In an unusual moment, Mayor Bloomberg was left in an embarassing position over the past two weeks.  First, he announced that he would not be mailing out the property tax rebate to New York City homeowners.  Then, his Budget Director announced at a City Council hearing that the Mayor does not have the authority to hold back those checks.  Then the Mayor responded by saying he would not mail the checks out until June.  Ouch!!

I have been quite critical of Bloomberg in the past few months.  I found his power grab for a third term to be an outrageous act of hubris.  While he has been, in my mind, a satisfactory Mayor, the City could go on with new leadership.  Without letting that single act shade my objectivity, I must say that Bloomberg has it right on the rebate.

The property tax rate is set by City Council in order to meet the financial obligations of the City.  It is the only tax that can be decreased or increased without the State Legislature's approval. 

In Bloomberg's first term, he coerced the Council into raising the property tax rate by 18% in response to the economic distress caused by 9/11.  This increase proved to be amazingly unpopular with City residents and the Mayor watched his popularity plummet.  Reacting to those disapproval ratings, the Mayor came up with the $400 solution, the property tax rebate.  Why not?  Sprint does it all the time with its cell phones.  It worked as a marketing tool for phones, why wouldn't it work for a Mayor's approval rating?

While on the surface this appeared to be a grand gesture, I found it terribly patronizing.  There was our rich Mayor giving us money just as his foundation gives money to all those community groups that support him.  Compounding this distasteful aspect of the rebate was the fact that the property tax should have been lowered if the City was collecting more funds than it needed for its operations.  This rebate was nothing more than a Seinfeld "re-gift", and in this instance, the gift belonged to the recipient in the first place.  

Had the surplus of funds been handled in a non-political, professional manner, the Mayor would now simply be requesting an increase to the property tax rate.  Instead, he has to ask for both an increase and permission to withhold the rebate.  What kind of convoluted tax policy is that?

I understand that tax increases are always political, but the issue of the tax rebate has taken the matter from the ridiculous to the sublime.

It was entertaining to watch David Weprin, playing Perry Mason, ferret out the truth about the Mayor's legal power to withhold the rebate.  A stroke of brilliance on Weprin's part, the only thing about which he seemed disinterested was whether or not the City needed the funds.  The Finance Chair certainly did not instill confidence when he found Mark Page, the Budget Director, guilty as charged.

Then there was Lew Fidler.  He summoned up the image of Mrs. Goldstein, the homeowner.  Mrs. Goldstein has come to rely on those checks these past seven years.  I wonder whether or not Councilman Fidler had any conversation with Mrs. Smith, the tenant, who has never received such a check.  If this is about wealth distribution, then shouldn't need play some role in the distribution formula?

The most memorable of all, however, was Controller Bill Thompson.  He was very supportive of the Council's demands to release those checks.  Why shouldn't he be?  His role in the City's finances is very limited.  He believed that the Mayor only needed to be "creative" with the budget in order to reduce expenses for the billions of dollars of deficit the City is facing next year.  Of course, he gave no concrete examples.  We wouldn't expect him to.  Someone should do an analysis of the Controller's Office budget to see how creative he has been in handling the finances of which he has direct control.

The importance of the $400 rebate is minimal at best.  What is critical is that our City elected officials wake up and smell the coffee.  As the finance industry contracts in unprecedent proportions, and retail sales plummet to lows we have not seen in decades, and home values become lower than the mortgages that supports them, the City's entire economy will need to be realigned.  I hope that the men and women we entrust with our financial well-being are up to the task of identifying more important responses than saving the $400 solution.