Bite Size Bad News 9--State and Local Budgets

I'm kinda worried about Gus the Polar Bear.


See, every time there's a budget crisis here in NYC, there's a sort of charade that gets played out as city officials proclaim that things are so dire that almost all services will have to slashed to the bone. Invariably it is announced that it will probably be necessary to close the Central Park Zoo.

As soon as the tabloids and the evening news broadcast this, elementary school classes are mobilized and thousands of letters pour in demanding that the zoo be saved and that its most famous resident, the severely neurotic Gus, be allowed continue doing business at the same old stand.

This threat serves two purposes--to warn the public that the crisis is real and, at the same time, to provide a smoke screen for the deep but less visible cuts which are actually made while the zoo remains open.

This is what seems to be happening in California, where a dispute between the legislature and Governor Schwarzenegger over how to close a $15.2 billion budget gap been raging. The Governor recently played the California version of the Gus card--ordering that 20,000 part-time employees of state government be laid off and trying to reduce the pay of all full-time state employees to federal minimum wage, $6.55 an hour.

The newspapers openly call this as a scripted drama which has been played out before, and report that once a budget is passed, the lost pay will be made good by the state. Folk I know in Cali say that that's probably true but that the press seems suspiciously insistent on declaring that there is no real threat. The problem is that the state is broke, bad broke, and someone is going to pay--maybe the part-timers, whose return the media seem much less assertive about.

Things could get even uglier in New York. Governor David Patterson has called an emergency session of the legislature for later this month to deal with the unfolding budget crisis.

Paterson offered another example of the rapid deterioration in the state’s finances. In June 2007, he said, the 16 banks that pay the most on their business profits remitted $173 million to the state treasury. “This June, just a month ago, they sent us $5 million — a 97 percent decrease,” he said.

New York City, even more dependent than the state on revenues from the FIRE sector (finance, insurance, real estate) will take a proportionately bigger clobbering.

This time any threat to Gus may well turn out to be real, and require new approaches to save the zoo. Do you suppose polar bears eat banker?