Caution Serves City Well

Given the city's dependence on the financial services industry for tax revenue, there was something remarkable about the fact that the upheaval on Wall Street during the past week or so did not have a dramatic ripple effect on city government.

If anything, there was a certain business-as-usual quality to municipal affairs. In the wake of the collapse of Lehman Brothers, the discounted sale of Merrill Lynch and the woes of AIG that spurred a Federal bailout, Mayor Bloomberg canceled a trip to California Sept. 15 to help deal with the crisis. But the following afternoon, he went ahead with a press conference that had been set four days earlier to announce a new wage contract for 9,000 municipal members of Teamsters Local 237.

Asked whether this wouldn't add to the city's budget burdens at a time when it is increasingly clear that tax revenues are going to come up well short of what was collected last year, Mr. Bloomberg told reporters that the money for the two 4-percent raises under the Local 237 deal was already included in the city spending plan. It is consistent with several other deals reached over the past 14 months by uniformed unions, although the fringe-benefit gains fall short of what was provided in those pacts.

The Bloomberg administration has seen the trouble on Wall Street gathering momentum for some time, even though the magnitude of last week's events was stunning. The Mayor took some criticism from union leaders over the past year for rolling over a good chunk of a city budget surplus to cope with future fiscal problems rather than using it to be more generous at the bargaining table. As he put it in announcing the Local 237 deal, "If we err, I'd rather err on the pessimistic side."

Yet ultimately union leaders have deemed the 4-percent raises that loom as the pattern for this bargaining round to be reasonable. That includes Patrolmen's Benevolent Association President Pat Lynch, who has throughout his tenure taken the most-militant stance of any city labor leader at the bargaining table, in no small measure because his members are frustrated about the disparity between their salaries and those paid by neighboring police departments where job conditions are often less demanding and less stressful. It is not, we believe, that the PBA leader has gone soft, but rather that he understood that in today's fiscal climate, the gains under his tentative pact with the city were notable. Our guess is that his members will confirm that judgment when their ratification ballots are counted at the end of the week.

As demanding as their constituents can sometimes be about getting every dollar available to improve wages and benefits, union leaders realize that their chances of doing that depend on a healthy city economy. Municipal workers are sometimes unhappy that when that economy is booming, they don't enjoy the good times nearly as much as some in the private sector whose salaries and bonuses can soar, but they are also not subject to the uncertainty about continued employment that is now plaguing many who work on Wall Street.

During an appearance on "Meet the Press" Sept. 21, Mr. Bloomberg displayed a command of the financial situation that had to make the major-party presidential candidates a bit envious. Perhaps the most-compelling moment of the interview, at least from our vantage point, came when host Tom Brokaw asked whether the city was in danger of sliding back into the disrepair and chaos of the mid-1970s, when it was forced to impose massive layoffs to avert bankruptcy and municipal services suffered greatly as a result.

The Mayor dismissed that possibility out of hand, saying that the fiscal structure of city government was stronger and that there was also a full understanding of the mistakes that were made during that fiscal crisis. You cannot gut services, he explained, to achieve budget soundness without it having a drastic effect on quality of life in the city. And so it is essential to strike a balance that tries to limit taxes but not at the expense of providing adequate services in areas ranging from police and education to sanitation and mass transit, he said.

His remarks weren't intended as a comment on the lack of balance that has infected the Federal Government's operation over the past eight years on matters like tax policy and regulation of industries, but the contrast in attitudes was instructive nonetheless.

We endorsed Mr. Bloomberg for a second term despite quarrels with some of his policies, and noted that the quality of his fiscal stewardship — and his willingness to take the heat for a property-tax increase rather than impose massive service cuts five years ago — was a primary reason. An increasing number of union leaders have acknowledged the importance of his good judgment there as well.

Local 237 President Greg Floyd following last week's contract announcement, and Uniformed Sanitationmen's Association President Harry Nespoli after he was chosen to head the Municipal Labor Committee, became the latest to offer tributes to the Mayor in this area. Mr. Nespoli said, "He did a terrific job of seeing this storm and making plans, which is why we're still in good shape."

It is not known yet whether that could change because of the shakeout on Wall Street. But Mr. Bloomberg's success to this point in insulating the city from the aftershocks should reinforce for unions and members alike that a steady fiscal hand should rank at the top of the criteria used in evaluating who the next Mayor should be.