Two men with abundant egos and presidential ambitions will be occupying overlapping political space—and one is likely to blow an enormous hole in the other’s budget. On top of which, the first guy, Andrew Cuomo, is trying to demolish Steve Rattner, who has been managing the multi-billion-dollar fortune of the second guy, Michael Bloomberg. The soon-to-be-governor and the current and future mayor are doomed to brutal competition and conflict, right? That’s certainly the safe bet. But the relationship between these two very different politicians got off to a surprising start, and their mutual need could end up benefiting New York, state and city.
Their first real conversation was in 2005, during a parade. The city’s economy was chugging along, crime was plunging, and Bloomberg was heading toward a resounding reelection win. Cuomo was still in the political wilderness, his public image defined by his humiliating exit from the 2002 governor’s race and his messy divorce from Kerry Kennedy. Cuomo was piecing together an attempt at a comeback, as a candidate for state attorney general, but his success was by no means certain. Finding himself standing next to Bloomberg at the start of the parade seemed a minor bit of good luck. That the two were still chatting amiably when they reached the northern end of Fifth Avenue startled Bloomberg’s team.
“I thought Mike would have hated the guy,” a Bloomberg strategist says. “I thought he would have dismissed Andrew as a lifelong politician. And he usually makes snap judgments. The first time he had an extended meeting with Eliot Spitzer, he walked out of it and said, ‘This is the same guy as Rudy. Take their politics out of it, their personality and management style are the same.’ Kirsten Gillibrand he dismissed even faster. Whatever happened during that parade conversation, Andrew didn’t win him over, but Mike held back judgment. He said, ‘Seems like a decent guy; we’ll see what he does going forward.’ ”
Five years later, Bloomberg enthusiastically endorsed Cuomo for governor—a favor magnified by the announcement’s timing, on the same September morning that a poll showed the Democrat a mere six points ahead of Carl Paladino. It was a fairly easy choice, given Bloomberg’s core preference for competence and Paladino’s demagoguery. But Bloomberg was also being pragmatic. “They’re never going to be friends,” another mayoral adviser says. Maybe not, but they’re going to need as much goodwill as they can muster very soon.
The mayor howled when Spitzer’s first budget proposed cutting $328 million from state aid to the city. And those were the good old days, when the city and state were in the short-term black. Both Bloomberg and Spitzer saw long-term budget trouble, but it’s turned out to be even worse than they predicted. The state’s current deficit is $9 billion; it could easily grow to $11 billion by the end of this fiscal year. Last week, Bloomberg announced job cuts and service reductions aimed at saving $1.6 billion, leaving the city staring at a gap of merely $2.4 billion next year. Cuomo’s ascension is being greeted as a great chance to finally fix the state’s fiscal mess, and Bloomberg has been cheering as loudly as anyone. The problem is that trimming the state’s budget means the city gets shellacked. “The real tension for the mayor is not whether or not he likes Andrew,” the Bloomberg adviser says. “It’s that there are two sets of goals for the mayor, and they’re conflicting. It’s hard to do all these reforms and stop raising taxes and not cut spending for all these programs that the city relies on. It’s going to put the mayor in a very tough spot, because the goals are intellectually inconsistent.”
Cuomo has been cagily elusive about exactly how he’s going to cut, but the two biggest expenses under the state’s control are Medicaid and education. New York State spends about $44 billion annually on Medicaid; about half that money is spent in the city. Education spending is more proportional to the city’s share of the state’s population: Of the $20 billion in state education aid, $8 billion goes to the five boroughs. “The mayor’s budget had assumed that state school aid over the next three years would increase by $1.3 billion,” says E. J. McMahon, a budget expert at the Manhattan Institute. “That’s not going to happen.” Cuomo knows that clubbing the city’s economy would be devastating to state revenue, so he’s sworn off tax increases, at least for now. Bloomberg has been deft at minimizing the damage from previous shortfalls. What’s likely to shield the city the most, though, is sheer political self-interest: Cuomo needs Bloomberg’s help to succeed. And here the governor-elect is already showing what he’s learned from recent Albany history.