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Livery Cab Lawsuit Leaves $1 Billion Hole in City's Budget

By Jill Colvin | June 7, 2012 2:50pm
A lawsuit halting the sale of new taxi medallions could drive a huge hole through the city's budget.
A lawsuit halting the sale of new taxi medallions could drive a huge hole through the city's budget.
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Flickr/Flickr/Alex E. Proimos

CITY HALL — A Manhattan judge’s decision halting the city from moving forward with plans to allow livery cabs to begin accepting street hails is not only threatening to derail taxi service in the outer boroughs. It could also wreak havoc on the city’s budget.

A judge last week issued a temporary injunction halting the city from going forward with the so-called "five borough taxi plan," which would legalize livery street hails in northern Manhattan and the other boroughs, because the City Council was not consulted on the deal.

That has thrown a loop in Mayor Michael Bloomberg's 2013 budget plan, which relies on a whopping $1 billion from the sale of 2,000 new yellow taxi medallions. As a condition of the original deal, those medallions can only hit the market once the livery cabs hit the road.

"It is worrisome," Bloomberg told reporters earlier this week when asked about the potential impact. "If we were to not get it, it would be very serious."

The concerns were echoed by Bloomberg's budget director, Mark Page, in front of the City Council Wednesday.

"It's hard to know where we stand in terms of the medallion sale, the timing of it and what it's going to be worth," he said, according to NY1.

The hitch is renewing criticism from many who raised alarms months ago about the administration’s reliance on temporary fixes and one-shot deals, including the taxi money, in their current budget plan.

“The city’s reliance on one-time sources of revenue such as the taxi medallion sale or the Retiree Health Benefit Trust masks a large structural imbalance in the financial plan,” said City Comptroller John Liu. He also noted that, in its budgets for fiscal years 2012 and 2013, the administration relied on more than $3.1 billion in one-time revenue sources.

Maria Doulis from the Citizens Budget Commission, an independent watchdog group that has also criticized Bloomberg's budget strategy, said there was already uncertainty about whether the city would be able to sell the new medallions and what their value might be before the legal blows.

"Now the move has become even more risky," she said. 

If the money fails to materialize, the city could be forced to make additional cuts, which advocates are already warning could have a dire impact on programs, including after-school centers and child care.

"It’s a fairly substantial hole that you would have to fill," said Doug Turetsky, chief of staff of the city's Independent Budget Office, who noted that the 2013 budget is already counting on $1 billion in new spending cuts and revenue raising from city agencies.

"A billion-dollar hole in the budget plan is going to be something to wrestle," he said.

The mayor's office and City Council have until the end of June to come up with a final budget deal.