06/28/2010 08:48 am ET Updated May 25, 2011

New York City Government Makes Tough Budget Choices While Albany and Washington Play Political Games

While the recession continues, job recovery is slow to develop. Congress continues its political posturing, and last week, failed to extend unemployment benefits and aid to state and local governments. Similar symbolic politics continue in Albany as the Governor and Legislature play games and threaten a government shutdown. Fortunately, at home in New York City, the Mayor and the City Council remembered how to act like grownups and compromised on the city's final budget. According to New York Times reporter Javier C. Hernandez:

The late-night deal capped months of negotiations that were largely free of the tension and strife that typically accompany budget battles. With the city facing a budget gap of up to $5 billion and the economy still ailing, there was little room for compromise.

New York City's budget does not decline in the next fiscal year; in fact, the $63 billion dollar budget is $3.6 billion higher than last year's budget. The increases are due to rising health care costs and higher pension costs. These rising fixed costs of government are putting pressure everywhere else. They cause cutbacks in education, social services, public safety and mass transit. Payments to retired government workers are coming at the expense of cutbacks in the city's classrooms. Talk about intergenerational injustice. The current New York City and New York State budget crises are hitting programs that build for the future at the expense of paying bills due today. In case you are wondering, this is the same thing we did back in the 1960's. The result was New York City's near bankruptcy in the mid-1970's and the ensuing quarter century rebuilding effort just to "get back to where we once belonged."

Fortunately, the city's aging infrastructure is being systematically replaced by the Mayor's long term capital plan, although the pace of replacement is slowing down due to the recession. Capital spending reached an all-time peak at $11.7 billion in 2008 but then declined to $9.5 billion in 2009. Mass transit, a critical resource that makes New York a sustainable city, is cutting service, raising fares and delaying restoration projects. A host of special programs, designed to make the city's school children competitive in the global economy, are being eliminated due to the budget crisis. These programs, like science field trips, advanced placement courses, computer training, arts, theatre and foreign language courses are luxuries in the city's schools, but are viewed as necessities in wealthier suburban or private schools.

By cutting subsidies to mass transit, New York State imposes an indirect and regressive tax on working people in this region. Higher fares impose direct costs to workers and may drive some people out of mass transit and back to their cars. This will increase congestion and the cost of doing business in New York. Less transit service and more traffic means that commuting will take more time and be less efficient. This will impact commuters in ways that are impossible to quantify, such as separating parents from their children for longer periods of time.

The recent budget deal in New York City is evidence, once again, of the critical role played by local governments in America. It is at the local level that the public really meets its government and knows it best. In D.C., Congress preens for the media. In Albany, the state legislature sells its vote to the highest bidder. Both the federal government and the state government seem far removed from the day to day reality of the impacts of their actions. Over one million Americans will exhaust their unemployment benefits at the end of June. The folks running the United States Senate don't seem all that focused on that fact.

Here in New York City, Mayor Bloomberg said it best when he remarked that: "We faced up to our responsibilities as well as to financial realities...Make no mistake about it: These cuts are real...Pain, yes. Serious damage, no." I hope the Mayor is right, but my daughter just completed her junior year in a New York City public high school and has already been told of courses and services that will not be available next year.

I agree that the Mayor and the Council have done their best to deal with a bad situation. However, to paraphrase the Mayor, at some point real cuts and pain will cause serious damage. At least in New York City, I know that our local leaders are doing their best to minimize the impact of these difficult times. They know that at some point they will have to look a school parent or a senior citizen in the eye and defend these cuts. When I look to Albany and Washington, I get the feeling that they are more interested in winning debating points than achieving results. The level of misinformation and spin is so intense that it is difficult for the average citizen to cut through all the nonsense and even know what to ask for. The result is Tea Party movements that prescribe medicine that is far worse than the disease. New York's state government and the U.S. Congress might want to take a look at some of the country's mayors if they'd like to see how adults run governments. They could learn something.