The Coming Budget Crunch
In the fiscal year that ended in June 2005, for instance, Bloomberg hiked spending by 10 percent, but tax collections, fed by the Wall Street bubble, increased by an astonishing 13.4 percent, producing a surplus. Two years later, Bloomberg boosted spending by another 7.2 percent, but Wall Street–inflated tax revenues rose by more than 11 percent. Even after the market meltdown in 2008, federal policies to strengthen and bail out financial firms lifted Wall Street profits temporarily and provided enough growth in tax collections to give the mayor some fiscal wiggle room. More recently, as growth in tax revenues slowed, Bloomberg closed small budget deficits with a series of fiscal gimmicks, including selling new taxi medallions to raise money (a one-time maneuver) and shifting cash to the city’s general fund from a trust fund designed to pay future retirees’ health-care costs.
