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40th Anniversary

The Day Everything Changed

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The Dinkins administration had balanced four budgets, to its credit, including a $1.8 billion deficit in its first year. But tensions were heightened as Giuliani took office by the presence of something called the Kummerfeld Report, a study Dinkins had commissioned to assess ways out of the crisis. The report, which came out during transition, suggested higher taxes, layoffs, canceling a police class—Dinkins and Albany had just passed legislation expanding the force by a head count of 8,000 in 1991—and putting tolls on the East River bridges. Giuliani rejected every one of these (“Old thinking”), which sounded tough but rather limited his options.

Here, the Giuliani administration made three crucial decisions. First, it would cut department budgets, in some cases painfully; but it wouldn’t touch police, fire, or the number of teachers (the Board of Ed bureaucracy was a different matter). The NYPD was the controversial untouchable, because of longtime battles over police spending versus social-service spending. “But Rudy called everybody in,” Powers says, “and he said, ‘Look, I was elected to cut crime, and I have a plan to do it, and I know it’s going to work. So just get used to it. We’re gonna take the heat.’ ”

Second, the administration worked with Albany to cut a few taxes, most notably the hotel-occupancy tax. That tax, at the time, was 21.5 percent. The city portion was 7 percent. It was lowered by one point. Symbolic, maybe. But still a tax cut. By 2001, hotel tax revenues had nearly doubled from 1994, to $243 million.

Third, the pièce de résistance. Budget-cutting as severe as the kind the Giuliani team faced always involves layoffs. The public-employee unions had all, of course, backed Dinkins. To say they were suspicious of Giuliani would be like saying Jewish voters had a few qualms about Pat Buchanan. “The unions thought this was Darth Vader coming in,” recalls Randy Levine, who was the mayor’s chief labor negotiator in those days. I remember it well: Everyone expected, by the time Rudy and the unions were done waging war, to see the public-employee blood being mopped off the floor.

His great destiny was to be mayor and mayor only—and at a specific moment when the city needed someone like him.

Abe Lackman, Giuliani’s budget director, had different ideas. As Fred Siegel tells it in his book Prince of the City, “Lackman reasoned that the city needed to do more than just cut workers; it needed union cooperation to change some of the work and staffing rules to make city government more flexible.” Lackman was looking for savings, and Levine wanted a whole new approach to the city’s workforce problems. The plan the administration worked out was this: The city would lay off, per se, no workers. Instead it would offer severance packages—a lump-sum payment and health-care benefits for one year— encouraging employees to leave the public sector and seek private-sector jobs. In return, the unions would agree to greater flexibility in hiring rules. For example, the city could transfer employees from Department A to Department B based on need, rather than having to continually go through an entire hiring procedure when a Department B vacancy popped up.

The task of negotiating the deal fell to Levine, a lawyer who’d been a labor negotiator on the management side. “I took it to Rudy, ‘In the private sector, this is the way you do it, so why don’t we do it this way in the public sector,’ ” Levine recalls. He went to the unions with the plan and one reassuring statement: “I never in my fourteen years [of doing this] tried to break a union.” The labor leaders were taken aback. The plan sailed through. Savings. No blood.

It would be three or four years before Giuliani really got the budget under control. But I’ve always thought that the severance deal was one of Giuliani’s great accomplishments. It placed on display not his bullheadedness, but another leadership quality that we never saw quite enough of, one that was important to his success: his iconoclasm and willingness to depart from received wisdom. It played against type. Unlike a lot of things he subsequently did, it cooled heads and fostered community.

When Giuliani said to Powers et al. that he had a plan for reducing crime and knew it would work, he wasn’t actually talking about his plan. And that’s okay. Mayors administer lots of things other people conceive, and ultimately they get the blame or the credit, and deservedly so.

The first revolutionary idea—simple, like most revolutionary ideas—was Jack Maple’s, and it hit him one night in early 1994 while he was sitting in Elaine’s.

The story has been amply and ably chronicled in this magazine’s pages and elsewhere, but quickly, two points: First, for years, or decades, the various bureaus of the NYPD had worked as separate fiefdoms. There were nineteen separate data-reporting systems within the NYPD, and virtually no one had access to all of them. Second, incredibly enough, the NYPD was not in 1994 chiefly a crook-catching enterprise. Years of internal restructurings had made the department reactive rather than proactive. In 1993, the average cop made fewer than a dozen arrests.


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