Bad news has arrived from Rochester, from where the President and Chief Economist of the Center for Governmental Research e-mails that the organization has “no plans” to repeat its 1999 and 2004 analyses of the balance of state revenues and expenditures among regions of New York State. “It is rather a monumental undertaking, unfortunately.” The Center’s reports showed that even in the early 1990s, when New York City was reeling in a deep recession with one million people on welfare and substantial reductions in public services, the State of New York took much more revenue out of the city than it spent here. And later in the decade, when the city’s economy was booming but its poverty rate was still over 20% and its schools still under-funded, the State’s net redistribution of fiscal resources out of the city increased. While the Center’s reports didn’t change the fact that of other areas of the state resent, and feel free to work to the disadvantage of, the city and its people whenever possible, their inconvenient facts did somewhat diminish the 30-year river of black bile flowing our way from virtually every other part of the state. If new ones aren’t coming, those living elsewhere could be free to go back to asserting, absent evidence, that New York City residents are a bunch of undeserving freeloaders who need to be put in their place.
I had been looking forward to a report showing how the balance of state revenues and expenditures had changed in the years immediately following 9/11. One might have expected, under the circumstances, the rest of the state would sacrifice to save the city from calamity. Based on the data available to me here http://www.r8ny.com/blog/larry_littlefield/how_9_11_changed_the_nyc_local_government_budget.html, however, it appears that in fact the rest of the state took advantage of our vulnerability to drive a hard bargain. The State allowed the City to help itself, by granting authority to raise local income taxes and sales taxes and go deeper into debt, in addition to raising property taxes and cutting public services. In exchange, the city would suffer a greater share of the fiscal pain resulting from the state’s own fiscal problems, which resulted from a reduction in the prosperity of its cash cow, the city itself. That is what I believe happened, although it would take a much more detailed analysis to say for sure. We do know how public employment changed earlier in this decade, as I wrote here. The same way it did in the early 1990s.
This is only the most recent set of inconvenient facts to disappear. For example, the share of Medicaid expenditures paid for by federal funds, state funds and local funds in each county of the state and New York City, which has previously been reported in the New York State Statistical Yearbook, vanished. The state has made a practice of only requiring local governments to pay 10% of the cost of Medicaid services concentrated outside New York City (nursing homes, family health plus) but 25% or even 50% of the cost of services concentrated in the city. As a result, New York City is forced to pay for a higher share of the Medicaid expenditures within its borders than other parts of the state. The resulting fiscal damage of that difference is greater than the revenue lost due to the commuter tax repeal, and in some years greater than the state’s “reverse Robin Hood” school aid formula. Or was, because the state won’t let us see it anymore.
Of course we are all “one state,” or so the new Governor says, now that New York City, adjusting for the lower expectations of the taxes we must pay and services we expect to receive, is prospering. Still, I hope the CGR or someone else finds the resources to redo the analysis of fiscal flows by region. Perhaps the future State Comptroller will do so on an ongoing basis, along with some of the other analyses I have called for previously on this site. Because otherwise, the next time the city that the rest of the state loves to hate is in need, we probably won’t be “one state” once again.