Wall St Windfall Brings Surprise Tax Cuts For New York

Soaring Wall Street profits enabled Rudolph Giuliani, mayor of New York City, to reveal a surprise package of vote-grabbing tax cuts on Thursday that appeared calculated to ensure his re-election this year.

There will be new schoolbooks, the sales tax on clothing will be slashed, and commuters will enjoy big savings on bus and subway fares mostly because of a windfall surplus in city finances caused by the Wall Street boom.

Giuliani announced yesterday that New York would end its financial year to June 30 with an $856 million surplus on its $34 billion budget, the biggest revenue surplus in its history and a sharp turnabout from previous years.

 

Until recently, the citys finances had been in a mess. New York had largely missed out on the recovery in the rest of the United States, and a combination of rising spending and stagnant revenues threatened to plunge the city into its worst financial crisis since its near- bankruptcy in the 1970s.

Giuliani, New Yorks first Republican mayor in a generation, came to office in 1994 with a commitment to put the city on a sound financial footing.

He made unpopular cuts in public spending in his first three years in office.

But now, with city elections looming in November, Giuliani has been able to adopt a giveaway budget because the citys tax revenues have been boosted by a jump in Wall Streets profits to a record $11.3 billion last year, up from $7.4 billion the year before.

Part of the budget surplus will be used to eliminate the citys four per cent sales tax on clothing costing under $500.

Spending increases will include an extra $70 million for schoolbooks and a reinstatement of the arts curriculum after an absence of 25 years.

In addition, commuters will save on fares from a rule allowing free transfers between buses and subways. Although unpopular for his spending cuts, Giuliani has benefited from an astonishing fall in the New York crime rate since he became mayor, and with the city economy also doing well he now appears unassailable as a candidate for re-election.