Construction Leaders Balk at Bloomberg Cuts

Harder to PlaNYC with Capital Spending Cuts, Critics Say

By Adam Klasfeld
April 21, 2009

Industry experts argue that New York City Mayor Michael Bloomberg’s proposed budget cuts will eliminate thousands of construction jobs.

What a difference two years makes during an economic recession. 

In April 2007, Mayor Bloomberg first unveiled PlaNYC, and three goals of his sweeping ten-point plan were devoted to infrastructure initiatives that fell under the rubric MaintaiNYC. 

With the mayor’s recently announced proposal to ax capital spending by 30%, he risks withdrawing funding from these same maintenance plans, according to Denise Richardson, the managing director of the General Contractors Association of New York. 

“PlaNYC talked about sustaining a level of infrastructure about a year ago today,” she said.

Worse news for those in the industry is the number of jobs that are estimated to be cut under the proposed budget.  Dick Anderson of the Building Congress believes the number can be as high as 10,000 a year for four years on a rolling basis, as well as an additional 5,000 jobs indirectly affected by the construction site. 

“When people work in construction, they buy bagels and coffee,” Anderson said. “So you’re really talking about a total of 15,000 jobs.”

A spokeswoman for Bloomberg argued that Anderson’s projections are based on a $3 billion reduction in capital spending, but the actual reduction is almost half that at $1.8 billion.

She added that the city is legally obligated to balance the budget annually and said that the federal stimulus announced two weeks ago will inject $1.1 billion into transportation infrastructure projects.

The cuts all but insure that the industry-wide slump from the economic recession will continue, according to Anderson. 

“At its peak, the construction industry had 130,000 in the city,” he said.  “And it's falling to about 100,000 by next year.”  Given this projection, the estimated job losses could represent “eight to 10 percent of the total construction work force.”

In fact, he projects that the city will lose more money in taxes from the loss of these jobs than it will save in the immediate short term. 

“They only save $227 million over four years, and the taxes that are paid by the people who work in those 10,000 jobs amount to more than that – like $260 million in taxes per year,” he argued.  “By not going ahead with this budget cut, it’s actually paying for itself.”

But Bloomberg says his administration did not arrive at the cuts arbitrarily.

“We don’t have the money. Plain and simple,” he said in a statement. “We have a number of problems and so the City is going to be faced with a smaller capital budget because our debt service is something we can no longer support and our number of employees, unless we can find some way to mitigate the pain.”

One way he plans to do this is to through state and union coffers.

“[We’re] going to go to Albany and ask them to pass a number of laws and we’re working with the municipal unions,” he said.

Until the funding alternatives are secured, he says, people will have to “do more with less.”

Both Anderson and Richardson expressed sympathy with the city’s struggle to control debt service costs.

“I worked for the City for over 20 years before I came to the General Contractors Association,” said Richardson, who has worked for the sanitation department and the MTA.  “I understand how difficult it is in times like this to balance the budget, but all that being said, the only place where the city can really create meaningful jobs is in the capital budget expenses.” 

“We admire this administration,” said Anderson. “We think they know how to run the city, but we think they were too quick to pull the trigger on the capital budget side before they examined some of the issues that were raised.”

When asked why he thought capital spending was being cut, Anderson answered “because it's an easy target,” adding, “There's no big constituency for the capital budget.”

Notwithstanding their goodwill toward the mayor, their opposition to the proposal was swift and pointed.  The Building Congress lobbied City Council members, and Councilman Lew Fidler fired off a letter to Bloomberg with 43 total signatures from elected officials.  So far, there has been no reply, but the Anderson pointed out that “letter only went out a week ago.”

The letter argued, in part, that “cutting capital budget spending in this recessionary period runs counter the economic policies of President Obama and the Federal government which seek to stimulate our economy with critical infrastructure spending.”

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