To Debra Wasser, New York has never looked better. The streets
are cleaner, the parks are better tended, and the hotels are packed
with people. A talk-show host, she lives on Fifth Ave. and
overlooks Central Park.
But Bob Grossman sees a very different city: more homelessness,
dirtier subways, and fewer services to help needy kids and the
elderly. The retired teacher lives in a single-room-occupancy hotel
on the Upper West Side.
New York, like cities across the country, is experiencing a
fiscal revival. Aided by the overall health of the economy, city
coffers are filling up with increased tax revenue and producing the
biggest budget surpluses in decades - affecting everything from
politics to schools.
But the fiscal health belies a growing gap between the wealthy
and working class. To keep budgets in balance in recent years,
cities have had to cut services that benefit mostly the poor.
Moreover, with far less federal aid to the needy coming in and
welfare reform shifting more burden to states and localities,
cities are entering a new era of financial uncertainty.
"Things are terrific fiscally, but the question is, will the
exact opposite happen when there's a long downturn in the nation's
economy?" says Frank Shafroth, director of policy and federal
relations for the National League of Cities and Towns.
Mr. Shafroth says cities now are far more dependent on the
health of the overall economy than they are on the federal
government. In 1977, the average city got 12.1 percent of its
budget from federal grants. In 1992 (the most recent year
available), that was down to 3.6 percent - a 75 percent drop. That
shift makes them more susceptible to economic swings.
Yet many cities are happy to have the cushion of a surplus for
now. Some of the amounts are significant. In 1996, for instance:
*Los Angeles posted an $89 million surplus.
*Milwaukee, Wisc., was $94 million in the black.
*Virginia Beach, Va., had $74 million in extra revenues.
In New York, Mayor Rudolf Giuliani (R) is basking in the luxury
of an unexpected $856 million surplus - the biggest in history -
thanks in large part to the revenue windfall from an investment
boom on Wall Street. As in other cities where mayors are facing
reelection, the financial boon is expected to solidify the
political base of many incumbents.
In a budget released yesterday, Mr. Giuliani proposed income tax
cuts and increased spending on education. He'll also use more than
40 percent of the windfall to pay off some city debts. But the city
still has what's called a "structural" deficit, which means in an
ordinary budget year, its expenses are still greater than its
"We have significantly reduced the growth of city spending and
the size of government," says Giuliani. "The mistakes of past
excess spending will not be repeated. …