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LEAD: After months of grim warnings about New York City's fiscal prospects, Mayor Edward I. Koch yesterday presented the kind of budget on which politicians love to run, especially those facing re-election campaigns.

After months of grim warnings about New York City's fiscal prospects, Mayor Edward I. Koch yesterday presented the kind of budget on which politicians love to run, especially those facing re-election campaigns.

The $26.6 billion spending plan for the fiscal year that begins in July, along with the accompanying capital budget, would provide more police officers - a budgetary promise critics noted the administration had failed to keep before - as well as more probation officers, prosecutors and child-welfare caseworkers, additional jail beds and ambulance service, construction of smaller shelters for the homeless, more help for AIDS patients and more treatment for drug abusers.

Some of the new programs, however, would not reach fruition for years and would require the city's continuing fiscal commitment.

A gap of more than $1 billion for 1989 and 1990, which had prompted dire fiscal forecasts, would be closed partly through savings from reduced contributions to municipal pension funds, money from the Municipal Assistance Corporation, savings from this year's job freeze and a surge in city tax revenues that city officials said became apparent in the last two weeks.

The Koch operating budget would impose nearly $200 million in service reductions in the 1990 fiscal year, resulting in dirtier streets, messier parks and shorter hours for libraries, among other things. The plan might also lead to a reduction in the number of city firefighters or at least cutting of their overtime, depending on the outcome of contract arbitration. The budget also calls for $195 million in higher taxes, although it would not raise broad-based taxes on income and property.

Still, the spending plan, some details of which had been disclosed during the week, marked a major shift in Mr. Koch's assessment of the city's fiscal prospects, at least over the short term. It also seemed to herald a change in his re-election strategy, from an emphasis on "making tough choices" to a willingness to confront such problems as crime, drug addiction, AIDS and homelessness by spending more - albeit mostly from the city's capital, or long-term, budget. .

At a City Hall news conference yesterday, Mr. Koch rejected the notion that he had crafted a spending plan attuned to a campaign in which he has declared himself an underdog even before he has formally declared himself a candidate. He reminded reporters that "the budget is going to be monitored by six different agencies."

"Anything that I do between now and Election Day - the two Election Days - will automatically be attacked by those running against me," he said. "Whether it's good or not, they will attack it." Ambitious New Programs

In announcing a plan with several ambitious new programs, including a drug-treatment effort partly paid for by the city, something he had long resisted, Mr. Koch seemed to invite criticism by rivals that he had moved too slowly in confronting some urban ills that have mounted in his third term.

"It is a catch-up, patch-up budget," said David N. Dinkins, the Manhattan Borough President who is challenging Mr. Koch in the Democratic primary.

City Comptroller Harrison J. Goldin, another Democratic mayoral hopeful, called it "a paper budget that is not worth the paper it is printed on" and said Mr. Koch had failed for several years to follow through on promises to hire more police officers.

The budget plan, said Rudolph W. Giuliani, the former United States Attorney and a Republican mayoral candidate, "clearly demonstrates that the Mayor's best years are behind him."

But Mr. Koch said he was the "most proud" of this budget "because of the obstacles we had to overcome." Lagging Tax Revenues

A preliminary version of the city's 1990 spending plan released in January warned of large reductions in the size of the Police Department and other city agencies, largely due to a state budget proposal from Gov. Mario M. Cuomo that the Koch administration calculated would cost the city $443 million in anticipated aid. The city's prospects seemed even worse when its tax revenues lagged behind expectations.

But in the latest state budget enacted by the Legislature, the city lost only $131 million. Then the city's Budget Director, Paul Dickstein, reached an agreement with municipal labor unions to raise the statutory limit on income from pension funds that, if approved by the Legislature, would enable the city to save $273 million in contributions in 1989 and 1990. Then the city received $100 million from the state's Municipal Assistance Corporation.

Within the last two weeks, Mr. Dickstein said, the city raised its estimate of personal-income tax revenue by $139 million, based on an increase in tax payments that apparently was the result of underwithholding and deferral of tax liabilities from the preceding year. Total city tax revenues will still be $290 million lower than anticipated in 1989 and 1990.

The hiring freeze and cuts in administrative expenses already imposed this year also freed funds for use in the coming year's budget.

The Koch administration made the most of its limited resources by crafting programs that, while ambitious, would not require heavy outlays from the 1990 operating budget. For example, more than half of the $1.2 billion drug-treatment program announced Wednesday would be paid for by the state, and the five-year plan would begin slowly, with a $32 million expenditure next year, only $13 million of which would be from the city's coffers.

Similarly, the administration financed some initiatives largely through the capital budget, totaling $4.8 billion in 1990 under the Koch plan. A $500 million program to close the huge shelters in armories and build smaller shelters and renovate apartments for the homeless over the next four years would require just $2.7 million in 1990 operating funds. A $40 million expansion of AIDS programs would require $7.3 million in 1990 operating funds.

To accommodate those programs and other new long-term projects like sludge plants and bridge repairs and to keep interest costs under 12 percent in future years, Mr. Dickstein said, $1.7 billion in already planned projects would have to be cut from the city's $26.4 billion, four-year capital plan, which runs from 1989 to 1993. That would mean delays for new swimming pools and regional parks, the rehabilitation of half a dozen police stations and firehouses, and the reconstruction of many miles of highways.

The administration also formally delayed until at least 1993 the start of construction of four of the five incinerators it has been planning to build, temporarily saving $700 million.

The tax increases Mr. Koch proposed were scaled back from $237 million outlined in January to $210 million, including $20 million from a sales tax already enacted on mail-order purchases. To Extend Some Taxes

The city plan avoids rises in broad-based taxes on income or property but would extend the mortgage recording and transfer taxes to cooperative apartments and impose a fee on taxis and other commercial passenger vehicles. It would also increase the real-estate transfer tax, which would raise $175 million over the next two years.

Almost all of the new taxes need approval by the Legislature. "I will try very hard to be supportive," said Governor Cuomo, who noted that he had not seen the details of the Koch budget.

The budget plan requires approval by the City Council and the Board of Estimate. The Council's Finance Committee chairman, Michael DeMarco, said he would seek to restore some of the reductions for the Parks, Sanitation and Fire Departments. "I think the rest of it will go," he added.

But Raymond D. Horton, president of the Citizens Budget Commission, a private organization, warned of the impact of balancing the budget through "one-shot" revenues. "This budget leaves the Mayor or his successor with a very big problem next year," he said.


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Information in this article was accurate in May 19, 1989. The state of the art may have changed since the publication date. This material is designed to support, not replace, the relationship that exists between you and your doctor. Always discuss treatment options with a doctor who specializes in treating HIV.