April 2, 2009

Hon. Michael Bloomberg, Mayor

City Hall
New York, New York 10007

Dear Mayor Bloomberg,

We are writing to you to urge you not to cut capital spending in the FY 2010
budget. This is just the wrong time for such a step.

While we are mindful of the need to control our debt service, cutting capital
budget spending in this recessionary period runs counter to the economic policies of
President Obama and the Federal government which seek to stimulate our economy with
critical infrastructure spending. We believe that the time to cut back on capital spending
to reign in debt service is when the private sector is back at work and our economy has
recovered sufficiently. Doing it now will only deepen our recession and put more people
out of work.

The Office of Management and Budget estimates that job losses in the local
construction industry will be 23,000 over the next two years. Industry estimates are even
higher. Further, OMB estimates that by 2011 construction permits in the City will drop by
an astounding 80%. Cutting capital spending now by an additional 30% will only
exacerbate this problem.

During the past few years construction in this City was booming in the private
sector. City projects had to compete with private entities for construction work. Now,
with the private sector near dormant, the cost of construction is coming down fast. In fact,
between last October and January of this year, the cost of construction dropped at an
annual rate of almost 3%. As private sector construction work continues to slow, those
costs to the City should drop even further. Simply put, this is the best time for the
taxpayer to get the “most bang for the buck.”

In addition, the Congressional Budget Office estimates that the “ripple” effect in
the economy for a dollar of capital spending can be as much as $2.50. It is counter-
productive for economic stimulus money to flow to this region and have the City cut
many times more from the capital budget. Even worse, this current plan to cut the capital
budget comes on the heels of a 20% cut just last year.

There is clearly a need to control rising debt service costs. In that regard, there are
two points to consider. First, the Federal government is trying to open up credit markets
and is working to reduce interest rates. If they are successful, we will be able to re-
finance City debt at lower rates, thus effecting savings in debt service.

Secondly, even if they are not successful, this is not the time to take these steps
which will only drive more people to the unemployment lines, to social services, and into
foreclosure. Maintaining our current levels of capital spending will help us return to
economic health. When that happens, and the private sector is once again at work, then
reducing government spending to reign in debt will be more appropriate.

Over the next months, you will present an Executive Budget and the Council will
hold hearings and negotiate and adopt a budget for our City. Without a doubt, the greatest
attention will be focused on Expense Budget issues. However, we are writing to you
today so that attention is in fact paid to this critical issue.

We strongly urge you to reconsider this planned cut to the Capital Budget.

Sincerely,

LEW FIDLER
Assistant Majority Leader

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