Read Online The Streets Were Paved with Gold by Ken Auletta - Free Book Online

report noted, “almost half of every dollar spent for operating the City was allocated to police, fire, sanitation, and education. At present, less than one-third of every dollar goes for these functions.” By 1975, the Regional Plan Association said, New York was spending an average of $249 per person in aid to the poor vs. an average of $59 for all other local governments in the state.
    As their share of the budget pie diminished, middle-income residents found New York less attractive. And more expensive. By 1975, New York City had as many different taxes (twenty-two) as Howard Johnson’s had ice cream flavors. There were personal income and commuter taxes, sales taxes, vault taxes, auto use taxes, stock transfer taxes, cigarette taxes. New York developed another distinction: its middle- and upper-income residents came to shoulder the steepest tax burden in the U.S. Using 1974 data, the Eleventh Interim Report of the Mayor’s Temporary Commission disclosed that a city family of four earning $25,000 paid 6.6 percent of its income in local and state taxes—almost three times the national average. (Chicago residents, for instance, paid only 2.1 percent.) And the higher the family’s income, the greater the disparity. At the $50,000 level, a city family of four paid 11.1 percent of their income for local and state taxes (double Los Angeles’ 5.6 percent and triple the U.S. average of 3.7 percent; a family earning $20,000 in Houston would need $27,071 to have the same disposable income in New York City).
    Borrowing also grew. With the cooperation of its banks and financial institutions, the city devised a novel method to print its own money. Because New York was a financial center, and because its banks were underwriting more than they were purchasing city securities for their own accounts, the financial community was performing more a sales than a credit analysis function. They were salesmen, pulling down handsome commissions. So sell they did. Between 1961 and 1975, city debt almost tripled—from $4.3 to $12.3 billion. The city’s annual debt service payments jumped from $402 million in 1961 to $2.3 billion in 1976. Excessive borrowing led, inexorably, to excessive budget tricks. What didn’t come from Washington, Albany or taxes came from borrowing. An internal memorandum written to Comptroller Goldin in 1975 was appropriately titled “City Debt: The Price of Deception.” Sketching past city gimmicks, Goldin’s staff concluded that more than 20 percent of all short-term debt ($1.5 billion) was attributed to “gimmicks,” as was about 10 percent ($700 million) of all long-term debts. That year alone, the memo said, taxpayers would pay an extra $210 million in interest because of those gimmicks—more than the cumulative total spent annually to maintain city parks, repair streets, run a consumer protection agency, provide public health services, enforce housing codes, administer rent control and provide for the relocation of tenants. By 1976, 56 percent of locally raised tax funds ($3.7 billion) was earmarked not for the delivery of services but for debt service, pension payments and Social Security—consuming 31 percent of the total budget.
    As the city’s economic base shrank, losing one of every six private-sector jobs between 1969 and 1976, New York pioneered its very own WPA. In 1950, government employees comprised 10.8 percent of the city’s work force. By 1975, this number grew to 17.5 percent, most with city jobs. In the sixties, four of every five new jobs were for the government.
    All of this took place against a backdrop of massive migration in and out of New York. Though the city’s population remained a stable 8 million, between 1950 and 1970 the composition of New York changed dramatically. In those years, the city lost about 25 percent of its white middle-income population (1.6 million) and gained an equal number of (mostly) poor blacks and Hispanics. In 1960, just 4 percent of the city’s