Waste Not, Want Not

By John F. Dickerson

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.

Popularity, however, cannot be taken for granted. Rendell has had 75% approval ratings, but last week Philadelphians overwhelmingly defeated a proposition that would have modified the city's charter and given him more power to create and abolish departments. Though not a permanent blow, it suggests Philadelphians still want him to be accountable. Critics also feel his cuts hurt those who most need services. Rendell sees no other avenue. "What I understand, and a lot of liberals don't, is that unless we cut waste, unless we're more efficient, unless we can create a better business environment, there's not going to be any money to do other things."

In Houston the municipal charter gives Robert Lanier more power than almost any other big-city mayor. Unlike Rendell, he has wide appointment powers and a vote on the city council. Still, the wealthy former banker and real estate developer shares the same manage-your-way-to-profits attitude. "When I ran an apartment project," he says, "I asked people how they liked it. If they moved out, I asked them why. It's no different here." Judging from the 90% majority that voted him into his second term last fall and his consistent 80% approval ratings, the tenants are happy. Why? He said he'd put more cops on the street, and he did -- 760 of them, bringing the total to 4,673. Houston, the fourth-largest U.S. city, led the top 50 cities with the largest drop in crime rates during 1992, Lanier's first year in office. Since then, the rate has continued to fall. In addition to making the streets safer, Lanier has made them cleaner, adding new pavement, sidewalks and streetlights to some of Houston's worst parks and neighborhoods.

More important, Lanier -- whose desk is lined with the surveys, status reports and statistical tables that are his guides -- has been able through a combination of financial shrewdness and better management to squeeze $130 million more out of the city budget. His opponents say his financial manipulations will end up ballooning the city's debt. In defense, Lanier points to the overwhelming endorsement of his financial program by the city's business community. At his urging, Texas Commerce Bank opened a now thriving branch in the city's crime-ridden fifth ward. Last year the Amerada Hess oil company consolidated its offices in Houston. It was the largest corporate move into the city in the past 15 years. Since Lanier came to office, Houston has begun to reverse the exodus to the suburbs, adding 50,400 new jobs.

In Los Angeles, Richard Riordan has a different range of problems -- and a city that ranges over 466 sq. mi. and an even greater sprawl of bureaucracy. The former corporate lawyer has skirted, ignored and bucked the system ever since he won election in a bitterly fought campaign last June. One of his rules for cutting through red tape: "It's easier to get forgiveness than permission." Last month he delivered his first budget, an ingenious $4.3 billion package that would pay for his 18% increase in spending on police, to $463 million, while erasing the $228 million deficit Riordan was handed when he took office. The budget also includes the first substantial increase in municipal services since 1991.

As the mayor of the nation's most culturally and racially diverse city, Riordan takes a hard-nosed business approach that includes constant coalition building. "The name of the game is bipartisanship," says the mayor, "and I would hope people see me as a bipartisan problem solver because these are human issues, not political issues." Riordan's alliance with the city's first black police chief, Willie Williams, has helped build bridges to minority communities. "Riordan's positive relationship with Williams is one of the great strengths as far as the black community is concerned," says Charles E. Blake, the influential pastor of the West Angeles Church of God in Christ.

In cities like Los Angeles and Houston, the mayors rally support for their programs by including a huge dollop of public safety measures in their reforms. Rudy Giuliani has done the same thing to similar effect. But budget watchdogs claim that the police and fire agencies he has spared from budget cuts are as ripe for fat trimming as any other. Echoing his counterparts elsewhere in the country, the mayor reiterated that crime control was not negotiable. "Public safety is the critical issue for all New Yorkers and for all people who are going to visit New York or consider visiting New York. We're going to spare nothing to keep them safe."

But while Rendell and Lanier -- and, to some extent, Riordan -- have established their beachheads against the old cultures of city hall, Giuliani has only just begun. He is a Republican in a Democratic town, facing a Democratic city council. Days before his budget announcement, Giuliani bowed to public pressure by restoring the department of AIDS services, which was slated to be cut. While he may be acting like a manager, the mayor knows that sometimes he still needs to be a politician.

With reporting by S.C. Gwynne/Houston, Jon D. Hull/Indianapolis, Sylvester Monroe/Los Angeles and Janice C. Simpson/New York