Author: Larry Littlefield

The latest Current Employment Survey release from the New York State Department of Labor shows that local elementary and secondary school employment in the portion of New York State outside New York City increased by 11,400 future pension recipients from September 2009 to September 2010. Public school spending, staffing and pay has been off the charts in the rest of the state for decades.

In the past that has been at the expense of New York City, where local elementary and secondary school employment fell by 100 in the most recent September to September period. But now NYC school funding is higher, if lower than in the rest of the state — but with most of the added funding going to the retired. So local government employment in the rest of the state excluding the public schools is being slashed instead, by 32,600 in the most recent September to September period. In New York City, it fell by 5,800. State agencies are being gutted too. So what else happened in New York City?

If anyone under 55 thinks the election changes anything for their future, they are pretty much wrong. The details may have changed. They may face even more reductions in their old age benefits, rather than even greater tax increases. They and their children may be living with a deteriorating, third world infrastructure rather than groaning under the weight of more debt. If they choose to work for the government, they may have their pay and benefits cut to fund the enriched retirement benefits of those who went before, while those who went before do less and less work because they are “underpaid.” But one thing has not changed.

Generation Greed will not be asked to give back anything. Neither will producers of public services, who have become richer and richer in total compensation compared with everyone else not on Wall Street. Governor-elect Cuomo proposes scaling back retirement benefits, but only for future public employees, while the public employee unions are allowed to provide worse services. The retired will continue to pay vastly lower taxes on the same income than workers, workers who will later face poverty without retirement in their own old age. Republicans in Congress say entitlements must be “reformed,” but those reforms cannot affect anyone age 55 or over – cannot affect the best paid generations in U.S. history. In fact, they owe their electoral success in part to promising to eliminate the modest restrictions on Medicare spending the Democrats put in place. Will anyone talk about this? Will anyone at least force them to admit it? Will those under age 55 finally wake up, or will Generation Greed be allowed to keep taking and taking – without paying?

I’ve got a busy day, so I hustled down to the polls at 6 am. Voting was no problem, although I was a bit confused. I figured that you filled in the oval below the candidate’s name, but the instructions said to fill in the ballot above or next to the name, so I had to ask about it. One of the sad realizations I have come to is that most votes on Election Day don’t matter, because most elections have been engineered out of existence. Even a vote for President doesn’t matter much unless you live in a swing state, and most votes for Congress or legislature don’t matter unless you live in a swing district. But this year you have a bunch of statewide races where a vote actually does matter. All the elections in which votes actually matter, other than Mayor.

I have two comments on the new voting system. The bad news is that on the new sheets, the elections that they don’t want to be real elections remain hidden at the bottom of the page – Congress, State Assembly, State Senate. So fewer people will vote. To add to the discouragement, they are under the judges, for which the Republicans and Democrats put up the same choice, and which I think people shouldn’t be voting for anyway. The good news is that the new system makes it very easy to vote for a write in candidate. Before, I believe, one had to take a lot of extra time and ask for a separate ballot. Now it takes no time at all. Had I known about this, I would certainly have had something to say about it. There is now an alternative to voting for the one “real” candidate in a non-election, or a token candidate who did not campaign. Given that only special interests come out to vote in legislative primaries, a write in campaign on Election Day may as (un) likely to unseat – or at least wake up—an incumbent on Election Day as any other method, while getting around the ballot access nonsense.

When compiling data on Medicaid each year, there was one thing I couldn't explain. Why was New York's spending on the mentally ill and disabled so high? Unlike the seniors, they aren't a particularly powerful group. Is New York that generous, or are other states so unfeeling?

Evidently some journalists and the Feds were asking the same questions. And it appears to be a high cost jobs program. A sinecure. White welfare. The big bucks are going to former state institutions left over from de-institutionalization, where lots of politically powerful workers tend to few needy people. It's about the producer of public services interest, not public services or the needy. Again.

The two spreadsheets attached to this post have data on state and local taxes, as provided by the Governments Division of the U.S. Census Bureau. The “all state and county” spreadsheet has FY 2007 data for the U.S., each state, every county in New York State, and different areas of the state aggregated together. State taxes and local taxes, and major tax types, are identified separately. It prints as a four-page table. The “all years” spreadsheet has data on the total state and local tax burden for the U.S., New York City, the rest of New York State, New Jersey, Connecticut, Massachusetts, Illinois, California, Texas and North Carolina. The data is for FY 1972, and FY 1977 to FY 2008 excluding years when Census Bureau budget cuts meant no data was collected (FY 2001 and FY2003).

Per capita state and local tax data is sometimes used to identify Massachusetts, New Jersey and California as “high tax” states. But this ignores the higher average incomes in those states, and thus the higher cost of living, the greater ability to pay taxes, and the need to pay public employees more if they are to be paid as much as their neighbors doing similar work. This data presents taxes as a share of the personal income of U.S., state and area residents (as provided by the U.S. Bureau of Economic Analysis), and thus adjusts for the ability to pay and the cost of living. When the data is presented this way, two facts stand out. In reality New York is the only true “high tax” state. And deferring taxes, by running up debts, not funding pensions, and not maintaining infrastructure, is not the same as cutting them.

With another round of sacrifice coming in Albany, likely to be shared among those with less political clout, the Greater New York Hospital Association has started dishing out the propaganda. And with the New York Times no longer simply repeating what it says as fact, the factoids instead appear in this New York Magazine article.

The main GNYHA argument is apparently that because those who work in or with New York hospitals get more compensation, costs are higher, and therefore the government needs to give them more. That is the same argument top executives use for their own compensation across corporate America – because I voted while on your board to pay you more, you should vote on my board to pay me more. It is the same argument that public employee unions use to ratchet up their pensions – because you cut a deal with union A, we in union B deserve that deal too. It conveniently ignores the labor market most people are in, one where pay and benefits have been cut to remain “competitive.” Competitive for what? Competitive to attract the dollars spent by those with choices. As opposed to money received from the government, into which people have to pay whether they like their deal or not.

In general, research and news articles on public employee pensions have focused on state systems. Why? Because there are only 50 of them. But the separate NYC pension system is larger than that of most states, and more troubled than all but a few of them, even though NYC taxpayers have contributed more to those pension funds that those living just about anywhere else. Because the state legislature has granted richer and richer pensions to NYC public employees, the richest of whom live outside the city. It seems that some researchers, having finished with the states, have moved onto the cities, and one finds that NYC's pension funds will run out of money in 2021.

But that's not a problem for anyone that matters. The rich will continue to get around in black cars and send their kids to private schools, donating to their own "public" parks if they want them. The public employees will live in the suburbs, before taking their tax-free pensions to Florida, drive everywhere and park for free with their placards. The pensions are guaranteed by the New York State Constitution, and the senior citizens in the New York State Legislature and Congress will make sure today's senior citizens make absolutely no sacrifices. Only the serfs and younger generations will lose, as public services and benefits face an institutional collapse.

Thomas DiNapoli, having been appointed State Comptroller by Speaker Sheldon Silver and the rest of the State Assembly in the wake of the now-convicted Alan Hevesi’s resignation, is running for election against a Republican opponent, Harry Wilson. My general voting rule is to vote against all Republicans at the federal level, on generational equity grounds. To vote against all Democrats at the local level, because they always support the interests of producers of public services (who in NYC often live elsewhere but contribute to campaigns here) against the interests of those who use those services, whether that is fair or not. And to vote against all incumbents of either party at the state level in New York, where politicians of both parties are guilty of both offenses.

Thus far the campaign for State Comptroller has revolved around one issue, albeit an important one, the proper assumed future rate of return for assets of the New York State pension system. This ignores, among other things, the New York City pension system (some times it seems like DiNapoli and Wilson are running for Comptroller of a state that New York City is not part of), the fair level of pension benefits, all those pension enhancements, the level of past employee and taxpayer contributions and the fair level of both, and the debt and capital investment issues I covered in the previous two posts. For these ignored reasons, as illuminated by the information presented in those posts (which you should read), I will not be voting in favor of DiNapoli remaining State Comptroller.

In my previous post, I showed how the future of New York City, the rest of New York State and New Jersey have been diminished by retroactive pension enhancements for active and retired public employees, and past pension underfunding. That post contains two spreadsheets with a series of charts and a table that I will continue to refer to here.

This post will talk about the weight on two sides of a seesaw, the negative weight of state and local government debts, and the positive weight of past state and local government capital construction expenditures, investment in public buildings and infrastructure. Older and former residents of a community are on one side of the see-saw, and younger and future residents are on the other. If the older residents bore the weight of more capital investment, while leaving behind less debt to weigh future residents down, the quality of life of those future residents will be lifted up. That essentially describes the condition many in older generations were born into. If, on the other hand, older and former residents contribute less in capital investment, while shifting more debt onto those who follow, the quality of life of younger and future residents of that community will be diminished as their taxes rise. So how have New York City, the Rest of New York State, and New Jersey fared by these measures compared with other states and the U.S. average? Lets look at the charts and table and find out.

The quality of life, the extent and quality of state and local government public services, and the level of state and local taxation are not determined solely, or even primarily, by policy decisions made in a given year. They are also determined, in large part, by decisions made in the past that provide current and future residents of a community with assets, or stick them with liabilities. This post, and the two spreadsheets attached to it, use data from the Governments division of the U.S. Census Bureau to evaluate how residents of New York City, the Rest of New York State and New Jersey have fared by this measure, compared with other places and the national average.

One spreadsheet contains data on state and local debts, pensions, and capital construction expenditures for FY1972 and all years (excluding those for which none was collected due to budget cuts) from FY1977 to FY2008, for New York City, the rest of New York State, the U.S. total, New Jersey, California and Illinois, presented in a series of ten line graphs (Charts 1 to 10). The second presents similar data, in a table set to print on two pages, for all 50 states plus the District of Columbia for FY 2007 alone, and ranks these states (plus NYC and the Rest of the State if they had been separate states) according to a single “sold future rank.” I suggest downloading the spreadsheets, and printing out charts 1 to 10 and the table, to follow along as you read the rest of this post and the one following.