MR. GIULIANI'S BUDGET CHOICES

ith sizable budget surpluses flowing from New York City's economic boom,
Mayor Rudolph Giuliani could easily have proposed major new spending
programs and tax cuts for next year. Instead, he has prudently chosen to
stick with fiscal discipline. The financial plan outlined by Mr. Giuliani
yesterday calls for selective new expenditures for education and anti-drug
programs, as well as elimination of the sales tax on clothing and other
modest tax reductions. But these would be paid for with spending cuts
elsewhere. His projected $35 billion budget thus lays the groundwork for
economic stability in the city.

Mr. Giuliani's most flamboyant gesture was aimed at the city's community
college system, which he asserts spends too much on remedial programs for
students who cannot read, write or do arithmetic at college levels. In a
threat certain to rile the City University's leadership and the State
Legislature, he suggested he might withhold the city's portion of the
community colleges' budget if they do not shut down their remedial programs
and farm them out to private institutions.

That sounds, however, as if Mr. Giuliani has fired a warning cannon rather
than proposed a realistic solution. He will need to demonstrate why he
believes that a wholly new remedial approach would work better than existing
remedial programs, and will have to explain what impact his approach would
have on traditional open admissions policies in the community colleges.

This has been a year of budget surpluses at all levels. Earlier in the week,
President Clinton took a cautious approach by proposing to set aside the
first Federal surplus in 30 years for use in financing the long-term deficit
in the Social Security system. By contrast, Gov. George Pataki is recklessly
proposing to use New York State's surplus for a spending increase to bolster
his re-election campaign.

Mr. Giuliani comes out somewhere between these two approaches.

He declined to use the surplus to pay down some of the city's mountain of
long-term debt, the most prudent fiscal approach. Instead he would simply
close budget gaps projected next year and the year after.

Because this is a state election year, the debate with the City Council over
the budget could be especially lively. The Council Speaker, Peter Vallone,
is running for governor, and he wants the city to set more money aside in a
reserve fund that could be tapped in the event of an economic downturn in
the years ahead. He also proposes to cut the city's personal income tax
instead of the business and sales taxes that Mr. Giuliani wants to cut. But
these will be quibbles over happy choices.

The Mayor's budget contains no new ideas for improving the productivity of
the city's work force, including the use of civilians to replace deskbound
police officers. But its priorities are generally sensible, there are very
few egregious gimmicks, and the overall spending restraint reflects a sound
stewardship of the city's finances.

Copyright 1998 The New York Times Company