Wall Street Cutbacks Pose Challenge as Bloomberg Prepares 2012 NYC Agenda
New York Mayor Michael Bloomberg enters 2012 facing the prospect of 10,000 lost Wall Street jobs and a budget deficit that may make it more difficult to build on gains in health, education and public safety.
Bloomberg, 69, who is beginning the penultimate year of his third and final four-year term, plans to outline his 2012 agenda at 1 p.m. today, when he presents his State of the City address at a Bronx high school. The mayor of the most populous U.S. city has forecast a $2 billion gap in a $70 billion budget.
“This year will be the biggest challenge in a fiscal sense because the fragile nature of the U.S. economic recovery and the political climate in Washington and Albany doesn’t leave room for tax increases and borrowing,” said Kathryn Wylde, president of the Partnership for New York City, a nonpartisan association of corporate chief executives.
Wylde said her group expects Wall Street bonuses to drop as much as 40 percent this year as regulators curb banks’ risk- taking in a city where the financial industry accounted for 7 percent of tax revenue last year. That’s down from 14 percent in 2007, according to state Comptroller Thomas DiNapoli. New York’s finance, real estate, insurance and banking industries, which employ about 317,000, may shed 10,000 jobs this year, DiNapoli has said.
To stimulate the economy, Bloomberg has offered budding entrepreneurs low-rent office space he describes as “business incubators” in all five boroughs. In his speech today, his office says, he will announce that the city will seek proposals from investors for commercial development of the Kingsbridge Armory, a 100-year-old, castle-like structure occupying an almost five-acre block of the Bronx. It has remained vacant since 1996, when the National Guard turned it over to the city.
Bloomberg may also outline plans to further goals he established over the past decade, such as initiatives against tobacco and obesity that he’s credited with increasing an infant’s life expectancy to a record 80.6 years, compared with the national rate of 78.2 years; building 165,000 units of affordable housing by 2014; and creation of parks, bike lanes and waterfront recreation space,
The tourism industry, which drew a record 50 million visitors in 2011 and helped offset some of the economic drag from Wall Street, may have reached its peak, said Steve Cochran, managing director for Moody’s Analytics Inc. in West Chester, Pennsylvania. With Europe facing a debt crisis and the euro trading at a 16-month low, fewer Europeans may visit and more Americans may travel across the Atlantic, he said.
“The euro as a conduit to the U.S. economy goes right through New York,” Cochran said. “It hits the European banks with offices in the city and the U.S. banks that hold European sovereign debt.”
The city may experience a net loss of 3,000 private- industry jobs by September, out of a total of more than 3.24 million, Cochran said.
“It’s pretty clear that Wall Street bonuses this quarter will be mild compared with recent years,” he said.
In November, anticipating the looming fiscal strain, the mayor modified his spending plan to cut education funding by $301 million, which will eliminate programs and some staff in the largest U.S. school system. He also intends to trim $74.6 million from the Police Department, which spends about $4.45 billion a year.
“We cannot continue cutting police and other needed services every year,” said Councilman Peter Vallone, a Queens Democrat who is chairman of the Public Safety Committee. “These cuts may allow the city to hire a few rookie cops while also letting us lose a lot more senior officers, and that may make us less safe.”
New York recorded about 500 homicides last year, the lowest total since 1962, when the city began keeping such records.
Bloomberg has already unveiled some 2012 proposals, including a 10,000-bicycle sharing system with 600 rental stations in Manhattan and Brooklyn, and the continued development of Manhattan’s west side and a subway extension to serve the area. The mayor is founder and majority owner of Bloomberg News parent Bloomberg LP.
“One of Bloomberg’s tasks in 2012 will be to retain his relevance as mayor, with two years left in his term, with a very aggressive governor in Andrew Cuomo, who is moving in,” said Maurice Carroll, director of the Quinnipiac University Polling Institute in Hamden, Connecticut.
Cuomo, 54, a first-term Democrat, last month insisted upon modifications in a law Bloomberg sought that would allow so- called livery drivers to pick up riders who hail them on streets outside Manhattan, Carroll said. The governor this month proposed a $4 billion privately financed convention center in Queens and a real estate development on Manhattan’s west side, a neighborhood for which Bloomberg has had his own plans for almost 10 years.
“The mayor is the power center in the city, there’s no doubt about that,” Carroll said. “But Albany has always been an obstacle and now with Cuomo, more so, and there’s not a lot he can do about that but focus on what’s possible without Albany.”
On Dec. 19 Bloomberg declared Cornell University and the Technion-Israel Institute of Technology winners of a competition that awarded them $100 million in infrastructure improvements and free land on Roosevelt Island off Manhattan to establish a jointly operated engineering campus. The school would make the city’s economy less reliant on Wall Street, creating entrepreneurs, bolstering job creation and generating as much as $23 billion in economic activity over the next 30 years, Bloomberg said.
‘Not Leaving Quietly’
The mayor held out the possibility that runner-up schools, including the city’s Columbia University, New York University and Carnegie Mellon University in Pittsburgh might also get support to establish another satellite campus.
“The applied sciences initiative is a sign he’s not leaving quietly and feels he has some time left to leave a legacy and get some new policies out there,” said Jonathan Bowles, director of the Center for an Urban Future, New York- based nonpartisan research group.
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