News Release

August 17, 2004

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New Study Proposes Solutions for NYC's High-Tax Crisis
Big spender Bloomberg taints GOP tax-cutting record that may be centerpiece of NYC convention

WASHINGTON - New York City's Republican Mayor Michael Bloomberg will speak at the GOP convention at Madison Square Garden but it is unlikely he will talk about the benefits of tax cuts. While the nation enjoyed the largest tax cut in more than two decades, Bloomberg has given New Yorkers a series of large tax hikes. In fact, Bloomberg's tax policies have not solved the city's budget problems, as large deficits loom over the city's budget in future years. He has not reformed the city's bloated spending, and higher taxes have simply fueled a larger budget, according to a new study from the Cato Institute.

In his inaugural address in January 2002, Mayor Bloomberg appeared to be an advocate for fiscal reform, stating: "We cannot repeat the mistakes of the past. We cannot drive people and business out of New York. We cannot raise taxes." But he quickly reversed course and imposed huge cigarette, property, income, and sales tax increases on New Yorkers.

In "Budget Reforms to Solve New York City's High-Tax Crisis," New York City economist Raymond J. Keating maps out an alternative course for Bloomberg to reform his high tax and spend policies and increase economic freedom for New Yorkers. He details numerous spending cuts that would save the city billions of dollars a year and allow Bloomberg to get New York City's house in order.

Keating argues for the private management of sanitation services, golf courses, swimming pools and mass transit. He says the city could save almost $500 million annually by requiring city employees to put in a standard 40-hour week. By better scheduling its 224,000 employees, the city could have saved a large portion of the $830 million it spent on overtime in 2003.

Such reforms could cut New York City's exceptionally high debt load, which was $5,083 per capita in 2002 - more than double the average of 14 comparable U.S. cities. Additionally, Keating argues that the spending cuts would allow for tax cuts so New York City can "regain its place as the premium world center of growth and economic opportunity."

Cato Policy Analysis no. 522