Poor foot the bill as New York goes bankrupt

The Apple's finances are rotting

The steps of City Hall, for many years empty of angry protests - especially since 11 September - were crowded and noisy again last week as New York City plunges towards bankruptcy, with the poor and middle class picking up the tab.

First there were pensioners armed with placards reading 'Seniors Vote!', furious at the proposed closure of 32 daycare centres for the elderly. Then the firefighters - the heroes of 9/11 - demanding that eight fire stations due for closure be rescued.

But these are just two measures on the table as the financially rotting Big Apple faces a deficit more awesome that at any time since the Seventies, an era all New Yorkers like to forget, since when the city is seen to have risen, phoenix-like.

Former business tycoon Mayor Mike Bloomberg - now known as 'Mike the Knife' - was elected a year ago on a promise to run New York like a corporation - echoing his party's President in the White House. But since responding to the crisis with an austerity plan that City Hall officials call 'slash and tax', Bloomberg's approval rating has fallen 16 points since July.

Every city service is on the chopping block: from transport to policing to tree pruning. There are plans to reduce public sector staff in every quarter, cut back on foster care, community education, library hours and family support, and to eliminate 2,500 infant day-care slots.

New York will be levying more tax on cigarettes than anywhere else in the world. Subway and bus fares will rise and even the zoo has been ordered to raise its admission charges.

Signs of strife are already visible. As the first icy blast of winter blows down Manhattan's streets, the number of homeless people sleeping under piles of blankets and cardboard has mushroomed. On average, more than 37,000 people spend their nights in New York City shelters, the highest level on record. The number of homeless families sleeping in shelters has more than doubled since 1998. And there are uncounted numbers of people who sleep outside.

'It's getting steadily worse out there,' said James Inman, 54, as he finished Thanksgiving dinner at a Manhattan mission. 'All the shelters are full.'

The usually reliable rattle of the subway trains is less evident outside Manhattan, with services to the outer edges of Brooklyn, Queens and the Bronx becoming sparse. As cuts to the police force were yesterday revealed, with a freeze on the recruitment of 2,000 officers, some forms of violent crime, including shootings, are rising again after a decade of falls.

Education leaders were entertained at Bloomberg's mansion last week to discuss cuts in schools, at a time when they are already crowded and teachers struggle with low salaries in an ever-more expensive city.

The city's deficit for this year stands at $1.2 billion, but is set to rise by $6.4bn in 2003. It is by far the biggest debt for any city in America.

'This is the worst fiscal crisis the city has ever faced,' said council speaker Gifford Miller, a Democrat who supports Bloomberg' s cuts.

The attacks on 11 September are seen as the primary cause, but any sluggishness in the economy hits especially hard in a city that depends on Wall Street for revenue.

Bloomberg's remedy is a pincer movement: an 18.5 per cent hike in property tax, the biggest in New York's history, offset by a controversial income tax windfall benefiting the rich. As a result, Bloomberg stands accused of implementing a municipal echo of President George Bush's national tax policy: making the poor pay the bill while the rich bag the money.

Watchdog groups say the combination of a property levy and tax breaks will be a final eviction order for all but those who can afford to pay the city's soaring rents.

Under Bloomberg's tax plan, the non-partisan Independent Budget Office found that a person earning $24,000 a year would gain $174 on income tax, but their rent increase - after property tax rises have been passed on by landlords - would top $300.

On the other hand, a condominium owner earning the property-owning average of $180,000 a year would save some $1,200.

The budget watchdog group City Project called the Bloomberg package 'inadequate, irrational and unfair'. It has, the group says, the potential to break up what remains of traditional communities in now over-priced and 'yuppiefied' neighbourhoods, as landlords break through rent controls to levy vast increases.

But the Democrat-controlled council has, with some defections, swallowed the mayor's prescription as a necessary medicine.

'People are really going to have to get used to doing without,' says councillor Bill de Blasio.


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Poor foot the bill as New York goes bankrupt

This article appeared in the Observer on Sunday December 01 2002 . It was last updated at 03.47 on December 01 2002.

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