Budget Crash Obama Style ; New York City Crashes

What will it take for the city managers in New York to wake up and make real life changes in policy? Maybe when the people are storming city hall with pitch forks like Greece.

Oh wait, I know, a Republican mayor and city council! Nah - won't happen.

A BIG, FAT "GREEK" BUDGET
Source: Nicole Gelinas, "A big, fat 'Greek' budget," New York Post, May 10, 2010.

As New York City Mayor Michael Bloomberg unveiled his updated $66.2 billion city budget last week, Greek protesters were terrorizing their compatriots and global markets. In other words, the West's economic crises are far from over, says Nicole Gelinas, a senior fellow with the Manhattan Institute.

Greece is in trouble because markets have made it admit that its finances are impossible, says Gelinas: Athens will spend 13.9 percent more than it can expect to take in this year -- and that's no one-time thing.

For years, Greece has spent more on its public workers and retirees than it could afford - because membership in the "safe" euro allowed it to borrow cheaply. New York City isn't Greece, but its numbers are disturbing, says Gelinas:

In fiscal year 2009 (which started in July 2008), New York City spent 6.1 percent more than it took in via tax collections and other recurring local revenues -- a $2.5 billion gap.

In 2010, the city spent 5.2 percent more -- $2.2 billion.

For the new year, 2011 -- which starts this July -- the city will spend 7.6 percent more than it takes in, or $3.3 billion.

By 2014, the city will cross an important line, with an 11.3 percent gap; like Greece did, New York City is approaching scary double digits.
Everyone, says Gelinas, knows the problem is being caused by public-sector retiree costs. It's not simply that taxpayers have to make up for declines in the stock market portfolios that fund public workers' guaranteed pensions, it is worse: Even as taxpayers must pour more cash in, more is pouring out, too:

Pension and health payments to retirees are now $13.1 billion a year, up from $7.5 billion in 2002.

The cash drain is accelerating as more uniformed workers retire on lucrative disability pensions and others live longer.

Cutting library hours, closing senior centers and shutting pools down early will save just $36 million -- one day's worth of payments to state public-sector retirees.