Author: Larry Littlefield

Well here’s something you don’t see every day. According to the Albany Times Union, “New York Gov. David Paterson has signed a bill cracking the code of silence at public authorities that run New York City's mass transit system, the state Thruway, and many other major services…The newest statute makes it illegal for a public authority to prevent employees from disclosing anything about their work, except in certain cases when the information is kept confidential by law.” According to Richard Brodsky “the public authorities long operated without proper scrutiny even though they collectively handle billions of dollars.” So what is it that they didn’t know over the past 20 years? That if you make some people better off by borrowing $billions today, other people are going to be worse off when it has to be paid back tomorrow?

As it happens, I have in my possession a spreadsheet that I obtained as an MTA employee, covered by the confidentiality rules I was under at a time – that you cannot publicly release information that you only knew because you were an employee. The rules were in the MTA policies, and I thought them reasonable at the time. The spreadsheet is a table of the age of the signal system for each stretch of track, along with past replacement projects. It shows which parts of the city will have their transit service collapse first, as the MTA’s resources shift to debt service as a result of past borrowing for ongoing normal replacement (maintenance not capital as far as I’m concerned), once ongoing normal replacement stops. So, Paterson and Brodsky, would it be ethical for me to attach that table (and some others) to this post under the new law? I know my fellow transit buffs would love to see it.

The New York Times has an article today on the possible damage that New York's high taxes on real estate transfers, on both sellers and the recording of mortgages, is doing to a possible real estate recovery. "The combined New York State and city transfer taxes, levied whenever a property changes hands, are 3.025 percent, among the highest in the country. In a rising market the taxes are seen as incidental, but when profit margins contract the tax looms larger, and lenders and borrowers are grappling with who will pay it."

There is another side to this issue, however. Perhaps the sky-high taxes on each new mortgage and sale is one reason there was less idiotic flipping and cash-out refinancing in New York than in other places to begin with, as people on housing bubble blogs seem to believe. An owner-occupied residence is a place to live, not an investment, whose actual return is the rent you don't have to pay net of the expenses you do. Unless you are planning to stay a long time — possibly long enough to pay off the mortgage and live rent free — it doesn't pay to buy to begin with.

Generation Greed has promised itself so much that it has been unwilling to pay for, there are only three ways out. Tax younger generations to poverty while denying them public services and benefits. Refuse to pay the debts and pension obligations older generations have promised themselves, with the conflict going extra-legal and perhaps extra-constitutional depending on how deeply the system is rigged. And inflate away the debts, so they are paid back in less valuable dollars. Economist Paul Krugman, looking at the Greek situation, seems to be catching on to this, and coming to terms with inflation as the least bad alternative in the wake of Generation Greed, as you can read here.

Gotham Gazette has a story on New York City's goal of creating a green economy. As it happens, I had solar panels installed on my roof last year, receiving massive federal, state and local subsidies for doing do. But part of the subsidy was absorbed by the cost of bureaucracy. From the time I signed a contract until the time the final inspection was completed, the solar project took nearly a year. But the actual installation of the solar panels and equipment took just ONE DAY, in part because the contractor was good, and in part because I had planned for it, timing solar installation with the need for a new roof.

Today the New York Times notes that states are approaching a debt crisis. And what is the crisis? When lenders decide that younger generations may be unwilling to pay more and more taxes for fewer and fewer services, and refuse to pay the debts and pensions older generations promised themselves but refused to those coming after. Until that point, the generations now in charge will continue to grab more and more with an implicit promise that those in the future will repay by having less and less. While this is a national problem, a function of Generation Greed, it is worse in New York, where Generation Greed is greediest.

Not long after I mentioned it in a prior post, that data is out for 2007. New York City accounted for 45 percent of the state's income and 47 percent of its income tax payments in 2007.  Those figures only include the taxes paid by state residents. New York State income taxes paid by commuters from Connecticut and New Jersey are in addition, and most of those are collected in New York City. New York City received 38.3 percent of New York State school aid that year. New York City's share of the state's income and taxes have probably fallen quite a bit since then, particularly since such a large share of the workers in the rest of the state are public employees and retirees. The city fell from 41.6% of state tax payments in 2000 to 39.4% in 2002, during the last Wall Street meltdown. So, based on who got cut the most in previous recessions, will it share of state school aid, if back door school aid and other gambits are included.