The Full Rudy: The Man, the Mayor, the Myth (Page 3)

The Budget Buster

It's now apparent that Giuliani purchased the city's good times partially with borrowed money and left his successor, Mike Bloomberg, holding a bag of debt. New York City went from a $3 billion budget surplus in 1998 to a $4.5 billion deficit after Giuliani left office. This mismanagement of prosperity is a big part of his legacy. Giuliani left the city's finances in a mess that was aggravated by the collateral economic damage of 9/11--the loss of up to 130,000 jobs since 2001 and unexpected expenditures for relief, cleanup and overtime.

Tom Carroll is the president of the conservative activist group Change New York. He says of both Giuliani and Governor George Pataki: "There wasn't the fiscal discipline we had hoped to see overall. But on debt, there was no discipline at all."

Some fiscal watchdogs saw this coming, including State Comptroller McCall. In a report issued in July 2001, McCall declared: "As I've said time and again, the most responsible use of the record surpluses of the past few years would have been to reduce the City's mounting debt burden, and build a reserve fund for the rainy day that will inevitably come.... Record budget surpluses...afforded the City a golden opportunity to get on the path toward long-term fiscal stability. The opportunity has been squandered."

Most of the current budget deficit is Giuliani's responsibility. Tax cuts he enacted since 1995--benefiting mainly the wealthy--will cost the city $2.6 billion next year. He added 25,000 employees to the city's payroll, many of them patronage hires, after promising to cut the work force as a candidate of fiscal conservatism. On the day he left office, the head count of city workers was the highest in history.

Giuliani's borrowing practices increased the city's debt burden by 50 percent. New York City is now the biggest debtor in the nation outside the federal government, with $42 billion in loans outstanding. In comparison, the State of California has a debt of $25 billion. When Giuliani took office, the city was spending 15 cents of every dollar it collected in revenue to make the payments on its bonds. Fiscal monitors now project that New York will be spending 20 cents of every dollar to pay off its bonds by the end of this year. To the extent that debt service is rising, the city is forced to reduce spending on education, police and healthcare.

If a liberal Democrat had borrowed with such abandon, and converted a surplus into a deficit so swiftly, the bond raters and editorial boards would have demonized him as a drunken sailor on a binge. Giuliani was hardly criticized.

The Education Failure

By every measure, public education under Giuliani stagnated or got worse. Reading and math scores deteriorated. Classroom overcrowding grew worse. The high school dropout rate has risen during the past three years. In 2001, in the citywide eighth-grade math test only 45 percent of white students met the standards, 14 percent of Latinos and 12 percent of blacks. This is well below the standards of other big cities.

Giuliani did nothing to shift resources into the poorer districts. In 1999 he diverted funds for improving school facilities from Brooklyn and the Bronx (more minority and working class) to Staten Island and Queens (more white and middle class), where the borough presidents supported him politically.

In eight years, Giuliani's most famous comment about public education was that the school system should be "blown up."

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