The amount involved mere fractions, but Rudolph Giuliani proudly made his point last week. For the first time since 1978, a mayor of New York City was proposing a budget smaller than the previous year's. The actual difference -- about $102 million sliced out of $31.6 billion, or just 0.3% less than the current budget -- still caused critics to carp and unions to bawl. But Giuliani remained adamant. "Disagree with us about how we distribute the pie," said the Republican, "but agree with us that it has to be a smaller pie." It was Giuliani's most substantial signal that New York City -- the biggest spender of them all -- was joining a movement trying to transform big- city gimme government. Wielding corporate-style tactics, the CEO mayors are taking on city hall.
In many large U.S. cities, a new breed of chief executive is performing fiscal triage. Urban reformers from both parties have fixed on programs grounded in austerity, responsibility, safer streets and the wooing of business through lower taxes. Managers rather than politicians, they apply private-sector solutions to chronic urban woes and switch over to the technocratic jargon without pause. Such savants include Bret Schundler of Jersey City, New Jersey, Frank Jordan of San Francisco, and Stephen Goldsmith of Indianapolis, Indiana, the so-called Prince of Privatization, who refers to his citizens as "customers." Goldsmith believes in "marketizing" his city -- making every sector of it more competitive. He adds, "We have to ratchet down costs as much as possible."
The mayors see little alternative. Since 1981, two-thirds of federal support for the cities has dried up while the urban problems of crime, drug use and homelessness have burgeoned. Corporations and the middle-class families they employ have fled to the suburbs, taking their potential tax payments with them. With doors shut in Washington, mayors were forced to look at their own bottom line.
The pioneer among the new pragmatists is Philadelphia mayor Edward Rendell, 50, a moderate Democrat. "No more whining that we don't get enough money from state capitals and from Washington," says the former prosecutor. "No more looking for the cavalry to bail us out." When he took the reins in 1992, Philadelphia carried a $200 million deficit and municipal bonds with junk- level ratings. Its citizenry, meanwhile, was financially anemic from 19 tax increases in 11 years. Fifteen months later, Rendell had engineered the city's first surplus since 1987 without a tax boost.
No budget item or entrenched interest group was spared Rendell's whittling, including the municipal unions. After a failed strike, the members accepted a 30-month pay freeze, cuts in health benefits and a reduction in time off that saved the city an estimated $93 million a year. An additional $32 million has been pared by allowing 21 private companies to run everything from the maintenance of the Philadelphia Nursing Home to janitorial services at city hall.