A city still aglow over Bloomberg

The union hall was packed with tough Democratic labor leaders, none of whom had supported Mayor Michael Bloomberg during the fall election.

Still, the head of the Central Labor Council, Brian McLoughlin, gave the new leader a gushing welcome, calling him "the right man at the right time" for the difficult job of rebuilding New York.

Donned in a gray suit, the new Republican mayor rose to the podium and looked around. "That's quite an endorsement, considering how many I got from this group this fall," he said. The room roared its approval.

Welcome to Michael Bloomberg's New York. With a dry wit, the billionaire businessman has so far charmed this gritty yet still traumatized city - at least for the for first month. True, he's not Rudolph Giuliani, his operatic predecessor who reigned in this unruly metropolis like a stern father over eight years.

Bloomberg, rather, is like a smart older brother you trust to take over the family business.

And for a man who spent $72 million of his own money for the privilege, he's not afraid to rub shoulders with other New Yorkers. He rides the packed Lexington Avenue subway every morning. He works in a cubicle, just like the rest of this staff. He's reached out just as much to black activists and the homeless as to Republican powerbrokers.

It's been a reassuring first month, especially for a city recovering from Sept. 11 and facing its worst fiscal crisis in a generation. But the honeymoon could soon be over. In his State of the City address this week, the mayor signaled it was time for sacrifice, and he laid out a blueprint for a modernized, more flexible, and smaller city government.

"What he's proposing is bold, good, promising. I applaud the vision," says political analyst Fred Siegel. "But it will be very difficult to implement. He's going to find out he's going to meet a lot of resistance."

And the first opposition could come from the municipal unions. Bloomberg made it clear he thinks New York City's government is too big for the times. At more than 255,000 employees, the municipal workforce is one-seventh the size of the federal bureaucracy. With an expected deficit of $3 billion to $4 billion over the next three years - and a pledge not to raise taxes - Bloomberg said the city just can't afford it. "Our people serve 8 million citizens. [Washington] serves 250 million," he told the City Council with executive-like bluntness.

He called on all the city's elected officials to sacrifice before asking the people to, and offered to send his own staff in if they had trouble figuring out where to trim. That sent an uncomfortable chuckle rippling through the council chambers. "We think it's unfair and wrongheaded just to look at cutting expenditures and not to look at raising taxes," says Lee Saunders, head of the largest union of municipal workers.

To date, Bloomberg has deftly deflected most direct political conflict. For instance, when questioned about a deal former Mayor Giuliani had cut with the Yankees that would allow them to leave town on a whim, Bloomberg didn't attack either party. He simply praised George Steinbrenner, saying he was too good a man to do that to New York. When challenged about the exclusivity of a $15,000-a-head fundraiser at his private mansion for Gov. George Pataki, Bloomberg joked that he didn't know if he could afford to go himself, since he makes only a dollar a year as mayor.

"He doesn't boil over the way Giuliani used to. He's continued to respond in ways that look thoughtful," says Robert Shapiro, a professor of political science at Columbia University. "But he's only now on the verge of having to deal with all of the big problems."

And they are enormous, from navigating the highly charged controversy over what to build at ground zero, to keeping businesses from fleeing, to overhauling the city's failing schools. Bloomberg has made it a top priority to abolish the Board of Education. To do that, he could alienate many people with deeply vested interests.

"My suspicion is that if Bloomberg is going to want to do anything, he's going to have to make enemies," says Mr. Siegel. "The interesting question is, Can Bloomberg's 'let's-do-it-together approach' accomplish very much of his agenda? That's the nub of it."

The people he's reached out to - many of whom were in hostile and legal confrontations with the Giuliani administration - are wondering as well. Mary Brosnahan of New York's Coalition for the Homeless is "guardedly optimistic." The best way to solve the homeless crisis is to invest in affordable housing, she says. Yet the housing department, like most of the city, has been asked to cut its budget by 20 percent to deal with the fiscal crisis.

"I'm just hoping as a sensible businessman he looks at the hard economics and understands to the extent that he puts off sensible investment, he's going to pay many times over for emergency services," she says.

That's just one of a myriad of seemingly impossible challenges facing New York. But in the new post-Sept. 11 spirit, a general sense prevails that this famously impatient city will give him time to get his bearings.

"It's not that we feel sorry for a billionaire who's mayor of New York," says historian Kenneth Jackson. "But with the recession and the war on terrorism, we do feel compassion for the challenge he's facing. His honeymoon could last longer than others."