Don’t Let Council Blow $4 Billion Surplus

What often distinguishes a leader from a politician is that the former will resist the many opportunities power affords to boost one’s popularity with voters at the expense of the long-term benefit to the lives of those voters. With news this week that the city is still on track to post a $4 billion budget surplus this year, Mayor Michael Bloomberg is about to wade into the thick of combat with the City Council, many of whose members will press the mayor to let that $4 billion rain down on the city in the form of increased spending, tax cuts and other sugary treats. And given that Mr. Bloomberg’s term in office expires next year, one can imagine the temptation to ride out of town on a crest of adulation from local politicians, community groups and voters, a tidal wave of goodwill unleashed by allowing those billions of dollars to flow unimpeded downstream.

That scenario, of course, would be a disaster. Now is the time to prepare for the tough times ahead, by using that surplus to pay down the city’s debt while pruning municipal spending and freezing hiring in city agencies. As several independent budget groups have noted, the city faces mounting deficits in the next several years because of ballooning health care and pension costs. The financial services sector is already shrinking, with layoffs announced at several investment banks and securities firms. The consequences of these layoffs will be most seriously felt in 2009 and the years beyond, when bonuses will likely be reduced at even more firms, impacting real estate, retail and restaurant spending.

Fortunately for New Yorkers, Mike Bloomberg has consistently come down on the side of fiscal restraint rather than excess. And we were happy to hear him say this week that, to further strengthen the city’s finances in the face of a national downturn, he would consider eliminating the politically popular but costly $400 tax rebate for homeowners.

Beating back the spend-happy Council won’t be easy over the next weeks, though given the Council’s current woes—particularly revelations that members were hiding millions of dollars of spending from the normal budget review process, a ploy that has piqued the interest of local and federal investigators—we’d say the mayor has a pretty strong case to make to voters as to why the surplus is better saved than spent.