Posted by Annemarie on Sep 24 2007 10:05AM -
The revisionism of Guiliani’s much touted claim that he “turned a $2.3 Billion deficit into a multi-million dollar surplus” begs the credibility of his candidacy .
It is well documented that Guiliani handed over a $4 billion deficit to incoming Bloomberg, and he can’t blame 9/11. Back in December 2001, Ed McMahon, Senior Fellow of the Manhattan Institute, wrote: “Even if the events of September 11 had never ocurred, the next mayor was destined to confront hard fiscal times. Recurring expenditures were on track to exceed revenues by at least $2 billion in Mayor Rudolph Guiliani’s last budget - an operating budget he temporarily covered with prior year surpluses. Temporarily tamed in the mid-1990’s, City government is once again growing beyond New York’s ability to afford it. More than $2 billion in surplus funds will be needed to balance the 2002 budget. By the first year of Mayor Bloomberg’s tenure, if Guilian’s own predictions hold, the gap between expenditures and revenues will be wider than it has for nearly a decade.”
Indeed, Guiliani’s tax cuts did stimulate the NY economy, generate and sustain job growth, increasing taxable income base and helping generate budget surpluses.
But, budget surpluses ain’t worth a hill of beans unless they go cheek-to-jowl with astute long-term fiscal policies, disciplined practice, balanced budgets and stockpiled reserve funds. Quite to the contrary, Guiliani misspent and squandered the budget surpluses on his ever-expanding City government then regularly rolled over the surplus from one year to close the deficit in the next.
In 1997, State Comptroller Carl McCall accused Giuliani of spending the revenue windfall “like the worker who blows Friday’s paycheck that night”. Later, in March 2001, in the Village Voice, he referred to Guiliani’s profligate spending; “Record budget surpluses afforded the City a golden opportunity to get on the path toward long-term fiscal stability. The opportunity is being squandered.” Even Guiliani’s own City Comptroller, Alan Hevesi, agreed; “The most responsible use of the record surpluses of the past few years would have been to reduce the City’s mounting debt burden and build a reserve fund.”
McCall and Hevesi’s analysis of Guiliani’s 2002 budget was echoed by the City’s Independent Budget Office and Citizens Budget Commission.
In a New York Daily News interview in April, 2007, Guiliani apparently claimed that as Mayor he had “reduced the size of government in New York”. In truth, according to a 2001 Manhattan Institute Civic Report, from 1997 to 2000 he actually increased its size, adding 25,000 new City employees and raising the headcount to 253,000, the highest in NYC history - an unnecessary expansion which added additional overhead of close to $5 billion in personnel service costs.
It was left to his successor, Michael Bloomberg, to systematically reduce the size of Guiliani’s City government and improve its efficiencies. While Guiliani’s first three budgets after assuming office had cut spending and reduced City jobs, his fiscal discipline was thereafter abandoned. Neither the scope of government was reduced, nor its efficiency increased.
Testimony to this - between June 1996 and February 2001, 3,109 new uniformed officers were hired for the Police Dept., though its operational strength only increased by 1,585 officers. NY Police officers worked an average of 200 days a year vs 261 days for other occupations, and in 2001 were campaigning for enormous pay increases.
Under Bloomberg, the ranks of uniformed police officers were reduced by 10%, without sacrificing results. In fact, the decline in crime and safety of the City has been sustained since 2001 by a smaller Police Dept.
It is on record that Guiliani’s over-spending kept apace across all categories; capital expenditures, construction, housing, outsourced contracts, 15,000 new teachers, economic development subsidies, the arts, welfare, Medicaid, debt servicing, etc.
After Guiliani, Bloomberg inherited the “city’s gravest fiscal crisis since the 70’s” and his first two years of office were characterized by unpopular tax increases and drastic reductions in government spending which, over time, have brought about a correction.
In January, 2007, Bloomberg announced a $3.9 billion surplus, with continuing provision for increasing the reserve funds he has been accumulating.
Mayor Guiliani, you have claimed that you converted the deficit you inherited into a surplus, but in December 2001 when you surrendered office, you yourself are quoted in the New York Times as estimating “the 2003 fiscal year budget gap at $2.9 billion”. Where then was your surplus?
Furthermore, in January 2002, in the New York Times, the Citizens Budget Commission commented that “the City has done a poor job of addressing its long-term structural fiscal imbalance, resulting in large gaps between planned spending and expected revenues in future years”, giving your 2002 budget a “D” for “budgeting responsibly” in the “City Budget Report Card”.
Respectfully, Mayor Guiliani, the facts on record do not support your recent claim of fiscal conservatism, shrewd budget control and efficient management. Quite the contrary. We are looking to the campaign of America’s Mayor to speak out and provide the American public with detailed and published historical facts which support your claim.

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