MAYORS AND MONEY AMERICAN POLllICS AND POllTICAl ECONOMY SERIES EDITED BY BENJAMIN I. PAGE MAYORS AND MONEY FISCAL POLICY IN NEW YORK AND CHICAGO Ester R. Fuchs THE UNNERSIN Of CHICAGO PRESS CHICAGO AND LONDON The University of Chicago Press, Chicago 60637 The University of Chicago Press, Ltd., London 0 1992 by The University of Chicago All rights reserved. Published 1992 Printed in the United States of America ISBN 0-226-26790-3 (cloth) ISBN 0-226-26791-1(paper) Library of Congress Cataloging-in-Publication Data Fuchs, Ester R., 1951- Mayors and money : fiscal policy in New York and Chicago 1 Ester R. Fuchs. p. cm. - (American politics and political economy series) Includes bibliographical references and index. 1. Budget-New York (N.Y.) 2. Budget-Illinois-Chicago. 3. Fiscal policy-New York (N.Y.) 4. Fiscal policy-Illinois- Chicago. 5. Municipal finance-United States. 6. Intergovernmental fiscal relations-United States. I. Title. 11. Series: American politics and political economy. HJ9289.N46F83 1992 336.3'09747'1-dc20 91-31503 CIP @ The paper used in this publication meets the minimum requirements of the American National Standard for Information Sciences-Permanence of Paper for Printed Library Materials, ANSI Z39.48-1984. for my parents Naomi and Max fuchs Preface ix Acknowledgments xiii 1 Toward a Political Theory of the Urban Fiscal Crisis 1 2 Fiscal Crisis and Fiscal Stress: A Comparative Perspective 3 Depression-Era Fiscal Crises: Political Lessons for Urban Policymakers 4 City Budgets and the Urban Fiscal Condition: Trends in Expenditures 5 City Budgets and the Urban Fiscal Condition: Trends in Revenue and Debt 6 Intergovernmental Relations, Legal Arrangements and the Urban Fiscal Policy Process 7 Interest Groups, the Political Party, and the Urban Fiscal Policy Process 8 Conclusion Appendix A: Mayoral Administrations Appendix B: Some Methodological Issues Appendix C: Census Data Categories Notes Bibliography Index I grew up in New York City during the 1960s, and my first political memory features Mayor John Lindsay and the blizzard of 1969. As anyone from the borough of Queens will tell you, Lindsay's cardinal sin was failing to remove nineteen inches of snow from the streets for an entire week. At the time, I thought this failure was wonderful, since schools were closed and there was no greater fun than playing in the snow. My parents, on the other hand, were less delighted. They and their friends were outraged at the mayor's apparent incompe- tence, which created untold personal hardships and missed days at work. I was soon to learn that this "incompetence" was a theme of Lindsay's first administration, which included strikes by sanitation workers, teachers, city hospital nurses and doctors, welfare workers, and police. Lindsay was actually rejected for a second term by his own Republican party, but managed to get reelected by running as a LiberaUIndependent and won the mayoralty with only 42 percent of the vote. I also remember how, despite the erratic politics of his first term and his narrow 1969 victory, Lindsay the patrician gained pub- lic respect during the "days of rage," when ghetto violence spread across urban America. John Lindsay rolled up his shirt sleeves, walked through Harlem, and kept the peace in New York City's most volatile neighborhoods. I was told by a good friend who grew up in Chicago in the 1960s about her first political memory. It too was about the mayor. While in grade school, she thought that the honorific title of the city's chief ex- ecutive was "mayordaley." It was not until years later that she real- ized there was a distinction between the office and the man who had occupied it for over twenty years. "Mayordaley," boss of the Demo- cratic machine and resident of working class Bridgeport, was ex- tremely popular among parents and children. He was responsible for 'the city that works," especially keeping the streets clean. He was PREFACE also responsible for the "shoot to kill" orders during Chicago's 1968 riot. It is not surprising that these memories center on individuals. New York and Chicago are two cities where the cult of personality looms so large that individuals rather than institutions or events tend to be the focus of political histories. While it is hard to imagine New York City without John Lindsay or Chicago without Richard J. Daley, the historical presence of these two men in their own cities is not an acci- dent. The individual personalities of these mayors are not really as im- portant as what Lindsay and Daley represented politically. John Lindsay would never have been elected mayor of Chicago, while Richard Daley would never have resided at Gracie Mansion in New York City. The structure of politics in these two cities explains why these men were elected mayor. The historical and comparative perspective of this book provides insight into how political structures develop over time and constrain the policy choices available to individual mayors. Each city has its own rich political history which contributes to the development of in- stitutional relations and a local political culture. It is within this con- text that mayors are elected and their policy choices are made. Fiscal policy is the focus of this book, and it too must be understood in the context of local political interactions, something that has escaped the attention of most practitioners and analysts. The isolation of fiscal policy from its political roots was most apparent during New York's 1975 fiscal crisis. While New York was struggling to remedy its fiscal crisis, its polit- ical leadership was searching for scapegoats and excuses. Ide- ologues from both the right and the left assisted the politicians in this time-honored activity. The conservatives took great pleasure in blaming "greedy unions" and "lazy" welfare recipients for the city's near-bankruptcy. The leftists found their villain in the capitalist system; the urban fiscal crisis was merely a symptom of the inevi- table self-destruction of world capitalism. The ideological middle, as usual, split. There were those who viewed the city's condition as a consequence of "bad management, the reformers' traditional la- ment, and those who saw New York as a victim of national economic trends, beyond the control of local decision-makers. All of these ex- planations had one characteristic in common: they succeeded in ignoring the interaction between politics and the economy and con- sequently divorced localpolitical decisions from fiscal outcomes. The first objective of this book is to demonstrate that politics has an important effect on a city's fiscal condition. A comparison is made be- PREFACE tween fiscal policy-making in New York City and in Chicago because of the similarities in the two cities' local economies and the stark con- trast between their political structures and fiscal conditions in 1975. The book's second objective is to untangle the complex political inter- actions in the fiscal policy processes of these two cities in order to develop a theoretical framework for understanding why some Ameri- can cities have experienced fiscal problems and others have not. Fi- nally, I hope that a better understanding of the structure of fiscal policy-making will make it possible to create new forms of urban gov- ernance that improve the quality of life for all those who struggle with the daily problems of living in American cities. Writing a book can be an overwhelming and lonely task, but I am lucky to have found an intellectual community which sustained and encouraged my efforts. At the University of Chicago I was fortunate to benefit from the wisdom of Ira Katznelson, Paul Peterson, Ben Page, David Greenstone (may he be remembered for a blessing), and Terry Clark. Ira and Paul helped me formulate a theoretical frame- work for analyzing the urban fiscal crisis grounded in the rich politi- cal histories of New York City and Chicago. Their personal warmth and continuous encouragement enabled me to complete this project. I must thank Terry for hiring me as a research assistant in his "Fiscal Strain" project and for patiently introducing me to the nightmare of census data and city government finances. Ben provided continuous intellectual stimulation and helped me make the important theoreti- cal link between urban problems and federal policy. I am flattered and grateful to have this book included in his American Politics and Political Economy Series. I am thankful to Barnard College and the Columbia University Semi- nars for providing me with research support and to my colleagues in the Political Science Department for their encouragement. Jim Caraley has been a greatly appreciated colleague and friend whose comments on my work and personal support have been invaluable. I owe a very special gratitude to my colleagues and fellow travelers Bob Shapiro, Bill McAllister, Paula Newberg, Jeff Tulis, and Richard Briffault. Their intellectual inspiration, warm support, and genuine encouragement will never be forgotten. I must single out Bob, a pre- cious friend and colleague, whose assistance had no limits and whose support has been unwavering. My sincere appreciation also goes to my friend and colleague Harpreet Mahajan, whose computer skills, graphic wizardry, and unending patience make this book dazzle with numbers. My thanks to Frank Kruessi, Bill Grimshaw, and Paul Green for keeping me in touch with Chicago politics despite my dis- tance from the action. A special thank you to Susan Moore Juda for helping me find the strength to focus on life's blessings. I also want to thank the women of Barnard and the other students who provided research assistance and data collection at various stages of this project: Violanda Botet, Miriam Feldbloom, Sherry Jetter, Naomi Braine, Errika Kalomiris, Sara Offenhartz, and Bonnie Rosenberg.