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Mike Spano fears 'social bankruptcy' amid fiscal woes

Yonkers Mayor Mike Spano speaks about budget issues

Yonkers Mayor Mike Spano speaks about budget issues at Yonkers City Hall. (July 30, 2012) Photo Credit: Nancy Siesel

Yonkers mayor Mike Spano said in a wide-ranging interview on the city's budget problems that he sees no need for a return to control board management of the city's finances, but he does fear "social bankruptcy" resulting from cuts to parks and libraries if the city cannot cut costs in other ways.

"Before we cut police, fire, sanitation or schools, we're going to cut the libraries and parks and other things that give our city character," Spano said. "We'll have social bankruptcy before we have financial bankruptcy."

Absent large-scale union concessions or a major infusion of state or federal aid, city residents will have to get used to paying higher taxes and dealing with reduced services, Spano said.

He said the impact of municipal service cuts could be far-reaching.

"We are where the rubber meets the road," Spano said, pounding his fist on a large, wooden table in a cavernous meeting room at City Hall. "When we cut, it has a real effect on people's quality of life. When we cut, the classrooms go up another 10 students. When we cut, we lose a garbage route. When we cut, we lose police officers and close firehouses."

The city's aggregate budget deficit is now projected to reach upward of $430 million by 2016, according to Spano.

Yonkers was under the watch of an independent financial control board from 1975 to 1996. Because of past financial problems, the state comptroller's office still has to approve the city's annual operating budget before it goes into effect.

A commission headed by former Lt. Gov. Richard Ravitch and former Assemb. Richard Brodsky concluded earlier this year that the city can no longer use "one-shot gimmicks" and borrowing to balance the books.

Spano says the city is running out of options.

"We've been kicking the can down the road for too many years," the Democratic leader told Newsday. "But there's no more road left."

The mayor said he is implementing economic incentives designed to boost the city's stagnant property tax base and is reaching out to other mayors to help orchestrate a drive for increased state and federal assistance.

Still, the former state assemblyman admits that he doesn't have all the answers for his city.

"I'm trying tackle one issue at a time," Spano said. "Bottom line is, there's not one solution to the problems we face."

To balance this fiscal year's $958 million budget, his first as mayor, Spano cut department spending by 10 percent and raised property taxes and water rates. He has required top administrators to begin contributing to their health care costs and has pulled 40 city-owned vehicles off the road to auction them.

His original budget proposal had called for laying off 112 employees -- including cuts to police and fire departments -- but the jobs later were restored using a mix of federal grants and reserve funds.

The cuts made so far are minuscule, Spano told Newsday.

"It going to be hard, and I honestly can't claim any great success at this point," he said. "The reality is we just can't cut or tax our way out of this mess, and we certainly can't expect the labor unions to foot the bill all by themselves."

Spano said he is focusing now on $8 million in overtime costs in the police and fire departments. He has explained that he wants to do away with unlimited sick leave for firefighters not injured in the line of duty.

"I won't continue to allow these abusive policies to continue," he said. "We have to bring it under control."

The budget battle will test Spano's relationships with the city's influential police and fire unions. Both unions backed Spano's run for mayor but since have pushed back hard on the overtime issue, accusing Spano of making police and fire personnel scapegoats in the budget debate.

"It's hard for me, because I ran with the support of labor," Spano said. "They're the greatest workforce in America, and as I've said before they'll be at the table with me, but they're going to have to be willing to give up a little bit."

If the unions won't bend, the city will be forced to cut payroll costs though layoffs, Spano said.

Pension costs, which this year increased by $17 million, are another major contributor to the deficit, Spano said. He said the city can't shift to 401(k)-style retirement plans -- a move taken by other cash-strapped cities across the country -- because state law prohibits it. And even if he could, savings stemming from those changes wouldn't be realized for years, he said.

"We're not hiring anyone, so there wouldn't be any savings," he said.

Also contributing to the deficit, Spano said, are the city's property tax valuations. Yonkers hasn't conducted a citywide property reassessment in decades. The lack of a recent reassessment has led to a huge increase in tax challenges by property owners who feel they are being overtaxed. To foot the bill for settlements, the city has been borrowing at a rate of $10 million to $15 million a year.

To deal with that problem, Spano is pushing a plan to reassess properties, a project that could cost $6 million and take several years, but one he believes would lessen the financial burden of tax challenges for future mayors.

"We've been borrowing tens of millions of dollars to pay for yesterday's lunch," Spano said.


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