The propaganda is coming fast and thick as the New York State legislature meets to consider a school property tax growth cap for the portion of New York State outside of New York City. The New York State Untied Teachers and the Working Families Party claim that restricting the increase in taxes to 20% more than the inflation rate, unless local residents vote to increase taxes more, would devastate upstate and suburban schools. And some state legislators from New York City have claimed that if tax increases were limited elsewhere, the state would have “no choice” but to cut education funding for New York City, or raise taxes on city residents, to make up the difference.
These statements are an outrage, because as anyone who has read my posts knows the public schools in the rest of the state are vastly over-funded, overstaffed and extremely, extremely well paid compared with the public schools anywhere else in the country, including New York City, New Jersey, and Connecticut. Spending, staffing and pay have soared continuously there from already high levels for nearly 20 years. And to pay for it, the state already has slashed funding for New York City schools in recessions and cut the city’s state assistance in other categories to pay for “tax relief” aid to the rest of the state. While city residents and children – and property tax payers elsewhere – are asked to sacrifice repeatedly, evidently no efficiencies, let alone austerity, can ever be asked of the massively entitled districts elsewhere in the state.
For those of you who haven’t been paying attention, here are just a few numbers.
In March 2006, according to the U.S. Census Bureau (spreadsheet attached to this post), the public schools in the rest of New York State outside New York City had 1,881 instructional employees (mostly teachers) per 100,000 residents, compared with 1,444 in New York City and 1,542 in the United States. Put another way, there were 10.4 students per instructional employee in the U.S., 8.9 in New York City and 8.4 in the rest of the state. The non-instructional employment in the rest of the state is massive at 938 per 100,000 residents, compared with 678 nationally and 382 in the city.
And it is going up and up and up. According to the New York State Department of Labor (get data here), from May 1990 to May 2008 public elementary and secondary school employment rose by 5,700 in New York City, including 2,000 in the past year, and 83,200 in the rest of the state, including 8,700 last year. For good measure from May 1990 to May 2008 other local government employment is down 22,800 in New York City, and up 27,800 in the rest of the state.
Teachers are getting their share of the money. According to Census Bureau data on public education finance in FY 2006 (spreadsheet attached here), total instructional expenditures per child was $5,552 in the entire United States. In Upstate New York, it was $8,555. In the Downstate Suburbs, it was $11,338, or $226,760 for a class of 20 kids. Not bad funding for the teachers, eh? Even with the cost of living adjustment I use for expensive downstate New York, the Downstate Suburbs averaged $8,676 per child, about the same as the adjusted total for New York City (the city had been much lower in the past) and well above the adjusted $6,911 in New Jersey. Even adjusted downward for the higher cost of living downstate, instructional expenditures per child are more than 50% higher than the national average in all parts of the state (and we also have more children, thanks to universal pre-kindergarten). All of these figures would be much higher today.
The rest of the New York State outside New York City really stands out in spending on things other than instruction. After adjustment for the cost of living, non-instructional spending per child was $3,601 in the U.S., $2,708 in New York City, $4,596 in the downstate suburbs, and $4,669 in Upstate New York.
All this costs money. According to FY 2006 public finance data from the Bureau (get the spreadsheet here and past spreadsheets in the post linked here), school districts in the rest of the state spent the equivalent of 6.2% of their residents’ personal income that year, compared with 4.3% of personal income spent on schools in New York City and 4.6% in the United States. That cost residents of the rest of the state plenty. The locally-funded share of that spending equaled 3.4% of the income of residents of the rest of the state, compared with 2.2% for both New York City and the U.S. as a whole. That, and the local share of Medicaid, is why property taxes are high in the suburbs and Upstate. But part of that additional cost t was borne by all state taxpayers, including those in New York City. Whereas state funding for education equaled 2.3% of the income of residents in New York City and 2.5% nationally, it equaled 3.1% for the rest of New York State. Staffing and spending is so high there, in other words, that even with more state aid, residents there also paid more local property taxes.
So people in the rest of New York State, faced with this huge property tax burden, are increasingly frantic about it. So do they vote down the school budget? No. They demand that New York City be sacrificed instead. And Sheldon Silver, and all those NYC assembly members objecting to the proposed property tax cap, go along.
In fiscal 1996, when money was tight due to the recession, the state legislature and Governor Pataki slashed school aid to New York City (where spending was low) while increasing it to the rest of the state (where spending was and is high — data in one of the spreadsheets attached here). The city’s share of state education funding fell to 29.6%, even though the city accounted for 37.2% of the state’s public school students and, despite a deep recession that saw 1 million people on welfare, its residents’ paid 37.4% of state income taxes. I can personally attest to the impact of that decision on public education in New York City. Nothing Sheldon Silver, Joe Bruno and George Pataki ever did, or will ever do, will have as much impact on my life and life of my contemporaries and their children as that decision.
Subsequently, the state passed the STAR program, a back-door education funding mechanism that provides little to New York City and more to school districts elsewhere that overspend. Supposedly intended to reduce school taxes, it just redirected more education funding away from the city.
In fiscal 2003, in the next recession, the state legislature voted to jack up income tax rates, on the grounds that this would hit downstate harder than upstate. New York City’s state school aid was not cut that year, but its share was. In the wake of 9/11, the city’s share of state education funding was cut from 35.8% to 34.2%, as “school aid” was cut but “STAR aid” kept on growing. And then yet another STAR program, the Bruno check diverted even more money away from New York City beginning last year. Now State Senate Majority leader bragged to his constituents how much money Long Island received from that program, and how little New York City received, in pie charts in a mailing sent to his constituents. (I hope city residents represented by Senate Republicans well be getting a copy of Skelos’ mailing this year). All of these are attempts to shift more and more of the cost of more and more spending on schools in the rest of the state onto New York City’s children, New York City taxpayers, or both.
Silver has gone along with all of it, because it benefits the unions who back him, doesn’t hurt the people of his generation who are cashing in and moving out, and sacrifices those who don’t matter. The only goal of him and his fellow legislators seems to have been to make one more big score before leaving and leaving nothing behind, like a previous generation did to New York City in the 1970s.
And then NYC assembly members say capping tax increases in the rest of the state will “force” them to sacrifice New York City taxpayers and children even more. That’s the debate isn’t it? Will New York City’s children and taxpayers be made worse off if taxes are not capped and residents elsewhere demand more tax relief at their expense (as Assembly minority leader Tedesco claims), or if taxes are capped and the teachers’ union elsewhere in the state demand school aid to spend more at their expense (as Assembly members from the city claim)? Probably either or both, based on the history.
The current red herring proposed by Democrats in the state assembly is a property tax “circuit breaker,” which would limit the property taxes residents of the rest of the state have to pay to a certain percent of their income no matter how much property wealth they have, and provide state funds (collected in part in New York City) to make up the difference. Now I’m all in favor of a plan to limit property tax collections based on income. I proposed doing so in this post nearly two years ago, even though my taxes could triple if the same policy was applied to New York City. But there was an important difference from what the Assembly is proposing, seriously or not.
In my proposal property taxes in excess of a certain share of income would be merely deferred until the property was sold, not eliminated. Those poor souls living in $3 million mansions whose income was low because they were unemployed, retired, took losses on their $millions in investments recently, or were just cheating on their income taxes, might be too hard up to pay the same taxes as those living the same way next door in a given year. But they would surely have the money when it was time to sell, and cash in their capital gains. And rather than have New York City residents pay extra state taxes to make up the taxes forgone, school districts would have had to live without them for the most part. After all, the state school aid formula takes into account the income residents have available to pay school taxes, doesn’t it? If it doesn’t, it should.
Without some limitation on excess spending outside the city, the only debate is over who the victim should be — city taxpayers, city children, or taxpayers elsewhere. I have proposed a school spending limitation far more draconian for overspending districts than the current tax cap proposal. In addition to a minimum per child which the state aid system would make sure every school district (even New York City) could afford, I proposed a state mandated maximum at 33% higher than the national average, with an adjustment for the cost of living downstate. Above the maximum, school districts would be docked one dollar in state education funding (or STAR funding) for each additional dollar spent. The system would work like the luxury tax in baseball, and aside from a few wealthy school districts willing to pay double to gold-plate their schools (like the Yankees).
The result probably would have been all schools in the state within spitting distance of that maximum in school funding, which would have been substantially more than the national average. Fiscal equity with well funded schools, in other words. Rather than inequity with over-funded schools. And in some high spending districts, spending might actually have gone down. Under the current proposal, it is permitted to rise by 20% more than the rate of inflation every year, even as the income of state residents who have to pay for it face falling income relative to inflation. So the Suozzi Commission opted for a weak property tax growth cap instead. It’s better than nothing.
Even with all the taxes city residents have to pay, with how little they have settle for in public education for most of the past 25 years, it is apparently inconceivable to city representatives in the state legislature that school districts in the rest of the state could be asked to merely spend massively more than the rest of the country, rather than massively more plus still more. Cap or no cap, there is no excuse for any reduction in educational quality in the rest of the state. While the schools there are good, they are a ripoff, and those complaining about the proposed property tax cap are the people doing the ripping off. The property tax cap says it is enough. It is more than enough – we’re paying for a high quality public education system in the rest of the state AND a luxury-class welfare jobs program in the suburbs and upstate. For people who sit around the kitchen table at night sneering about the low-class parasites of New York City. Folks who somehow believe there is still 1 million people on welfare here, and that their source of income is an actual job. How many additional people are school districts in the suburbs and upstate planning to hire next year, in the middle of a fiscal crisis, anyway?
At a company function, I was talking with a co-worker with pre-school children about education, and recounting my experiences back in the mid-1990s at the dawn of the Sheldon Silver era in New York State. She said she lived on the Lower East Side, was screwed, and had no idea what she was going to do. Who represents the residents of the Lower East Side again, as opposed to the former residents now living in Florida?
That’s right. No one. And after refusing to bring the property tax cap up for a vote, as the fiscal crisis intensifies look for Silver and his fellow legislators to slash NYC's share of state education funding again, either by cutting aid directed to the city while allowing STAR and son of STAR to grow or by some other means. In fact, give the way the information was suppressed, I'll bet teh city share of state education funding is already on tis way down this year.
And that’s what Paul Newell and Luke Henry need to know about the property tax cap.