NYC mayor: Can't afford $400 property tax rebates



Mayor of New York, Michael Bloomberg, listens to members of the public before signing a bill extending term limits on elected officials at City Hall in New York, November 3, 2008.

By Joan Gralla Joan Gralla – Wed Nov 5, 6:23 pm ET

NEW YORK (Reuters) – New York City Mayor Michael Bloomberg said on Wednesday he has instructed the finance commissioner not to send out $400 property tax rebates to homeowners because the crisis on Wall Street has cost the city dearly in lost tax revenue.

Bloomberg, who hopes to win a third term by convincing voters he is best suited to guide the city through its fiscal crisis, told a news conference that Wall Street already has taken half a trillion dollars in write-downs.

Financial companies might not pay city or state taxes for three to five years as they struggle with losses, he said. The mayor estimates New York Stock Exchange member firms will have to earn a combined $10 billion a year for several years before the city can resume collecting taxes from them.

Wall Street, which could shed over 30,000 workers, represents about 35 percent of the city's wage base. Adding to the gloom, the mayor is expecting a total of 140,000 job losses city-wide by July 1, 2009.

Even financial planning has its limits.

"If it turns out to be a meltdown, nobody can prepare for that," the mayor said.

Should the economy fail to recover soon, sales or income taxes may have to be raised to plug the $1.3 billion deficit in next year's budget -- despite $1.5 billion of new cuts that begin now, Bloomberg said.

To illustrate the problem, the mayor said a 7.5 percent increase in income taxes for a family of four earning $50,000 to $70,000 annually would mean they would pay an extra $116 a year.

That "does put in perspective what might have to change," Bloomberg said.

CITY PAYROLL MUST BE TRIMMED

The harsh remedies he unveiled on Wednesday include cutting 3,000 city jobs, mainly through attrition.

"If you're going to spend less, then you clearly have to have fewer employees," he said.

New York City has about 300,000 workers.

The mayor also will make up for the pension fund's losses by taking $1.1 billion from a trust he created to pay for retired workers' health care. The fund totals $2.5 billion.

Though he praised how Democratic City Comptroller William Thompson, a mayoral contender, and the finance commissioner had managed pension investments, Bloomberg estimated the fund has fallen 20 percent to about $80 billion in recent months.

Fiscal monitors have praised Bloomberg, an independent who won his first term in 2001 as a Republican, for cutting spending a few percentage points every year, but they have also criticized him for giving workers overly rich pay packages.

Bloomberg, whose eponymous news agency made him a billionaire, answered that criticism by saying the city will only hire and keep the best workers it needs to weather the crisis by paying competitive rates. Saying he was the first mayor to match the salaries that teachers can earn at suburban schools, he displayed his management experience by detailing $20 million of savings that will be gleaned by running the city's fleet of vehicles more efficiently.

The mayor praised the Democratic City Council for putting the brakes on some spending. His relations with some Council members were bruised by his recent push to extend term limits.

NOTHING'S SACRED

No agencies are immune from cuts. The police department will lose one class of recruits, the fire department will trim protection for commercial buildings on weekends, and schools will lose about $560 million over two years.

But "we're not going to return to the dark days of the 1970s when service cuts all but destroyed our quality of life," the mayor said.

Bloomberg inherited a multibillion-dollar deficit from his predecessor, former Republican Mayor Rudolph Giuliani, and he vowed to set the city up for another rebound.

New York City will save about $250 million by canceling the property tax rebate, and another $600 million or so if the Democrat-led City Council agrees to end a 7 percent property tax cut in January -- six months faster than planned.

(Reporting by Joan Gralla; Editing by Jan Paschal)

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