Is New York City cruising for a bruising? Greg David of Crain’s New York Business reports that NYC’s debt has doubled during Michael Bloomberg’s decade-long tenure as Mayor. Recession-based spending increases did play a major role, but they cannot bear all the blame: reckless spending by the city government exacerbated the problem, and things are expected to get even worse as time goes on:
The Independent Budget Office estimates that interest expense will soar from $6.1 billion in the current fiscal year to $6.5 billion next year and $7 billion in 2016 (adjusted for various financial maneuvers). Needless to say, that is at a much greater rate than the increase in revenue.
That may sound bad, but it’s actually worse than you think.
Remember, like the federal government, the city is benefiting from historically low interest rates. At some point, interest rates will go up (and you should hope they do because that will mean the economy is improving) and so will the annual debt service cost.
Bloomberg was elected Mayor as a sound economic manager who could bend the city’s chronic fiscal issues into shape. Yet as his third term winds to a close, the city is now so deep in debt that his successor may find this task even more difficult than it would have been ten years ago.
A lesson to future mayors: Spend more time on the basics of budgets, taxes, and spending—and less time worrying about trans fats and sugary soft drinks.