Author: Larry Littlefield

Knowingly

|

The City of Baltimore, heading for bankruptcy, is trying to retroactively reduce the pensions of police and firefighters with 15 or fewer years on the job. Their unions have fought back with a lawsuit that claims "officials 'knowingly underfunded' their pension plan over the past decade."

"Knowingly." Now there is a word that could be used more often as we head for an institutional collapse. After all, public employee unions knowingly lied about the future consequences of all the retroactive pension enhancements they got in backroom deals with their pols over the past 15 years. They often approved underfunding the pensions as part of the same deals. Those pols also knowingly ran up debts that would obviously lead to a combination of massive tax cuts and service cuts in the future. They knowingly ran up off the books debts by not setting aside any money for the retire health care benefits they had promised, and made those promises unlimited, since they themselves would benefit. And they knowingly failed to reinvest in the public infrastucture enough to keep it from declining, while borrowing a lot for it by overpaying for the work that was done.

Perhaps New York Wants Solar Too Much

|

A while back I wrote a post about how permits and inspections by multiple agencies meant that installing a solar system took a year, even though the actual installation only took one day. I wouldn’t have posted it if I didn’t think I was done with the city, but it turned out I wasn’t. My installer had to do yet another round of surveys and inspections, associated with yet another subsidy, which ran another four months. What I found is that it isn’t just the permits and inspections that are uncoordinated and overlapping, but the subsidies as well. Once I added them all up, I felt less like a civic-minded environmentalist and more like someone who perhaps ought to be working for Goldman Sachs.

Issue of the Decade

|

“This, in my opinion, is the public issue of this decade,” according to New Jersey Governor Chris Christie as quoted by Bloomberg News. “Things that used to be sacred cows, that used to be the third rail, no longer are. They’ve been replaced by the unaffordability, absolute unaffordability.” He is referring to public employee pensions and retirement benefits, and I agree, unfortunately, that it will be the issue of the decade, and the morality of it will vary from place to place.

In some places, such as New Jersey, public employees have contributed a great deal to their own pensions, and it is the employer (former taxpayers) who didn't put in the required amount, to get more spending with less in taxes. In California and some other states, the public retirees do not get Social Security. Even in those places, however, the unions are guilty for cutting deals with the politicians to get undeserved, retroactive pension enhancements and collectively engaging in schemes to inflate pension payments relative to pay earned on the job. At the other extreme, with public service recipients and taxpayers nearly blameless, is New York City. And everywhere, Generation Greed has the same solution — solve the issue of the decade, caused by older generations making themselves better off at the expense of the future, by making younger generations worse off while avoiding politically difficult conflict by not asking those older generations to give anything back.

NYC Employment and Wages Data for 2009

|

The New York State Department of Labor has released payroll employment and payroll data for New York City and each borough for 2009, along with the change from 2008. I’ve done a few calculations with it and put them in the attached spreadsheet. The data is based on the administrative records of unemployment insurance program, and thus excludes the self-employed, freelancers and contract workers, a growing share of the workforce. Because the City of New York and MTA do not comply with state requirements to report its employment by actual work location (known as the “Bell file”), moreover, the data on government employment is not accurate by borough. Nonetheless some conclusions can be drawn about private and public employment and wages in New York City during the recession.

Citywide, the data show that from 2008 to 2009, private employment fell 3.5% in New York City’s private sector despite increases of 1.7% in the substantially government-funded Health Care and Social Assistance sector, and 1.9% in the tax-exempt private Education sector. Government employment fell just 0.3%. Total private sector payroll plunged 12.3% despite increases of 3.5% in the Health Care and Social Assistance sector and 5.2% in the Education sector, while total Government payroll increased 2.0%. Average (mean) private sector pay per employee plunged 9.1% despite increases of 1.8% in the Health Care and Social Assistance sector and 3.2% in the Education sector, while pay per employee in Government increased 2.3%. The fall in private pay per employee was driven by a 17.7% decrease in the Finance and Insurance sector, due to lower bonuses, which will bring little sympathy given the 2009 average of $231,176 per worker for the sector. But excluding both Finance and Insurance and Health Care and Social Assistance, payroll per private sector worker fell 3.2% from 2008 to 2009 in New York City.

The Rest of the Story

|

If you listened to the radio over the holiday weekend, you heard commercials from the United Federation of Teachers and the Uniformed Firefighter Association decrying the consequences for city residents and schoolchildren of drastic funding cuts for their agencies. How great are those proposed spending cuts? The answer may be found in the tables on page 40 to 44 of this document, the city's May budget summary.

Total spending on the Department of Education, with all cost including retirement and debt service included, is proposed to increase by $306 million or 1.4%, in a year when inflation is zero and many people's wages are going down. To achieve this, the city's contribution is proposed to be increased by $833 million, minimum. The Fire Department budget is proposed to be reduced by $4 million, or 0.1%, with the city's contribution increasing by $133 million. What is going down is not what New Yorkers are paying, it is what they are getting in exchange.

No End to the Fraud

|

"The budget may be stalled, parks may be closed but public employees might soon be able to take early retirement" according to the Albany Times-Union. "The 55/25 bill would allow state workers as well as local public employees to retire at age 55 after 25 years of service without penalty…The measured passed in the Assembly Monday and may be reviewed in a key Senate."

So they cut the number of people on the job, services are gutted, and rather than have to deal with the consequences, Generation Greed gets to ride off to Florida. 'Supporters are confident the bill will pass in the Senate, too, especially considering that it's a potential cost-saver." Like all the other pension deals? Then how come taxes are rising while services are being gutted –to pay for the soaring cost of those retired?

Four Years on Room Eight

|

It’s been four years since I first started posting on this site, and I might as well continue the tradition with another retrospective. First, I’d like to thank Ben and Gur for providing me with a website to post essays on the public policy non-decisions no one wants to talk about, with the capacity to attach spreadsheets with the facts no one wants to see. Creating such a site was beyond my capability, and I appreciate their free web hosting and technical support.

Writing on this blog has been, in a sense, my final howl against the moon in frustration with the generations in power for selling out the future of my state and community, to hide from everyone else the cost of enormous resources transferred to those working the system. The recession, as recessions do, has just started to reveal to everyone else what has happened. Four years ago, in another election year for Governor, I posted a series of data analyses showing how New York State, and different parts of New York State, compared with other states and the national average, with essays that identified problems with state and local government and the state in general, and made a series of proposals. This year I’ll probably continue to post data as it become available, in case there is anyone out there who is interested in the actual facts, but I don’t think I’ll talk much about what should happen next. Because between then and now I’ve learned something: things are so rotten to the core that nothing will change prior to a collapse. Consider it my New York City education.

Politically Relevant Info From the Times Article on Pensions

|

“Public pensions in New York City and State have had a cost-of-living adjustment feature since 2000, but it applies only to the first $18,000….The cost-of-living adjustment was the most expensive pension enhancement enacted in recent memory in New York, according to the Independent Budget Office. The cost has, once again, proved higher than expected.”

Expected by whom? In any event, that retroactive pension enhancement, neither worked not bargained for, was the means Carl McCall used to get the 2002 nomination for Governor over Andrew Cuomo, getting the support of the public employee unions. Not that the unions went all out in the general election to actually make McCall Governor. They had cut a deal with Pataki to sign the legislation, following the deal Pataki cut with Local 1199 and the Greater New York Hospital Association. Of course all this was a long time ago. Which is how things were planned, because we have not yet begun to suffer to pay for all of this.