Consider how the world looked a year ago.
Sen. Hillary Clinton was about to sail through the Democratic primaries on the way to her party's presidential nomination. Rudy Giuliani, though faltering, still stood atop some polls for the Republican nomination. Lame duck Mayor Michael Bloomberg mulled a White House bid of his own, while City Council Speaker Christine Quinn touted herself as a champion of reform and fine-tuned her alliance with the mayor in the hopes of succeeding him in 2009.
Up the river, Eliot Spitzer girded himself for another year of battle with his Republican nemesis Senate Majority Leader Joe Bruno.
Securities firms handed out a record $38 billion in bonuses, helping to send the average price of a Manhattan apartment to $1.4 million. New luxury projects dotted the skyline, as the city planned for massive new development from Jamaica to the Hudson Yards.
It all seems very long ago. For a look at how we got from there to where we are now, here are the Top 10 New York stories of 2008:
Illinois Sen. Barack Obama was elected president of the United States on Nov. 4, becoming the nation's first black president. With only four years in the U.S. Senate and a "funny name" as he himself says, Obama stood as the underdog a year ago. Instead New York Sen. Hillary Clinton had staked out the role of frontrunner, garnering the support of all the state's -- and many of the nation's -- leading Democrats. On the GOP side, Rudolph Giuliani seemed to have a decent shot of parlaying his image as America's mayor -- garnered in the aftermath of the Sept, 11, 2001 attacks -- into the nomination. Meanwhile, Mayor Michael Bloomberg looked on, pondering scenarios that could make the nation turn to a bipartisan billionaire.
The setbacks began for Clinton with a third place finish in the Iowa caucuses in early January (Former Sen. John Edwards narrowly beat her out for second place.) She saved her campaign with a victory in New Hampshire's primary, putting her and Obama on a grueling multi-month multi-state fight to the finish. But despite a number of victories, including a resounding triumph in the New York primary on Super Tuesday -- Clinton never again captured the lead.
The race did not end until the final primaries in June when Obama clinched the nomination, paving the way for his nomination at the Democratic National Convention in Denver in August.
Giuliani faded far earlier. Faced with disconcerting poll numbers, he stayed out of the crucial early contests, focusing his attention on Florida. After he came in a distant third there, he withdrew, leaving as his legacy one of the long campaign's best lines (uttered by Joe Biden): " "There's only three things he mentions in a sentence: a noun, and a verb and 9/11."
Giuliani went on to campaign for the eventual Republican nominee, Arizona Sen. John McCain.
As 2008 began, Bloomberg continued to play it coy about his ambitions, fooling virtually no one. The mayor apparently dreamed of a polarizing race -- John Edwards vs. Mike Huckabee, say -- that would leave America hankering for a man of the center. When that failed to materialize, Bloomberg abandoned his dreams and went on to pursue other ambitions (see below).
Once Obama became the nominee, he received enthusiastic backing in New York, capturing 62 percent of the state's votes on Election Day. Celebrations in Times Square, Harlem and other parts of the city greeted his historic election. And while New York may have to play second city to Chicago over the next four years, Obama has turned to New York for a number of key appointees including Hillary Clinton for secretary of state, Timothy Geithner for treasury, Eric Holder for attorney general and Shaun Donovan, city housing commissioner, for the Department of Housing and Urban Development.
The effects of cascading failures in subprime mortgages and the ensuing credit crunch spread to Wall Street in September. Like dominos, a parade of major financial institutions began to lose money and even shut down, transforming Wall Street and New York's economy. Bear Stearns failed, Lehman Brothers collapsed, and Merrill Lynch was saved only after being swallowed up by Bank of American (which would face its own troubles down the road). To prevent more carnage, the federal government devised a $700 billion rescue package.
While much of New York (so far) avoided the worst effects of the housing foreclosure crisis, it bore the brunt of Wall Street's woes. By November unemployment in the city had reached its highest levels in nearly four years. The city comptroller predicted the five boroughs could lose 170,000 jobs by the end of 2010, with unemployment reaching 7.4 percent. The effects trickled downward, affecting the jobs of cabdrivers, restaurants and shops whose business came from the brokers and investors. With fewer financial companies -- and fewer employees at the ones that remained -- demand for office space waned, along with money to build it, putting the future of a number of high profile developments in doubt.
The economic turmoil also played havoc with city and state tax revenues. The mayor's office forecast that, money raised through the city's personal income tax would fall from $8.4 billion in fiscal year to $7.6 billion in the 2009 fiscal year before bottoming out at $6.6 billion in 2011. The state forecast rising revenue as well.
After a string of relatively flush years, deficits returned in 2008. And unlike the federal government, the city and state had no choice but to try to fill them.
In June, the mayor and the City Council approved a budget that kept spending virtually flat in contrast to the increases of recent years. Then as the nation's and city's economy deteriorated further, Bloomberg called for all city agencies to cut an additional 2.5 percent for this year and 5 percent for 2010. He also sought to block the $400 property tax rebate checks New Yorker property owners have come to expect and to increase property taxes by 7 percent.
The usually compliant council balked. After some fairly heated negotiation, the council and mayor agreed in late December to the 7 percent property tax increase and hiked the hotel tax. Bloomberg consented to mailing out the $400 rebate checks. With the city still a facing a more than billion dollar shortfall for next fiscal year and the economy continuing its nosedive, more cuts seem certain.
Things looked even grimmer in the state capital. There legislators refused Gov. David Paterson's request that they make cuts in the current fiscal year's budget, leaving the governor and the legislator to grapple with an anticipated $15 billion shortfall for the next 15 months. In response, Paterson in later December proposed a $121 billon state budget for next year featuring major cuts in education and Medicaid and an array of new and increased taxes. Among other things, Paterson would levy charges on sugary soft drinks and music downloads.
Gov. Eliot Spitzer's 15 months in office had been far from the triumph many predicted but no one expected such a spectacular crash. On March 12, the governor resigned, some 48 hours after it became publicly known that he had been the client of a high-priced prostitution ring. Even a public used to the foibles of the political leaders could only gasp at the downfall of Spitzer, who delighted in going after others suspected of wrongdoing and who as attorney general prosecuted several prostitution rings.
Lt. Gov. David Paterson succeeded Spitzer and, as a long-time -- and well-liked -- legislator quickly sought to try to end the sharp atmosphere in Albany that had characterized Spitzer's 14 months in office. Given the enormity of the state's problems though -- particularly its looming financial woes -- he faced a daunting task.
Bloomberg's search for his next job took an unexpected twist in October when he announced he would really like to hold on to the one he has now. Contending that the city needed his fiscal expertise in these tough financial times, Bloomberg set about reversing the law -- approved twice by voters at the ballot box -- limiting all city officials to two terms. As has often been the case, he enlisted as ally City Council Speaker Christine Quinn, who also faced the loss of her job in 2009 because of term limits -- and whose mayoral hopes had faltered in the wake of a scandal involving City Council funds (see below). Members of the city's business establishment also backed the mayor's bid, while on the other side good government groups and the Working Families Party, among others, argued that, whatever the shortcomings of term limits, the mayor and council should not unilaterally overturn the will of the voters.
On Oct. 23, in one of its most divisive votes ever, the council approved the extension of term limits. Legal challenges continue. Meanwhile Bloomberg has promised to put the issue before a charter revisions commission -- but that will have to wait until after the billionaire mayor already has had his chance for his third term.
After more than 40 years, the Republicans lost their majority in the State Senate, putting the body in Democratic hands -- or so it seemed on election night. Democrats won two GOP seats in November, getting at least a 32 to 30 edge.
But the party, which already held the governor's office and the Assembly majority, seemed unable to close the deal. Three renegade Democratic senators from New York City withheld support from the party's Senate leader, Malcolm Smith, trying to extract various concessions. The party leadership and the three reached a deal in early December, only to see it crumble. And so it remained with only days to go before the next legislative session begins. Stay tuned.
Despite support -- albeit a bit grudging -- from the New York City Council, Gov. Paterson and then Senate Majority Leader Joe Bruno, Mayor Bloomberg's plan to charge people to drive into Manhattan during the work week sputtered to a halt in early April. Assembly Speaker Sheldon Silver refused to bring the issue to a vote, effectively killing it and costing the city $354 million in federal aid in the process.
As the year ended, though, another more conventional plan to charge people to drive in Manhattan was getting a renewed look. A commission on transit finances headed by former Metropolitan Transportation Authority Chairman Richard Ravitch called for placing tolls on the East River and Harlem River bridges to raise funds to help plug the MTA's huge budget shortfall -- without drastically cutting service. The plan, though, seemed likely to encounter the obstacle that blocked congestion pricing: the opposition of many officials whose constituents would have to pay those tolls.
In April, the New York Post reported that, over a period of at least several years, millions of dollars in City Council "discretionary funds" were allocated to organizations that apparently did not exist. The weeks that followed saw a stream of questions and concerns about the council's so-called member items, or what John McCain would call "earmarks." In addition to the phantom groups, some funds were meted out to organizations run by relatives of council members or by people who gave heavily to their campaigns. Some of the organizations did not do the work they claimed to do or did political chores for elected officials. The mayor had his own pot of money that he gave outto his favorite council members to, in turn, dole out to their pet charities.
The revelation led to indictment of two aides to Brooklyn Councilmember Kendall Stewart and sparked a fight within Council about how to subject the process to greater scrutiny and transparency.
Two construction crane accidents within two and a half months of each other, both in Manhattan, killed nine people, prompting concern about whether the city government had sacrificed public safety in its effort to building more, higher and faster. The accidents led to the resignation of the buildings inspector and tighter rules on crane regulation.
In a development it's safe to say no one foresaw a year ago, President-elect Barack Obama has selected Hillary Clinton as secretary of state. That creates a vacancy for her Senate seat -- though not in the way many expected.
As the jockeying began with all the usual suspects (Rep. Caroline Maloney, Attorney General Andrew Cuomo, Nassau County, Executive Tom Suozzi, etc., etc.), Caroline Kennedy began making it clear that she would like the job. Just by wanting the job, the fundraiser for the city's schools and daughter of the late president, emerged as the odds-on favorite for the job. Her simply wanting the post seemed to create a juggernaut -- despite questions about her experience, stands on the issue, public support or lack thereof. As the year ended, though, some pundits began sensing an anti-Caroline backlash and bandying new names about.
Despite the barrage of press accounts, the race remained too close to call. There is only one voter -- Gov. Paterson -- and, so far, he's not talking.
After six weeks of debate, the City Council approved a 7 percent property tax hike and approximately $500 million in spending cuts on Thursday to address a budget deficit that continues to widen as an economic recession grips the nation.
The property tax hike was approved by a vote of 33 to 18 with critics arguing a tax increase would further fray the empty pockets of New Yorkers.
Those who supported the increase, which was initially proposed by Mayor Michael Bloomberg in November, said the city's current fiscal crisis and the state's more than $15 billion deficit call for tough responses and difficult decisions. The council also approved a 0.875 percent increase in the city's hotel tax.
As part of the budget agreement, the administration has promised to send out a $400 property tax rebate, which it initially said the city could not afford. Residents should get their checks soon after the holiday, city officials said.
In addition to the budget cuts, the council also approved legislation allowing some union members to live outside the city's borders and a measure that discontinues alternate side parking during inclement winter weather.
Even with all of the actions taken at Thursday's stated meeting, the city will still face about a $1.1 billion deficit in the next fiscal year. If it had done nothing, officials said, that hole would have grown to approximately $4 billion.
"The fact that 20 to 25 percent of our revenues come from Wall Street puts the impact of this crisis very, very squarely at our front door," said City Council Speaker Christine Quinn.
The hotel tax, (Intro 879) which will increase the city's rate from 5 percent to 5.875 percent, will raise an estimated $80 million in revenue. The increase will add $2.62 to the average $300 a night stay, said the bill's main sponsor, Lewis Fidler. The hotel tax was approved by a vote of 46 to 5.
The property tax increase (Intro 887) will bring in $576 million. According to the council, the average property tax increase citywide for a single family home will be $118 for the rest of the fiscal year, which ends July 1. The property tax increase will take effect January 1. As part of the hike, council members approved a 15-day extension for homeowners whose property is valued less than $250,000 to pay their bills.
In response to the council's approval of the budget modification, the mayor said in a prepared statement: "It's never popular to phase out a tax cut or reduce agency spending, but they are the right choices to avoid far greater and longer lasting pain. We will not repeat the mistakes of the 1970s, which crippled (the) city's finances and nearly destroyed our quality of life. We are taking steps to weather this storm so we can continue to keep our streets safe and clean, continue improving our schools and continue protecting seniors and the most vulnerable New Yorkers."
Negotiations over the budget revisions were far more contentious than in previous years and presented a contrast to the normally harmonious relationship between the mayor and this City Council.
Part of the debate -- and a considerable amount of the ire -- centered on the $400 rebate, which the council argued the city was obligated to send out. Also, the council vigorously opposed the mayor's plan to suspend a police cadet class, which would have eliminated about 1,100 cadets.
As part of the budget agreement approved on Thursday, the city will have both a January and July class of 250 officers each.
The mayor's order last week for departments to cut their budgets an additional 7 percent would have eliminated the summer police class, according to Quinn. The agreement, which calls for about 1,700 fewer officers than the city usually trains, is an improvement over what the mayor originally sought, Quinn said.
It was not enough for everyone, though. The chairman of the council's Public Safety Committee, Peter Vallone Jr., voted against the budget revisions because of the decrease in police officers.
Other members said the increase in property taxes would essentially rip the city's rebate check from the hands of property owners.
"How do we give with one hand $400 and take it back with a 7 percent increase?" asked Councilmember Charles Barron. "We are bleeding already."
Some members, though, recalled the city fiscal crisis of the 1970s and said it was more important to preserve key services than keep a tax break.
"Even though it won't be popular," said Councilmember Miguel Martinez, "New Yorkers will understand."
The council revised other areas of the mayor's initial proposal to save $20 million from other programs. It restored more than $5 million from a cut to the City University of New York and added $3.763 million to the Administration for Children's Services to avoid a reduction in case managers. It also allocated about $1 million to save a job center in Harlem and $424,000 for a senior abuse prevention program.
The council did not add any funding to the budget modification, but found cuts elsewhere. For example, it cut $13 million for consulting on city capital projects.
Some areas were not restored by the City Council, including a program for elderly day care as well as cuts to libraries and public housing.
After two years of negotiations, the City Council approved a bill (Intro 837) to allow members of the District Council 37, the city's largest municipal public employees union with 121,000 members, to live outside of the five boroughs if they have worked for the city for two years.
The bill was approved by a vote of 50 to 1 with Councilmember Al Vann dissenting.
Teachers and police officers already do not have to live in the city.
Members of the District Council 37 will be allowed to reside in Nassau, Westchester, Suffolk, Orange, Rockland or Putnam counties.
The council unanimously approved legislation (Intro 895) to suspend alternate side parking if the Department of Sanitation also suspends street sweeping. In the past, motorists have received tickets for not moving their vehicles even when ice or snow have made it difficult.
The bill would suspend alternate side for at least 24 hours after the cancellation of street cleaning.
Arts advocates and organizations scored a victory last year when New York City's Department of Cultural Affairs reorganized its process for allocating funds in an effort to make it more merit-based and equitable. In terms of funding totals, the Department of Cultural Affairs and the New York State Council for the Arts both received as much money in their fiscal year 2008 budgets, if not slightly more, than they had in any year over the past decade. The immediate future looked good. But now, just a year later, the arts community sees expecting tough times ahead.
The current recession has arts organizations, like the rest of the city, taking a hard look at their finances. Public funding for the arts, as for every sector, is expected to shrink in both the city and state budgets. The cultural affairs department, which had an adopted expense budget of $168 million in fiscal year 2008, has a budget of only $152 million for this year. That may shrink to $149 million if the City Council approves the mayor's 2.5 percent budget reduction for all city departments for the remainder of the year.
If the mayor's plan for next year also is approved, the department will face another $3.8 million cut for fiscal year 2010. Bloomberg has said that he wants to keep arts funding at a high level, but when money gets scarce, arts sometimes loses out to services seen as more essential, such as education, police and fire.
The budget for the state arts council is likely to be slashed next year as well. The state legislature failed to approve budget reductions for the remainder of this fiscal year, leaving an ever greater deficit for 2010. With the public funding picture looking grim, the thousands of organizations that rely on city and state grants are expected to have to tighten their belts.
No one is yet sure exactly how much they will lose. Despite any budget reductions for the remaining fiscal year, most organizations that depend on public grants will not see a change until the next fiscal year, which starts on April 1 for the state budget and July 1 for the city budget.
Dance NYC executive director Michelle Burkhart said her organization, which provides services to artists and groups, has "already seen less funding from both city and state" grants. Of the groups Dance NYC works with, Burkhart said so far "no one's come yet saying they have to close their doors or go on hiatus."
However, she said, budget cuts would certainly affect her organization and its ability to serve its members. The majority of Dance NYC's constituents, according to Burkhart, are "underrepresented artists, working project to project" as well as "grassroots organizations." Dance NYC offers them various kinds of assistance, from workshops to help artists efficiently run organizations to providing stable infrastructure to dance groups. "We've just kind of had to re-evaluate some of the programming we're offering - minimizing some of the programs we're able to provide the field," Burkhart said. "Workshops are being re-evaluated or cut completely."
With the financial crisis deepening and the city and state budgets for next year still in the planning stages, the fiscal predictions change constantly. Virginia Louloudes, executive director of the Alliance of Resident Theatres/New York, said, "Now we're OK. Next year, we're not so sure."
Her organization provides services and support to member artists and theaters and is one of the thousands of groups that rely on state grants, city money or both. State and city budget cuts are difficult enough for organizations to absorb, but in a recession, arts organizations face other budget reductions as well. "It's going to hit us in three places: individual giving, the amount of money the city has to give us and the amount of money the state has to give us," Louloudes said.
The budget cuts in the recession in the early 1990s, Louloudes said, changed arts funding so that organizations relied more on corporate and individual donations than before, making private gifts perhaps even more important than public funds for some organizations.
Due to business mergers in recent years, the number of corporate donors has shrunk, forcing groups to rely more on individuals. Steve Zeitlin, executive director of City Lore, an organization committed to preserving New York's cultural heritage, said that in the coming months, changes in individual giving will "affect people the most."
With the economy in a recession, major corporate and individual donations are scarcer. As organizations conduct their year-end appeals, Zeitlin said he guessed that the response would show that giving has dropped a great deal. Of City Lore's funding, Zeitlin said, "We've had funders who say 'yes, we'll consider your proposal, but we have no idea when.'"
Arts organizations had prepared for the worst in terms of their finances, according to Louloudes. "I think that all of us have been sensing that this has been coming, so we are all being very conservative," she said.
However, less than a week later, after her organization had done more surveying among its members, Louloudes had a different opinion. "It's worse than I thought," she said. According to Louloudes, theaters in her organization are seeing a decline in attendance and income as well as a decline in funding.
New York has already seen a rash of show closings on Broadway, with "Hairspray," "Spamalot," "Spring Awakening," "13" and "Young Frankenstein" all announcing final performances in January. Smaller shows and companies are also expected to suffer. In the theater community, Louloudes predicted, "Off-Broadway will feel it the most." Smaller off-off Broadway groups without established fixed costs like rent for performance and office space may have an easier time weathering the storm than larger groups. But regardless, Louloudes said, "I'm concerned about the entire field."
Despite all the planning and saving, arts groups feel the worst is yet to come. Steve Zeitlin said City Lore had not felt the effects of city and state budget cuts, but probably would in the next year. "When these cuts happen, there's always a little bit of a lag. ... It hits us over a period of time," he said.
When funding is cut, Zeitlin said, "We basically have to go into survival mode and keep the infrastructure of the office intact." The result, Zeitlin said, is that the group may have to cut some programming in order to survive and continue advancing its cause. City Lore runs programs aiming to preserve New York City art and landmarks as well as promote ethnic folk arts to "ensure that the city's traditions and cultures are still given a voice in the city's cultural life." Zeitlin said. Zeitlin said he hoped City Lore wouldn't have to cut any programming next year, but worried that financial pressures would force the group to do so.
The various affects of the recession will be widespread. Louloudes said she has already seen groups suffer because of the downturn - the Ohio Theatre, an off-Broadway theater in SoHo and a member of ART/New York, will no longer have a space. The theatre's landlord was forced to sell the building because of financial pressures.
As a result of the funding cuts and fall off in contributions, New York City may experience a decline in the number of arts groups, performances and events in the upcoming months. It also seems likely New York City will see fewer free public events, Zeitlin said, because "those are precisely the events that rely on government funding."
In any case, arts in New York face a difficult battle. Of the times ahead, Louloudes said, "We have to prepare for the worst and hope for the best. And when I say 'best,' I mean 'I hope we can survive this.'"