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It is an extraordinary time to be the Speaker of the City Council. Last year, we elected a new mayor, a new comptroller, and a new public advocate who have never served in public office. We elected four new borough presidents and 38 of the 51 City Council members are brand new. It may sound ridiculous, but I am the senior elected official in the city. I am the grizzled veteran.
The issue that I believe will define this era in city government is the budget. We are in the midst of the greatest fiscal crisis in the history of this city. It is much worse than anything we have dealt with before. I do not think the public has come to grips with that. And I do not think those of us in elected office have done as good a job as we should in preparing New Yorkers for this reality.
The governor and mayor made a decision that we needed to get a year under our belt before we dealt with our fiscal problems. I believe we need to honestly grapple with the fiscal crisis. That time, whether we like it or not, is coming very soon.
This year, the city faced a $5 billion budget gap. We borrowed $1.5 billion to ease the situation. We enacted some spending cuts, and we did some targeted tax increases like the cigarette tax and other fees. The mayor's way of dealing with the budget was to say that there should be across the board cuts and that there should be "no sacred cows." The council felt that there was a different and better approach -- to prioritize. I believe we were elected to office to help make those difficult decisions. For one, we believe that education and classroom funding should not be cut. And I am proud of the fact that we were able to do that in this year's budget.
Next year, we have another $5 billion budget gap; some say it could be worse. To put this number in perspective: if we were to cut 20,000 police officers, close every senior center, close every after-school program, and close every library, that would only save us $1.5 billion. That is how serious it is. We are not going to do those things and we can't do those things. If we did, we would stop being New York City.
In the last 10 years, we have gained more than 1 million new residents. New York City is still a place where people from around the world come to live, because they believe it is a good place. It is sometimes tough to be a New Yorker, but it's worth it because of the excitement, the creativity, and the uniqueness of our city. As we struggle to deal with our fiscal crisis, we have to preserve those essential elements of what it means to live in New York City. We can not cut education. We can not close down our cultural programs. If we do not preserve these things, than the city just becomes a tough place to live.
In order to do maintain services, we have to generate new revenues for the city.
This year, the council proposed a number of new revenue generating measures. We proposed an absentee landlord surcharge on property taxes. The city currently taxes multiple dwelling landlords at a much higher rate than it taxes single family homes that are used as investment properties. If we brought those two taxes to more equal level would raise as much as $130 million. We also proposed selling more taxi medallions and privatizing the Emergency Management Service collection and billing services. EMS currently bills for $165 million a year, and only collects about $40 million.
We also have to bring back to the commuter tax that would generate nearly $500 million a year for the city. Two weeks after I became speaker, I met with State Assembly Leader Sheldon Silver. He told me that he is prepared to reinstate the commuter tax if the mayor and City Council ask for it. So, we need to start with the mayor. It may take a while, but I think we are going to get the mayor to agree. We can't close a $5 billion budget by just cutting services and we can't raise $5 billion in taxes. We have to do some of both. Our problems are just too big.
Another major priority, of course, is rebuilding lower Manhattan and rest of the city.
The federal government has given the city $20 billion that can be used in a variety of ways. One of those ways is through incentives that can help keep and attract business to lower Manhattan. Lower Manhattan is the third largest business district in the country: midtown is first, Chicago is second, and downtown is third. Downtown drives the tax revenues of the city and if we don't have a strong, vibrant downtown business district, we will be in a worse situation than we now.
We must also make long-term improvements to the area that will attract people and business. Currently there are $1.6 billion in Liberty Bonds from the federal government, which are low interest rate bonds, to subsidize the creation of housing in lower Manhattan. The governor has $800 million in Liberty Bonds at his discretion and the mayor has $800 million. The governor's proposal calls for 95 percent to be used to build market-rate housing and 5 percent for affordable housing. The mayor has not yet said what he plans to do. I believe that we if are aggressive about it we can get as much as 55 percent of the Liberty Bond money for low to moderate income housing.
The council believes that we should allow for 25 percent of those bonds to be used outside of lower Manhattan, so that every part of the city can benefit from this federal money. Frankly, we are not going to get all $1.6 billion used in lower Manhattan. There just are not enough projects to get it done quickly, but there are projects around the city that can benefit from this kind of funding.
Gifford Miller is Speaker the New York City Council.
Adapted from a speech at the Women's City Club, September 27, 2002.
It is terribly important that whatever is to be done to rebuild Manhattan be done rapidly. The rebuilding must not be delayed--or stopped dead--by the usual New York acrimony about every aspect of every really large project. The city's economy has been hurt badly. The longer Manhattan is in a state of suspended animation waiting for the architects' perfect plan to be approved and actually implemented, the more unlikely complete economic recovery will be. More firms and jobs will be lost forever. The city and state fiscal difficulties will grow worse. And many of the economic opportunities that were suggested by the city's economic successes in the late 1990s will never come to pass.
If rebuilding is to be rapid, it cannot be an attempt to replicate exactly what existed in lower Manhattan at 8.00 AM on September 11. The rebuilding has to be consistent with what markets have shown over the past 50 years to be a powerful trend in the location of economic activity within Manhattan. We need to go with the flow, which is a shifting, rapidly at some times and more gradually at others, of economic activity from lower Manhattan to midtown. This reflects the fact that the only locational advantage that lower Manhattan has over midtown is that downtown is more convenient for subway commuters who live in Brooklyn. That was enormously important before 1930. It is a trivial edge now.
By 1960, the shift to midtown had become pronounced. A study for the Downtown Lower Manhattan project in 1961 documented how severe the shift in the 1950s had been, but-whistling in the dark-the study asserted that the trend could be stopped fairly easily (I as a consultant to the project was one of the whistlers).
There are winners and losers in such shifts, the biggest losers being the owners of land in the place that is the loser. A couple of men who shared the same family name-Rockefeller-were, respectively chairman of the Downtown Lower Manhattan and CEO of the Chase Bank, and governor of New York. They were persuaded that heroic efforts were needed to stop the trend. Lower Manhattan's office buildings were mostly obsolete and unattractive to high-end businesses not permanently tied to the securities markets, and one of its important transit links, the one that carried commuters from New Jersey and is now called PATH, seemed on its last legs, physically and financially.
So, the Port Authority of New York and New Jersey, a creature of the governors of the two states, was instructed to intervene, to take over, rebuild and finance the permanent deficits of PATH (which benefited residents of New Jersey) and to provide millions of square feet of Class A office space by building the World Trade Center.
This intervention was timely, and it worked, in the prosperous 1980s and 1990s, when the two booms in the demand for the services of the financial services industries provide enough business activity to fill up the World Trade Center and other new office buildings, as well as a substantial amount of new office space in midtown Manhattan.
Rebuilding lower Manhattan to pre-9/11 standards will require the construction of millions of square feet of office space, mostly at the WTC site (there is no other open land in Lower Manhattan) or on a massive new land fill, and a huge investment in restoring the lower Manhattan infrastructure to its previous capacity. That cannot be done rapidly, even if we could avoid the controversy about just what to build that is already raging.
Much of the destroyed infrastructure would not need replacing, if we accept that the lower Manhattan economy will be a good deal smaller than it was before 9/11. With many fewer people working in lower Manhattan, New Jersey commuters could be accommodated by an expanded ferry system, and the PATH line need not be rebuilt at all (the signs suggest that there may not be any part of the under-river tunnel that is salvageable). The 1 and 9 subway line south of Chambers Street could be abandoned. The Con Edison steam system in lower Manhattan may not be salvageable, and abandoning it might justify closing down the entire steam system which is obsolete, to put it kindly. Similarly, the telecommunications capacity that would be needed if the economy were restored to ante-bellum conditions would be smaller, thus making it possible to avoid replacing the heavy Verizon losses.
On the other hand, the destroyed office space can be replaced quickly north of 14th Street, and the infrastructure is in place, or can be gradually expanded. The zoning is consistent with the construction of conventional office buildings, and 30-story buildings would not be a hard sell with respect to zoning. Developers know how to assemble land, design and build such buildings quickly. No doubt there would be scattered local opposition-after all, there are New Yorkers who believe that anything built before 1960, however hideous and dysfunctional, deserves landmark designation-and no doubt the product would be an ample plenty of plain vanilla buildings. But if the demand for midtown space is there, the 14 million plus square feet of space in the WTC could be met with dispatch. It would be building fast, not fancy.
Of course, there have been heavy economic losses and terrible human losses. The losers need to be made whole, to the extent possible, with one exception-landowners. But it would be grotesque public policy to restore lower Manhattan to its pre-9/11 condition in order to compensate landowners. Gamblers win sometimes, and lose other times.