Big Government in the Suburbs

With Long Island and Westchester trading charges over who is more overtaxed, and reports blaming duplicative and inefficient government on Long Island for its loss of competitive advantage compared with places such as Fairfax County, Virginia, I thought I’d compile some public employment and payroll data to see how these places compare with Fairfax, similarly affluent suburban counties around the country, a few other affluent suburban counties in the region, and U.S. average. Based on this data, we find that though the counties differ from each other to some extent, Nassau, Suffolk and Westchester counties all have high taxes in large part due to an unusually large number of unusually well-paid public school and police employees. Public employment is also relatively high in amenities such as parks and recreation and libraries. It is also likely, however, that these counties suffer from the effects of being fully developed and aging communities, with current residents paying rising bills for Medicaid-financed senior services, and for debts, pensions and retiree health benefits inherited from the past. In other words, they are facing the same difficult transition that New York City did in the 1960s and 1970s.

The data in the attached spreadsheet is for 2002 because the U.S. Census Bureau only collects publishes local government data at the county level in Census of Governments years, publishing more limited statewide data in other years. It is possible that the Office of the State Comptroller could provide data in other years that is comparable to the U.S., New York Statewide, and New York City data I posed here http://www.r8ny.com/blog/larry_littlefield/new_public_employment_and_payroll_data_shows_spitzer_s_budget_the_best_of_the_three.html if it chose. The next Census of Governments is for 2007; data should be out in 2009.

The number of full time equivalent local government elementary and secondary school instructional employees (teachers, principals, superintendents, teacher’s aides, librarians, guidance counselors) was 1,533 per 100,000 U.S. residents in March 2002. In Nassau, Suffolk and Westchester it was 1,732, 1,815, and 1,659 respectively. Above average public school employment is not unusual in the New York Metropolitan area, with the glaring exception of New York City. The figures were 1,738 in Bergen County, NJ, 1,925 in Monmouth County, NJ, and 1,733 in Fairfield County CT that year. Instructional employment was also higher than average in Fairfax County Virginia (1,608), Cobb County, GA (1,792), and Dallas (1,741) and Harris (Houston – 1,821) counties in Texas. Other counties across the country, however, got by with far fewer instructional employees, including Orange (1,156) and Santa Clara (1,315) counties in California, King County (Seattle – 1,007) in Washington State, and Mariacopa County (Phoenix – 1,265) in Arizona.

The New York suburbs also pay their public school instructional employees unusually well. As discussed elsewhere, excluding the high-paid Finance sector the average private sector worker earns about 33% more than the national average in Downstate New York, and pay in excess of the national average by 25% to 39% might be considered somewhat normal here. But public school instructional employees were paid 58.8% more than the national average in Nassau, 51.2% more in Suffolk, and 52.8% more in Westchester in March 2002. While pay levels were also high in Bergen (46.2%), in neither Monmouth nor Fairfield were teachers paid that much. Average pay was also substantially lower in Fairfax, Santa Clara, and King counties, although these are located in high-cost metro areas as well.

In non-instructional elementary and secondary school employment, Nassau (760), Suffolk (873) and Westchester (784) counties had far more public employment per 100,000 residents than the national average (670) or just about anywhere else, save the rest of New York State. Fairfield had 537; Bergen 528; King 377; Santa Clara 413. The other counties with high employment in this category were Fairfax (776) and Harris (842), so perhaps the smaller number of school districts in Fairfax didn’t help after all. New York City’s non-instructional employment per 100,000 residents is, and always has been, very low. The payroll per non-instructional employee was 51.6% higher than the national average in Nassau, but lower and comparable with Fairfax and many others in Suffolk and Westchester.

The Downstate Suburbs, among the wealthiest places in the Untied States, don’t receive a large share of state school aid that is called school aid compared with their share of New York State’s public school students. Since the creation of the STAR program, however, the state has provided them with more school funding in other forms the more they spend, as “tax relief.” The goal is to keep the gap wide between school quality and teacher pay between these suburbs and New York City. Thus, the Downstate Suburbs have hired ever more people since 2002 while New York City has been forced to hold the line on public school employment, pay and benefits. The teacher’s union prefers to compare New York City’s public school spending with that of the suburbs, rather than the national average. But it is only by keeping New York City school spending low, and diverting the state taxes paid for by city residents elsewhere, that the rest of the New York State has been able to hire so many and pay so much without even higher taxes.

Police protection is another category where suburban spending is high in the New York suburbs. The national average is 210 police officers per 100,000 residents, and while Suffolk is only slightly above average at 228, Nassau (359) and Westchester (293) are much higher. Note that this includes all police in each county. Where Nassau and Suffolk really stand out is high police pay, just under 50% more than the national average in March 2002, compared with 31.2% more than average for Westchester and 30.6% more than average for Fairfield. Fairfax only has 142 police officers per 100,000 residents, and pays them far less than Nassau and Suffolk pay. In fact, of the counties examined only Orange County in California paid more, or even close to, the amount paid by Nassau and Suffolk. New York City’s police officers earn far less. Here, blame a political deal with the local Republican parties for pushing Long Island police pay so high, and state arbitrators for keeping it there.

Census Bureau data assigns all mass transit employment outside NYC to state government, not local government, and though I had used other data to apportion a share to the Downstate suburbs as a whole, I have not done so for each county. I’ve downloaded information from the National Transit Database for 2005, and will crunch and post it shortly. What I can say is that the Downstate Suburbs as a whole averaged 301 full time equivalent employees per 100,000 residents, far above the national average of 81. Transit employment in NYC is even higher relative to population, but in the city this is more than offset by lower auto ownership and lower private employment in industries related to the automobile (sales, service, etc.) In the rich Downstate Suburbs, on the other hand, they want their transit AND their cars, and have higher employment in auto-related private industry than the national average. Moreover, transit workers in the Downstate Suburbs earned 42.9% more than the national average in March 2002, and more than their New York City counterparts.

In addition, while the U.S. average is 104 local government street and highway workers per 100,000 residents, Nassau, Suffolk and Westchester are at 132, 117 and 125 respectively. Rich but thrifty Fairfield is at 109; Fairfax in Virginia required just 13, but that may be because the state or general “public works” departments maintain roads there. New York City is below average.

Long Island and Westchester residents like their quality of life high (and New York City’s quality of life low?) The U.S average is 104 parks, recreation and culture local government employees per 100,000 residents, compared with 142 in Nassau and 133 in Westchester. In Suffolk the figure is just 54, but then again Suffolk, like Upstate New York, is blessed with many New York State parks. Reasonably taxed Bergen and Fairfield are at 56 and 76. Fairfax and King counties, however, are high at 162 and 164 per 100,000. The U.S average is 44 library local government employees per 100,000 residents, compared with 106 in Nassau and 112 in Suffolk and 77 in Westchester. Bergen, Fairfield, Fairfax and King are all below the national average. New York City is well below average in parks, recreation, culture and libraries year after year, despite providing research libraries that benefit the entire region. The City Council now proposes having libraries open five days per week – four years from now, if there is no recession, and if the state doesn’t continue to cut New York City’s share of state funding.

Given the attention paid to this http://www.longislandindex.org/3.0.html detailed study, which demonstrates the extent of government fragmentation on Long Island compared with Fairfax, it is interesting that in general government categories New York’s suburbs do not have more employment than the national average. Nationally, local governments averaged 413 employees per 100,000 residents in public health, financial administration, central and legislative staff, judicial and legal, and other/unallocated. Nassau, Suffolk and Westchester averaged 386, 390, and 398 respectively, all below average, and other suburban counties around the region were low as well, as was New York City. (The many local governments may be expensive anyhow, however, if unpaid non-employee elected and appointed officials get expensive perks). It is Fairfax County Virginia that is high in these general government categories at 572, thanks to major employment in the “other” category (which could be general public works departments that explain the low highway employment there).

Nassau and Suffolk also have relatively few firefighters, thanks to their extensive volunteer fire departments, although the Long Island Index study shows they have more equipment. One thing to look at…do any of those making equipment purchasing decisions in these volunteer fire departments have paid relationships with sellers of equipment? I once heard a story third-hand.

Although New York State’s government structure shifts much public welfare employment spending to the local level, the low poverty rate in Nassau, Suffolk and Westchester make these counties beneficiaries of that policy, since they shed some of the burden of the poor people left behind in New York City. While local government public welfare employment averaged 100 per 100,000 residents nationwide, the averages for Nassau, Suffolk and Westchester were 137, 128, and 159. Affluent Fairfax was lower at 68, but only because public welfare is more of a state function in Virginia, meaning that Fairfax residents do not avoid the cost of the poor in less affluent parts of the state the way Nassau and Suffolk residents do. Nassau also had 233 local government employees per 100,000 residents in its public hospital system in 2002, compared with a national average of 178. A bigger factor in its expenses – these workers earned 57.3% more than the national average. New York City’s public hospital workers are relatively low-paid.

The record is clear. New York City has been forced to be thrifty and underserved, while the Downstate Suburbs are profligate and wasteful in addition to receiving luxury-class services. But New York City has a local income tax, corporate income tax, unincorporated business tax, commercial rent tax, etc. etc. and the suburbs do not. So where do New York City’s taxes go? And what does this say about Fairfax County, Virginia?

In addition to extensive police and corrections employment, New York City’s taxes are high due to debts, pensions and other retiree benefits from the past, and the local burden of Medicaid and (to a lesser extent) welfare. These burdens became crushing in the 1960s and 1970s as the city became fully built out and its growth virtually ended, while much of its housing stock became more than 50 years old and was passed down from the suburbanizing middle class to the less well off.

Fast growing communities can keep services up and taxes down by deferring costs to the future, to be paid for by a larger number of future residents and businesses. The current tax base and local government size in Fairfax County, for example, reflects its current status as an increasingly dense, booming, high-income suburb, but its retired public employees reflect its past as a sparsely populated rural county. All local governments, it seems, under-fund their pensions while expanding pension benefits. Virtually none pre-fund retiree health care to force the cost of public services to be felt at the same time as the benefits are received. This is why when most places cease to grow, they start to die as those who can move on and the burdens of the past become larger for those left behind. Corporations pull the same trick, particularly in retail, where companies grow until they have lots of retirees and then become less competitive.

New York City stopped growing in 1950, and 25 years later had a large number of public employee retirees relative to its existing tax base. It also had a large number of senior citizens in need of expensive custodial care. And the city had huge debts run up by people who didn’t see their future within its borders, took all they could (including the right to keep public employment in the city), and left for the suburbs.

Until about 20 years ago New York’s Downstate Suburbs were like Fairfax, with few frail seniors, growth to cover up deferred debt, pensions, and retiree health care obligations, and few poor people. As they age and fill out, that will change. Faced with obligations from the past, instead of being able to shift obligations to the future, they will have to cut back, as New York City has been forced to do. Upstate’s situation is even more difficult, with more retirees and seniors supported by a shrinking, rather than stagnating, tax base. Someday this could happen to Fairfax as well. That it hasn’t yet is will not be a credit to that county’s governance, unless 30 years in the future we find that today’s residents did not take advantage of growth to defer debt, pension and retiree health care costs to that future.