CTA

1955 gave welfare to county
'64 courts to county
regional transit authority absorbed CTA
'60 state took welfare and county took corrections
all during Daly's tenure

capital 20% of budget now 10%

Municipal Employee Expenditure Trends in New York and Chicago

p125 nyc 1974 447,504 employees. cut 100k by '76 27% cut
p127 wagner big jump in employee expenditures due to unions lindsay 56 empl/1k residents '73

Capital Expenditure and Debt Service Trends in New York

p131 walker cut capital spending to appease bankers.
lag upped capital spending with federal money including subway expansion though retrenched during WWII.
ODwyer and Impelletteri bumpted it up big time with moses
Imp neglected basic service delivery
wagner up and down and up on capital. upped common spending too had to deal with the debt service imposed by the Imp regime
p133 Lindsay reduced capital $ due to big debt service increase facing him but jacked it during his second term by 71%
Beame cut capital by 73%
Koch MAJOR jump to deal with deferred maintenance

Chi kept capital spending and debt service low, especially during hard times. '56 created Public Building Commission

p143 Daly/Wagner both increased spending did both common and noncommon. O'Dwyer increased non common more than common

Lindsay increases due to influx of federal dollars but didn't respond to reduced federal aid or downturn in economy, leaving budget out of whack.

p144  1975
        $ per capita     % of entire budget
          nyc    chi             nyc    chi


welfare   366     12             34%     6%
common    175    109             16%    57%
safety     64     60              6%    31%




portion of entire budget
            NYC    CHI

staff       40%    64%
pension      7%     6%



increase from '29 to '75
               NYC    CHI

common         99%    64%
noncommon     761%   139%

CH5: City Budgets and the Urban Fiscal Condition: Trends in Revenue and Debt

p151  revenue in $ per capita
           nyc      chi

'29        226       46
'75      1,101      217
%change   387%     374%


p151 using intergovernmental aid to substitute for local $ instead of using them to expand budget. That way if non city $ vanishes you don't need to cut services.

p152 nyc expenditures rise faster than revenue. chi revenues rise faster than expenditures

p154 wagner was the only mayor successful in bringing expenditures in line with revenue

p165 chi increasing property taxes in response to property value drop and getting more federal/state aid... while modestly increasing expenditures (Daly/Byrne)

[This seems to run contrary with the major premise of the book: chicago mayors keep expenditures in line with revenues and don't increase revenues to meet expenditures.]

p169 "cyclical growth in nyc debt" [graph lines seem straight to me]

CH6: Intergovernmental Relations, Legal Arrangements and the Urban Fiscal Policy Process

p185 in nyc 37% of assessed property value belongs to institutions that are tax exempt
p189 ny is the state with the most mandates
nys and ill both have state mandated retirement systems
nys mandates collective bargaining, working conditions, benefits, now in chicago too ('84)
chi residency requirement while not in ny

p191 nys requires local match 50% afdc medicaid and SSI plus local enforcement of enviro quality laws

Due to '75 crisis nys assumed:

(p191 & 206)

p192 nys says all heart conditions of fire/police are job related so get 3/4 pay as pension

p202 Functional Responsibility in New York City:

NYC Transit Authority (NYCTA): city obligated to pay promissory notes, city contributes to capital and operating budgets, state contributions need to be matched by city.

Metropolitan Transportation Authority (MTA): authorities can't levy taxes and the mayor has few appointments on the board

chi more successful at getting state aid plus nyc far more dependent on federal aid

nyc mayoral power offset by board of estimate/borough presidents/council and public participation

chicago the party controlled elected officials and the mayor controls the party so he has tight budgetary/policy flexibility

[doesn't talk of WHY nys and ill are different]

[how much $ chi spends when add up all districts/commissions???]

CH7 Interest Groups, the Political Party, and the Urban Fiscal Policy Process

p234 [weird definition of interest groups]

[NYC is amazing. it takes a major organizing effort to lobby the city on the interests of the city. the straphangers campaign is not an interest group look after parochial piece of the pie... the city's interests are at stake.]

p137 chi strong party disperses interest groups and provides cohesion behind mayor in city council. Pulls blocks for state/fed elections which can garner rewards. in the local arena jobs and decent services given in exchange for support

earlier: interest groups take place of party and express narrow interests, seeking money for particular segment of society.

p240 "strong party organizations exist only at the expense of strong interest groups."

the only way mayors can avoid group pressure is during times of retrenchment/crisis

p244 even from inception, nyc fragmented politics. there is no city wide party organization. mayor put on ballot by agreement of democratic parties in each borough. Once elected has to deal with board of estimate/borough presidents/council. Bd of est even revoked a mayors financial authority when he tried retrenchment strategies.

lga defeated machine
subsequent democratic mayors came in on tammany but broke away from it and toward reform movement once in office.
last tammany politician was carmine desapio
lindsay republican/fusion final nail in the coffin of the party
p247 coalitions of interest groups are rare and don't last long, so mayor can't count on them as a source of consensual agreement on broad policy concerns.

p248 labor in nyc vocal/strong part of politics, more so than parties

[reformers are business sorts pushing austerity... so why get rid of machine??? "machine is efficient."]

p254 party coopts neighborhood/interest group leaders with patronage jobs

p265 daly controlled federal funds coming to city. ignored public participation and got feds to agree to it by delivering votes.

nyc process was wide open. so many private/non profit organizations provided services with little control by the city. lindsay barely knew who/what was being funded with great society programs

CH8: Conclusion

  1. expand taxbase to cover region
  2. eliminate unfunded mandates and if mandate, include $
  3. fed/state pay all welfare
  4. city control over workforce conditions and privatize some things
  5. revitalize party structure, create consensus for mayoral action rather than parochial interests
  6. convince congress and US citizens that cities are critical and need funding

 


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Last updated: 4 April 1999