There is no more hypocritical whine than older New York State residents complaining that their children find it necessary to move away to find a decent life for themselves. It is hypocritical because while providing the nation’s richest Medicaid services for senior citizens, and excluding retirement income from state (and in New York City local) income taxes, New York has made decision after decision for nearly 20 years to favor those cashing in and moving out at the expense of the state’s future, which is now the present. In general, Republicans sell out the future with debts, caused by tax breaks and rich government contracts for business. Democrats do it with pension enhancements for those with seniority and already retired, passed every time a stock market boom swells pension fund coffers, followed by lower wages and benefits for new hires, agreed to by the Democrats’ union allies every time high pension costs leave the government broke. Now that the bills are starting to come due, there is a bit of unease in Albany, as our “leaders” look around for someone to blame. But with every deal passing the state legislature 212 to 0 they are all to blame. So are the older generations that have gratefully accepted this largesse without questioning who would pay how much. It is those deals that should be undone, and those generations who should pay first, if a recession and fiscal crisis requires sacrifice. To do otherwise would mean that Spitzer and Francis are merely continuing the practices of the now-despised Pataki to pump up the current Governor’s short-term popularity. In the end, Spitzer would be despised as well.
The recent cycle of sucking revenues from the future, and deferring costs to the future, dates to the deep early 1990s recession. Former Governor Cuomo, in an effort to remain popular enough to stay in office in perpetuity – like a state legislator – took steps like canceling an ongoing subway care replacement program for the MTA, “selling” the Thruway and prisons to the Thruway Authority, and raiding the state road trust fund for non-transportation expenses. To maintain the road system, the state instead started borrowing against future highway taxes and user fees. Cuomo also cut off state funding for the MTA. Former Mayor David Dinkins made similar decisions for New York City. State residents were not amused that their future had been solid out, or perhaps just upset that the present was not so great even so, and in short order Cuomo, Assembly Speaker Mel Miller, Senate Majority Leader Ralph Marino, and Dinkins were dumped.
Once could make the case that desperate times require desperate measures, but as the state’s economy recovered during the mid-1990s, the new state leaders – Governor Pataki, Assembly Speaker Sheldon Silver, and Senate Majority Leader Joe Bruno – continued the practice of mortgaging tomorrow to pay for today. Pataki wanted to cut taxes, but aside from cutting benefits for New York City’s poor, and school aid for New York City’s children, he found that cutting spending was less popular. So in the end he didn’t. State legislators voted for the tax cuts, but not for the spending reductions that would have made them affordable. Meanwhile, neither the state nor the city ever restored the money cut off from the MTA, forcing massive borrowing to finance the 2000-04 MTA Capital Plan. Both the city and the state cut off funding for non-federal housing projects owned by the New York City Housing Authority. The result was deferred maintenance for all housing projects, whether federal or not. The state continued to divert money from the road trust fund to other priorities, borrowing to make up the difference. Meanwhile, discounts were added to transit fares and tolls were eliminated around the state, cutting revenues. Senior citizens, who previously paid half fares off-peak, now paid half fares all the time. Staten Islanders got to pay less than everybody else on the Verranzano. All this was very popular – among older people whose children had moved away.
With the tax revenues rolling in during the late 1990s tech and dot.com frenzy, one might have thought the city and state would have put a few dollars away for the future. It did the opposite. Hoping to become a Senator, former Mayor Giuliani reversed course on spending after 1997 while keeping taxes low, borrowing billions to make up the difference. Former Governor George Pataki also kept handing out tax breaks while spending more, hoping to become President. This included a deal to increase unemployment benefits while cutting unemployment taxes, leaving New York one of two states that did not meet federal guidelines for building up a trust fund for use in a recession. Hoping to become Governor, former State Comptroller Carl McCall pushed through an automatic cost of living adjustment for public employee pensioners, including those long retired, that they neither worked nor bargained for. He said it would be free – the stock market would pay for it all. Giuliani added a provision to only require employees with less than 10 years seniority to pay into the pension plans. Pataki pushed through the STAR program, with money for homeowners but more money for senior citizens.
Meanwhile, while imposing the nation’s highest taxes on new businesses, the city and state continued to hand out tax breaks and subsidies to large, existing businesses, enriching executives and “preserving” the jobs of older workers earning more than future workers are likely to get. Among the “investments” – subsidies for floor trading on the New York Stock Exchange and the film camera industry. The New York State Dormitory Authority borrowed for pork barrel projects favored by Democrats, while the Empire State Development Corporation borrowed for projects favored by Republicans. The debt is in the form of “moral obligation bonds.” That is, this generation of state officials and their beneficiaries get the benefits, at an exorbitant price, but future New Yorkers have a moral obligation to pay the money back while getting nothing in return.
If that is what was going on during a boom, it certainly didn’t get any better during the bust. The state took 30 years worth of tobacco settlement revenues and spent them in one year. The 2005 to 2009 MTA Capital plan featured a 1/8 percent increase in the sales tax, which downstate New Yorkers will pay for the next 30 to 40 years, to pay for just five years worth of ongoing system replacement. Even as the Second Avenue Subway was cut from six stations to three, and the pedestrian connection from the Broadway Lafayette station (B, D, F, V) to the Uptown Bleeker Street station (6) and a whole bunch of scheduled station rehabilitation were deferred. New York City’s street repaving program was cut back, as was trash removal in the subway system.
The city borrowed $1.5 billion just to avoid raising taxes until the State Legislature was safely re-elected, announcing a huge property tax increase a few days later. Most of that increase is still on the books for businesses and New York City residents who rent.
Even as pension costs soared, the state continued to pass pension enhancements for public employees with seniority, year after year. Meanwhile, most new city workers are now paid 15 percent less than those hired before 2003. Police and firefighters also had their starting pay cut. Mayor Bloomberg just agreed with the UFT to force younger employees to pay more into the pension plan, but to allow older teachers to walk out at age 55 without paying in an additional dime.
In fact, so great is the burden of past debts, pensions, and retiree health care that in each city and state budget the talk is of service reductions and maintenance deferrals, in good times and bad. And through it all, no one dares to say the senior citizens, and public employees with seniority, have been selfish. No one dares to say they have sold out our future because they were greedy for a better deal for themselves in the past. Instead, the consequences of past decisions are presented as “uncontrollables.” That is the word Mayor Bloomberg uses in every budget presentation, “uncontrollable expenses.” In its recent budget presentations, the MTA has used the same words. No one’s fault, really, just something no one could have controlled, we are told. And conservatives complain that “spending” is going up when in fact spending is going down, because we are paying now for spending that took place then.
And then more, to prevent people from rising up in anger, deals are cut to lessen the short run pain and tomorrow’s “uncontrollables” are created.
Are there any contrary examples? I can think of two. In the first contract between Bloomberg and the UFT, there was a higher pay increase for new hires which only partially offset all the “screw the newbie” contracts of the past and was subsequently reversed. And Bloomberg and the NYC Council put aside some extra money for future retiree health care costs for a couple of years. Perhaps not enough to reduce the burden shifted to future taxpayers and service recipients, but enough to prevent that burden from growing greater. Any others?
Will someone, anyone, stand up and say that selling out the future is wrong? Does anyone who matters care even about their own children, and expect that those children will live in New York?
I read current State Comptroller DiNapoli’s reform proposals, and they are well intentioned enough, and they absolutely fail to get to the heart of the matter. I cannot accept that elected officials have sold out the future of younger and future New Yorkers by accident, because they were misinformed. “Budget technocrats have been written by budget technocrats for other budget technocrats in a language most New Yorkers can’t comprehend…The budget should be a taxpayer’s budget, written so taxpayers could understand it.” What part of paying less and getting more, letting someone else foot the bill later, did New Yorkers not understand? This is not a technical issue. It is a moral issue. If he issues the equivalent of the MTA’s asset database, which the Federal Transportation Administration requires, for all infrastructure, and puts a dollar value on the cost of ongoing replacement, I might read it. Few others will, especially in Albany where “I want for me now” is the guiding principle.
“There will be no cure without some pain.” Well, who deserves the pain? “We need some fresh thinking.” Well here is some fresh thinking. Stop borrowing, but don’t continue reducing the ongoing maintenance of our infrastructure. Make up the money elsewhere. Additional debt is a generational assault even for if it is for “capital expenditures,” if those capital expenditures are nothing more than the ongoing normal replacement required to keep our infrastructure and public buildings as they are. Unwilling to pay that cost each year, past state residents borrowed the money instead. Since the money was borrowed, no one cared about getting decent value from government contractors, or if the ongoing replacement plan was affordable in the long run. Now future generations will either have to pay that cost AND the interest of other people’s debts, or our infrastructure and quality of life will collapse. Unless there is another solution.
If the city and state aren’t going to borrow more, perhaps future generations of voters should consider defaulting on existing debts to the extent possible, like Mississippi did by referendum in the Great Depression. Older, wealthier people invest in state and local bonds. They took the money in the past, and expect those who follow can be forced to pay it back in the future, but can they? Just the threat of a default might make it more difficult of today’s leaders to encumber tomorrow. Consider the threat made. I don’t have NY municipals, and if a referendum on default were to come up, I would vote in favor. Eventually, there will be many more like me, future state residents with nothing left to lose.
And what about those pensions? If they cannot be reduced, how about new labor contracts that require those who voted for multi-tier contracts at the expense of future workers in the past to swallow a larger share of their health insurance costs, including retiree health insurance costs, in the future? Tier 1 pays for all of it, Tier 4 for half of it, those forced to accept lower wages for none of it. Why not? Slashing retiree health care could fund a nice raise for those providing services today, and given what was done in the past, who can say that wouldn’t be fair?
In the end, people aren’t going to pay taxes for nothing. Those assuming they will get a paid what they have promised themselves are also assuming future New York residents (and U.S residents) will pay vastly higher taxes without decent public schools, a viable infrastructure, parks, libraries or police protection. They may be assuming that because we don’t have a democracy, and they can hold office indefinitely no matter what they do. In the end, however, the money will not be paid, either because people will move away, like New York’s young, or because tax evasion will become rampant and accepted. People will be happy to let the State of New York go broke once we have nothing left to lose, and those who were “at or over 55” when President Bush said the words seem determined to get us to that point.
The people who have been grabbing the benefits and sticking the future with the bill are of the same generation as Pataki, Bruno, Silver, McCall, DiNapoli, and the rest of the New York State legislature. At the very least, they should be forced to acknowledge what they have done and whom they have hurt, so at least they might be embarrassed about grabbing more and more and more and more.
Because the future is now the present, and becomes more so all the time. And when posterity eventually decides that due to “uncontrollable” factors they need to hit back at those who have cheated them, I won’t be one to object. After all it is my parents, not my children, who have moved to some other state, I’m not moving away, and I hope that my children won’t have to move away either. I’ve already indicated that I’m willing to live with the school spending New York City already has, cut school spending in the rest of the state, and reduce Medicaid spending to save money to stop encumbering the future. And I’d be happy to just shut the Dormitory Authority and the Empire State Development Corp. down. I’ll put some revenue raisers on the table in my next post.
So what is it going to be, Spitzer and Francis? When the going gets tough will it be more debt, deferred pension contributions, and higher tax rates on workers today? Or an actual change from the policies of yesterday? Did everything change on Day One? Or nothing? Pataki, Silver and Bruno are locked together in historic memory as those who sold out everyone in this state who isn’t currently age 50 or over, forever. As he runs for President, former Mayor Giuliani’s fiscal record is also beginning to be examined. Care to join them?