or most of the last 25 years, in most of the country, politicians have met every public policy challenge with one solution: cut taxes. Faced with failing schools and increasing income inequality, leaders from Ronald Reagan to Rudolph Giuliani have insisted that tax cuts are the best strategy for economic growth. But if New York City is to rebuild after Sept. 11, it will have to try a different strategy.

The city's budget shortfall has ballooned to $4.7 billion, more than the entire budgets of most cities. Recession, terrorism and the Giuliani administration's decision in boom times not to save for a rainy day have left the city in an astonishingly deep hole.

Mayor Michael R. Bloomberg's proposed answer is a budget that basically combines huge spending cuts with a lot of borrowing. He also hopes that Albany and Washington will help out more than appears likely, and he wants to tax the daylights out of cigarettes (leading to the perverse situation in which parents' smoking would actually be good for school funding).

The mayor is so tax-phobic that he has even avoided calling for the return of the commuter tax, a tiny income tax on nonresidents that helps spread the cost of city services more evenly. Overall, the Bloomberg budget takes the wrong lessons from New York's past and leaves the city ill-prepared.

Cities are not built on tax cuts, and they are not sustained by irresponsible spending cuts. New York became a world center because its leaders knew that public investments in education, transportation and housing would bring businesses and people from all over world.

Such investments have kept New York's economy dynamic. However, in recent years City Hall has moved away from careful public investment. It used the thriving economy to make $2.6 billion in tax cuts, a foolish gamble that has left the city in bad financial shape.

The city's leaders now face a stark choice. They can either raise taxes or make deep cuts to a wide range of services. The mayor's budget chooses to do the latter: $350 million from schools, $80 million from day care and millions more from the City University of New York, libraries, parks and environmental protection programs. Even a program providing weekend meals for seniors is axed. Cuts of this size will have terrible effects on the lives of children and adults.

The alternative is far more sound, even if it runs against the political grain: raise taxes, on a temporary basis, to maintain our core commitments. Given the extraordinary concentration of wealth in New York City, even small tax hikes could go a long way toward balancing the budget. For instance, increasing the city's income tax rate on wealthy individuals by 1 or 2 percentage points would bring in more than $1 billion, far more than Mr. Bloomberg's cuts to education, health care or any other single service. A tax of up to half a penny on stock transfers within the city could fortify city schools by another $800 million. In both cases, the economic impact would be minimal and far better for the local economy than cuts in city services.

Over the past decade, the benefits of the boom have worked together with city, state and federal tax cuts to make New York's incomes less equal. The top 13,400 tax filers in New York City in 2001 had a combined income that exceeded that of the bottom 2.1 million, according to an analysis of the most recent available figures by the New York City Independent Budget Office. The rich really have gotten richer, and my hunch is that they are not so selfish as to be unwilling to do their share in a crisis.

By insisting on no tax hikes, the mayor is asking the least from those who have benefited the most. That approach is sure to make life harder for the thousands of moderate- and low-income New Yorkers who don't have the cash to buy their way out of problems and count on the city to help get them to work, teach their kids and care for their elders.

In polls, New Yorkers have consistently said they don't mind paying higher taxes for better services. It's a trade-off that has benefited the city handsomely over the years. The city raised income taxes during the crime crisis in 1991. A decade later, the education crisis demands we act with similar verve. Do our elected leaders have the courage to set aside bankrupt ideas about taxes in favor of a fair solution to our fiscal woes?

Daniel Cantor is executive director of the Working Families Party of New York State.