2003-02-15 / Columnists

The Rockaway Irregular

By Stuart Mirsky

By Stuart Mirsky

While the argument that Mayor Bloomberg had little choice but to seek revenue enhancements to close the city's budget gap in the short term carries some weight, it is surely much harder to claim that there are no potential efficiencies out there for a real long-term fix (as the Mayor was recently quoted as suggesting). In fact, The New York Sun ran a fascinating editorial series, not long ago, identifying just such administrative savings that the City could obtain to close the now infamous gap. The Sun's premise was that city operations are so bloated, Mayor Bloomberg's primary goal at this point ought to be to rein costs in, by enhancing operational efficiency, instead of continuing to feed the insatiable bureaucratic maw.

To date, The Sun has clocked more than $6 billion in projected savings vs. an identified budget deficit of roughly the same amount. Specific items highlighted by the newspaper include: selling Gracie Mansion; contracting out bus service; ending free press parking; reinventing the Department of Corrections; cutting the Mayor's Movie Office; reducing public funding of campaigns; eliminating the Human Rights Commission as redundant; reforming Special Education; streamlining city procurement processes; reducing paid city worker holidays; increasing energy conservation; changing the staffing mix at the NYPD; shifting city workers to a 40 hour work week; revising the Medicaid system; merging separate borough library systems to eliminate redundancies; reducing agency fleet sizes; selling off Manhattan public housing; making immigrants legal so they can enter the above-ground economy and share the tax burden; consolidating a multitude of redundant city agencies; and introducing school vouchers.

While any or all of these may be good ideas, they may not all be feasible or yield the savings identified. In fact, there's a good chance that some would not since The Sun's projected savings are based on estimates only. Moreover, many of these proposals would fall short of enactment because of special interest opposition. Yet it is surely a good idea to begin to look in this direction since it can enable city government to finally operate at a level taxpaying New Yorkers can really afford. Moreover, increasing taxes ad infinitum has, as we all saw in the seventies, a very deleterious effect on the overall economy. This hurts everyone and fosters a downward spiral . . . exactly as it did back then, when the world began to think that big cities like New York were just ungovernable.

In recognition of the need to focus on cost savings and efficiencies, I offer a few other items that The Sun seems to have missed, since, I suspect, more, not less, will be needed:

o Problem: Arcane hiring and personnel practices militate against hiring adequate staff in a timely way and impede city agencies' abilities to reward good performers and terminate bad ones. The result is that city agencies routinely bulk up to fill gaps left by non-performing staff who remain on payroll . . . whether they are adding to the agency's output or not! Solution: Reform this system by streamlining hiring and enabling managers to hold employees accountable for the jobs they do and hundreds of millions of dollars in savings would be realized across the entire spectrum of city operations.

o Problem: Complex space rental rules prompt city agencies to over-rent space in compensation for absurdly long site search and site leasing lead times. These rules also result in poorly negotiated leases, leaving city agencies responsible for costs that the landlords, in a typical commercial lease, would have rightfully eaten. At the same time, city-owned properties often sit empty or underutilized while city agencies rent unsatisfactory space at high costs! In many cases, in fact, the city even rents out its own space at a fraction of what it actually costs to maintain and operate, incurring further losses for city taxpayers. Solution: Institute a citywide system that tracks, manages and monitors the city's physical plant portfolio in order to maximize usage and to control for frivolous renting and over-renting. This would also enable the city to recoup real costs when it rents out its own space. Hundreds of millions of dollars in potential savings here, too.

o Problem: Capital projects are largely performed by a single city agency that monopolizes this function (hence no competition) and which gets its operating budget based on the value of the projects it manages, prompting it to countenance higher costs! This is compounded by a complex vendor "specking" and bidding process and a lack of effective tools for managing and overseeing selected vendors in terms of cost control and job completion. As a result, costs for city renovations tend to come in at two or three times the costs for comparable jobs in the private sector, to take three or four times longer, and to have far more costly problems after completion, leading to substantial additional costs to recitfy! Solution: Build into the capital system the possibility for increased competition along with incentives for tighter oversight and cost control; develop and implement the tools for better job oversight and management including much needed automated tracking systems. Cost savings in the capital agency's own budget would certainly accrue, as a result of these changes, along with reduced costs to the city for that portion of its annual budget that supports interest payments on borrowed monies used for capital work.  

o Problem: Perhaps most telling of all, individual city agency budgets are driven by costs incurred annually, not true need, so that managers have every incentive to overspend at year end. The result of this is ever-increasing unit and agency budgets when those budgets should be tailored, instead, to what is actually needed to run programs effectively and efficiently. Solution: Alter the city's budgeting process to incentivize agencies and their managers for better-cost management and efficiencies instead of rewarding them for profligate spending!

While it is no easy matter to place specific savings values on these items as The Sun did on its items, the impact of these changes would be both broad and deep. All city agencies suffer from the Byzantine hiring practices that are currently in place while space utilization and rental issues are similarly widespread and intrinsically costly. Capital activity, too, cuts across agencies from the Departments of Health and Mental Hygiene, to Parks, Transportation, Sanitation, and beyond. Any agency that has buildings or structures under its jurisdiction has capital issues. And, of course, the city budgeting system is intricately tied into all agency operations.

Unlike their counterparts in the private sector, city managers are hemmed in by rules, regulations and structural impediments at every turn which foster waste and inefficiency. Unless factors like the above, which are entrenched in the current city system, are ferreted out and addressed, city agencies will continue to overspend and under perform in both good years and bad, leading us into future fiscal crises, coupled with the inevitable demands for higher taxes that accompany such crises. The items described above need to be added to the mix if the Mayor is to have any real impact on restructuring the city and pulling us out of a spending spiral that plunges us into the fiscal ditch whenever the economy goes south.

Stuart W. Mirsky, a long time Rockawayite, recently retired from city service where he last served as Assistant Commissioner for Operations in a Mayoral agency. He is the author of one historical novel, about Vikings in North America, and is now at work on another.

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