Analyze This: Lowenstein Knew Where the Bucks Stopped

In May 1996, Ronnie Lowenstein left a secure job as an economist with the Federal Reserve to become Chief Economist of the new Independent Budget Office, which three very different Mayors had tried to head off and City Council Speaker Peter F. Vallone had joined them in opposing.

The IBO grew out of the 1989 City Charter Commission's recommendations that were adopted by the voters that November in a referendum. Its existence had been delayed by lawsuits filed by the heads of city government, even as reformers both within the Council and in other government agencies clamored for it as a source of accurate, objective information about the city's finances.

OMB's Hidden-Money Tricks

The prime repository of information about the state of the city's finances was the Mayor's Office of Management and Budget. 

The City Council had its own Finance Division, with capable analysts who could often ferret out the nooks and crannies where OMB had stashed money that could magically appear to cover a union contract settlement that at first glance might have seemed generous enough to require a tax increase to keep the budget in balance. 

This allowed the Council to locate the money for its own pet projects, not least of them additional police hiring—always a popular item in an election year—that cut into the spending by the Mayor that hadn't been included in the original budget plan.

Having an agency that under the Charter was entitled to detailed information about revenues and spending served the public interest, Ms. Lowenstein observed during a Jan. 14 phone interview, but "neither the Speaker nor the Mayors thought the IBO was a good idea."

Set Budget Helped

Mr. Vallone, who by the time she took the job had more than a decade as Council Speaker, had misgivings, she said, about a new agency "with a guaranteed budget line that didn't report to anybody. Having an agency Director with a four-year term would allow it to do pretty much anything."

The IBO, under the Charter amendment, from its outset was assured of funding equal to 10 percent of whatever the Mayor and Council authorized for OMB.

That didn't mean its financial freedom exempted it from the slings and arrows of the first Mayor who had to live with it—Rudy Giuliani. He sought to abolish it through legislation that didn't advance, and twice submitted recommendations for its elimination via the same kind of voter referendum that created it. But, Ms. Lowenstein said, they never made it onto the ballot.

"We had some amount of editorial support, notably from The Times," she said. That backing had a practical reason beyond its civic-mindedness: the information the IBO supplied to reporters and other interested parties offered a truer picture of how rosy or bleak the city's finances were than Mayors were eager to share.

Torpedoed 'West Side Yankees'

The agency also offered analysis of economic-development projects, and Ms. Lowenstein, first as a key adviser to original IBO Director Doug Criscitello, and later when she succeeded him in 2000, was a particular thorn in the prickly Mayor's side regarding his bid to build a new stadium for the Yankees on Manhattan's West Side.

Mr. Giuliani claimed the stadium would pay for itself in terms of the economic benefits that moving the team from its Bronx home would provide to the city. Ms. Lowenstein oversaw an analysis of this claim, giving him the best of it on matters including an assumption that the players, many of whom lived in New Jersey, would "live in town" and thus be subject to city income taxes.

That still didn't make a Manhattan stadium a self-funding proposition, and didn't come close, either, said Ms. Lowenstein, adding, "It's very hard to build a stadium with public funds and have it pay for itself."

On another occasion, she said, former Mayor Ed Koch, who by then was writing a weekly column for whoever would run it, called the IBO to find out what the city was spending on education, and discovered that its per-student funding had declined under Mr. Giuliani.

Since Mr. Koch cited the budget office as his source for the critical column, Ms. Lowenstein said, "We got blasted for that."

'Our Best PR Person'

During a 2014 CUNY-TV interview with ex-Councilwoman Ronnie Eldridge, she noted wryly that Mr. Giuliani "was almost our best [public-relations] person...all a reporter had to do was show him our numbers and he would start venting." 

Mr. Vallone had become more accepting of the IBO as it established itself and became a particularly useful tool for other Council Members. And when he and Mr. Giuliani left office at the end of 2001, and were replaced by Michael Bloomberg as Mayor and Gifford Miller as Council Speaker, Ms. Lowenstein said, "Without the animus from City Hall, it became easier for us to get information from all the agencies."

There was still some resistance from individual departments, she said, because "we might put out information that might not be convenient for them or could be embarrassing."

But when Mr. Bloomberg, after state legislators after he took office in 2002 gave him control of the city school system that they had denied Mr. Giuliani, sought renewal of that power late in his second term, one condition attached was that the IBO's funding was raised to 12.5 percent of what was allocated to OMB to ensure that it had the capability to produce accurate numbers concerning school spending. Its budget for the current fiscal year is $6.6 million, and its staff grew to 38 employees.

Benefited DOE, Too

"Now we've got remarkable, granular information," Ms. Lowenstein said regarding how much money the Department of Education receives from city, state and Federal sources and how it is spent. She said this had worked to DOE's advantage as well, because having that information become public reduced suspicions that it was cooking the books.

That doesn't signify that the IBO has ceased to be an irritant to Mayors. In 2015, Mayor de Blasio agreed to a deal under which the Blackstone Group bought the giant Stuyvesant Town housing complex for $5.3 billion under a deal that required it to limit rents at 5,000 of its apartments for at least 20 years, keeping them rent-stabilized until at least current tenants moved out.

Early in 2018, the IBO issued an analysis of the deal that found it wasn't nearly as good as the Mayor had suggested, because 1,800 of those apartments by law would have remained rent-stabilized even without Blackstone's agreement.

"It showed it was a very costly deal for the city," Ms. Lowenstein said. "When de Blasio was asked about it, his exact quote was, 'God bless the IBO,' " in a tone that made clear he didn't mean it.

Keeping Mayors Honest

It was one more example, she said, of her agency's value as "a small counterweight to OMB. Certainly in terms of budget transparency, OMB is not there to serve [the public]—it's there to serve the Mayor. A Mayor can attempt to control spending by artificially low-balling the size of the revenue estimate."

While there were warnings last year that Mr. de Blasio was spending too much of the Federal aid provided to the city for pandemic relief rather than stowing away a good chunk for tougher times, Ms. Lowenstein said, "The near-term financial situation is a lot better than we had anticipated."

Initial estimates of budget gaps of from $4-$6 billion beginning in the coming fiscal year have faded, and the IBO projects the city will end this fiscal year June 30 with a surplus of $940 million. That can be rolled over to cut projected gaps in the two coming fiscal years to $1.4 billion and $1.6 billion.

"These are gaps of a size that the city has easily managed in past years," she said. "But I do think there are real long-term concerns as to whether we get tourism back to where we had it," what degree business travel will return to its old levels now that so many transactions are being been handled remotely, and whether employees are going to return to their offices on a full-time basis if and when the coronavirus comes under control.

The IBO has been wrestling with its own office issue since early December. "We were fully remote for quite some time," Ms. Lowenstein said. "The staff really stepped up during COVID; some people were even more-productive."

There had been a plan to gradually bring everyone back starting last Dec. 6, with staffers coming in two days a week and then going to three days, but that went asunder when Omicron began to take its full effect and infections rose dramatically.     

About to Retire

The interchange of ideas with staff is what she'll miss most when all this comes to an end for her Jan. 21, as she retires at age 71. Ms. Lowenstein plans to spend more time with her family, including four young grandchildren, while staying involved as a board member of Ryan Health, an Upper West Side community health center that provides care to those who can't afford it. 

George Sweeting, IBO's Deputy Director, will replace her on an acting basis, with the IBO's advisory board, as prescribed by the City Charter, recommending a successor to be voted upon by a committee that includes representatives of the City Comptroller, the Public Advocate, and a designated Borough President and Council Member.

Asked whether there had been a point during her 25-plus years as Director that she considered moving on, Ms. Lowenstein said, "I never looked. How often do you get the opportunity to build an organization that will provide objective data and rigorous analysis?"  

She had thought she would eventually want to work for the Congressional Budget Office, but then the IBO was born and allowed her to remain in New York and pursue her primary interests.

Where others might see a dizzying array of numbers, Ms. Lowenstein said the opportunity to regularly analyze education issues and property-tax issues was "what keeps it new and fresh and exciting. This was as close as I was going to get to CBO."