Sunday, March 22, 2009

NYC | In the Eye of the Storm, OMB's Mark Page

Ross Sandler (L) and Mark Page. All photos by JT Marlin. 
NY State's Gov. David Paterson has  agreed with legislative leaders to close a NY State budget gap for FY 2009 of $1.6 billion.

But now a monster gap of $13 billion is awaiting the Governor in ten days.

In some ways, NY City is better off than NY State, because the biggest part of NYC's tax base is the property tax.

NYC's annual property assessments are averaged over five years, creating a surge of revenue as the averages keep rising for two or three years after the beginning of a decline in property values.

When recovery starts, of course, NYC doesn't get as much revenue as it would if assessments were recognized more rapidly, but then the income-and-sales taxes are bouncing up and the City doesn't need the money as much.

However, when NY State catches a cold, NYC gets pneumonia because NYC depends on the State for aid.

Half the State’s revenues come from NYC, but something less than half comes back to NYC in aid. So a gap of $13 billion at the State level without raising taxes might mean $6 billion less aid for NY City.

That's another thorn in the side of Mark Page, the man who has been a steady hand on NYC's fiscal wheel as director of NYC’s Office of Management and Budget since Mayor Bloomberg took office in 2002. He was introduced not long ago by Mr. Ross Sandler of the New York Law School.

Mr. Page is a graduate of Harvard College and the NYU Law School and his responsibilities as OMB Director include
developing and implementing the city’s budget, monitoring and forecasting the revenues and expenses of the city, analyzing the economy, evaluating agency management improvement initiatives, and issuing bonds in the public capital markets in conjunction with the New York City comptroller.
Mr. Page joined OMB in 1978 as deputy counsel, was named general counsel in 1980 and had the title of deputy director added in 1982. He is reputed to hate giving speeches and is hard to locate at a podium other than responding to questions from members of the NY City Council. He's actually a pleasure to listen to as he speaks in perfectly formed sentences without any apparent reference to notes.

I had a chance to listen to him at New York Law School and took some photos and notes. I started reporting below what Mr. Page said, but midway I received word that a videotape of his comments had been posted online, at which point I decided I would stop typing up my notes. I have posted the link to the NYLS videotape at the end.
NYC OMB Director Mark Page.

The banking industry has been engaged in in an extended use of vapors. Washington is engaged in a dramatic wielding of stimulus dollars.

Here in New York City, we are engaged in questions about the frequency of garbage collection, the number of workers in the parks during the summer, and high school class size, the daily oatmeal of government.

Government budgeting is not that complicated. It has to do with handling the fact that we want to get more services, like more frequent garbage collection, and pay less taxes... and preferably eliminate taxes.
Henry Stern.
It’s easy to do more and tax less when you’re getting more money out of existing tax rates. Economic expansion gives us more.

But then when you get in the inevitable reciprocal cycle, a given tax structure gives you less money to spend on services. 
As I have heard it said very loudly at MTA meetings, in a downturn you are likely to have to tax more for less services. This is not a very seductive premise, particularly as government is political.
To make this point, we have divided our spending into controllable and uncontrollable costs. In government there are some things that are very difficult to avoid paying for. For an individual, the analogy might be with mortgage payments.

Jonathan Gelber (L) and Roger Herz.
For New York City government, the stuff you are really stuck with paying starts with debt service and pension benefits.

We’ve done a lot over the last seven years with bringing the East River and Harlem River bridges up to standard. We’ve spent a lot on building and maintaining schools and roads. And we have the debt to show for it.
To hear how Mr. Page's speech proceeded, with questions from audience members like Jonathan Gelber, Roger Herz and Henry Stern (all shown in photos) go to the videotape here.

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