Author: Larry Littlefield

New York’s State and Local Taxes: How, and by Whom, Are You Getting Robbed?

|

As you can see if you downloaded the spreadsheets attached to this post, New York’s state and local taxes continue to be sky high as a share of its residents’ personal income, and did not drop significantly as the economy recovered from the recession earlier in the decade. Only Wyoming and Alaska are in New York’s vicinity, and in these states a huge share of the taxes are paid by oil and mineral taxes, not state residents and businesses. If New York City were a separate state, it would have ranked ahead of both those states with total tax revenues at 15.9% of personal income, 46.1% over the national average, assuming the burden of New York’s state taxes is distributed in proportion to personal income. (It isn’t – the dedicated MTA taxes that are only collected downstate are included as state taxes by the Census Bureau). The state and local tax burden in the rest of the state was 23.4% higher than the national average at 13.4% of income, which would have ranked sixth (behind New York City, Wyoming, Alaska, the District of Columbia, and Maine) if the rest of the state were a separate state.

Unless you are one of the people profiteering off this situation, there are two ways to look at it. You can be outraged that the tax burden is so high in New York. Or you can be outraged that given the high tax burden in New York, we have so many unmet needs with threatened school cuts, the onrushing collapse of public housing and public transit, a shortage of public recreational facilities, and inadequate preventive health care for many. The discussion should be limited to how, and by whom, most of us are being ripped off, not whether or not.

An MTA Subway Map I’d Like To See

|

GIS systems seem to have ushered in a golden age of cartography, with younger generations actually paying attention to less boringly named maps such as “mash-ups” that present information geographically. Well, there is a map I’d like to see the MTA produce and post for the benefit of those younger generations, so they can have an idea what is coming. AMNY reports the agency has acknowledged that service is going into decline, caught between rising ridership and increasing disruption due to maintenance problems. “Trains are falling farther and farther behind since at least March 2006. It's worst in the evening rush where NYC Transit rates itself as running 88% of trains on time in March – the most recent data available – down from almost 92% in March last year” according to this source, and “the number of delays is up as well – an average of 27% over the last 12 months.” The mean distance between failures of the subway cars themselves, whose reduction over 25 years is the pride of New York City Transit, is down 12% over a year.

As readers of my prior posts know, service is going to be a lot worse as the practice of paying for ongoing maintenance and replacement with 30-year debt runs its course, and ongoing maintenance and replacement is cut back, perhaps eliminated. Now those debts – not to mention the state and local tax-free, inflation-adjusted pensions for transit workers who get to retire at 55 and demand to be allowed to retire at 50 – have to be paid for, even as dedicated MTA tax revenues plunge. “The situation is worsened by the news that for the third straight month the MTA saw its revenue from real estate transactions drop below budget estimates,” according to AMNY, but to anyone who isn’t being paid to provide a bogus estimate those transaction tax revenues continue to be greater than the MTA has a right to expect. In the future, everyone will be affected by this. But in New York “the future” and “everyone” don’t matter at all politically. If they did, the New York State legislature wouldn’t have made so many decisions over the past 20 years that have wrecked everyone’s future. So let’s show who will be hurt the most the soonest.

Census FY 2006 Public Finance Data: The Spreadsheets

|

Am I a nerd or what? Yes I played a couple of sessions of paddleball with a friend, took two long bicycle rides with my wife, and attended a barbeque with relatives this Memorial Day weekend. But I also downloaded and crunched down fiscal 2005-2006 comparative state and local government finance data from the U.S. Census Bureau. I’ll write about it when I can, but for those with open minds and a willingness to look at tables, I’ve decided to post the spreadsheets right away.

One spreadsheet shows state and local taxes as a share of the personal income of area residents for New York City, the rest of New York State, and all the other states and the District of Columbia. The second shows revenues and expenditures in many categories, generally expressed as the amount per $1,000 of personal income of area residents, for local governments in New York City, the Rest of New York State, the U.S. and New Jersey. The output worksheets are primed to print on 8 ½ by 11 inch paper. I decided to keep track, and it took me about eight hours to get from the start of work to this point, despite being the fastest grunt-worker on earth (or so I believe). A few more notes follow, for those who haven’t read my posts on this subject before.

Will Someone, Anyone Please Tell The Truth About the NYC School Budget?

|

As I read the circular finger pointing about the NYC school budget, and get the e-mails asking me to protest the budget cuts, I am increasingly sickened. It seems like a grand conspiracy of deception, with all the proposed antagonists in on it, parents and taxpayers being played for fools, and the newspapers playing along. The teacher’s union and Sheldon Silver claim the state is wonderfully bestowing money on the schools and the city is taking it away. The teacher’s union also points to the contract budget and administrative costs at the Department of Education as if they were high rather than low. The Mayor and Chancellor Klein claim the state is unfairly directing money away from better off children to less well off children, playing the two off against each other. And they point to the teachers no one wants sitting in the rubber rooms, who have always been there. Everyone is coming up with all kinds of reason why the quality of education is going to be going down, and pointing at each other.

As I wrote here, however, the truth is that according to Census Bureau data two years ago in fiscal 2006 New York City’s instructional spending per child, at $8,679 after adjustment for the cost of living, was 56.3% higher than the national average ($5,552), and about as high as the adjusted Downstate Suburbs ($8,676) or Upstate New York ($8,555). That was after massive increases compared with the past, when the city’s schools were under-funded. The instructional employees — the teachers — had all the money they ought to need then. Yet from fiscal 2006 to fiscal 2008, according to city budget documents, NYC Department of Education spending has gone up an additional 17.1%. And in addition, the Mayor’s proposed budget increases school spending by 2.8% next year despite on onrushing fiscal crisis, and increases spending on teacher pay by 5.1%. So what is the problem? Everyone pointing the finger at each other knows, and none of them will say, because they were all in on it.

A Capital Idea: Painting the Brooklyn Bridge

|

For those of you who haven’t heard, various events are planned this Memorial Day weekend to celebrate the 125th anniversary of the opening of the Brooklyn Bridge. As someone who has always enjoyed walking over it, and who now rides over it on a bicycle three or four says per week (I take the Manhattan Bridge home), I recommend taking a stroll. As The Great Bridge, a history of its construction, put it “to be on the promenade of the Brooklyn Bridge on a fine day, about halfway between the two towers, looking over the harbor and the city skyline, was to be at one of the two or three most soul stirring spots in America, like standing on the rim of the Grand Canyon.”

You might not want to look too closely at the steel on either side, however, because if you do you’ll see all the spots of rusting bare metal. And then instead of celebrating the monument we inherited from our ancestors, you might end up thinking about the fact that, one atom of iron oxide at a time, we are taking it away from our children.

Nobody’s Gonna Pay You to Tell the Truth

|

Annual retrospectives seem to be the custom here at Room Eight, so I thought I’d write about what motivates me to spend my time researching data and writing essays for this site. I do so without pay or compensation of any kind, and without knowing how many people actually download the spreadsheets and read the essays, if any at all. In part I’m just doing what I was trained to do – compile and analyze information bearing on government policy. That’s a skill I found to be worth little in government because public policy generally consists of deals, favors and non-decisions rather than decisions, and for those no background information is required. And in part I’m taking the opportunity to raise questions about those deals and favors, and their effect on people I care about and our future, which is my children’s future. It is a response to my frustration that there are so many open secrets that no one dares to talk about. In general, the only way to get paid to compile public policy information is to work for a privileged group seeking to maintain or expand those privileges at everyone’s expense. A fair analysis of comprehensive information is not in their interest. No one is going to pay you to tell the truth.

Fool Me Once Shame On You, Fool Me Twice Shame On Me

|

The news is that the MTA may not be able to sell the West Side rail yards to help pay for the capital plan after all. The deal between the MTA and developer Tishman Speyer fell through.

Some time ago, the New York City Partnership (equivalent to the Chamber of Commerce) put out a report saying the Second Avenue Subway (SAS) should be cancelled, since the Upper East Side is already built out and that investment wouldn't generate growth, but the Flushing Line extension was critical because it would open up a new area to development.  I wrote to them in opposition. My response at the time was that the promise of the SAS already induced lots of building on the East Side, and the failure to deliver left Upper East Side residents paying massive taxes while cramming onto the Lex like sardines. If the Partnership was against the SAS from a cost-benefit perspective, I said, what it should be in favor of on the West Side was promising the Flushing Extension, borrowing money for the Flushing Extension, planning the Flushing Extension, having lots of people invest in new buildings expecting to be served by the Flushing Extension, collecting massive taxes on those new buildings, but then NEVER ACTUALLY BUILD IT.  Future residents and workers of Hudson Yards could walk over to 8th Avenue and cram on the 8th Avenue line instead.

Where the Money Comes From And Where It Goes

|

Most of the time, those elsewhere in the state don’t bother to justify the fact that New York City residents are expected to pay local higher taxes (all taxes combined) as a share of their income while receiving inferior public services, and those in older generations don’t justify why younger people should face higher taxes and a diminished quality of life. The simply assert that they and people like them deserve more, and no one makes them face the fact that others will be left with less. To the extent that it is justified, however, the reasons include “they don’t need it,” “they don’t deserve it,” and “we don’t have it. New York City residents are simultaneously scored for being rich and scorned for being poor, while the “good people” who “make it on their own” by being “hard working” live elsewhere. Except in recessions, when there isn’t enough money to go around and, well, the good people deserve to keep what they’ve got. In light of a 40-year river of contempt, I’ve compiled from recently-released BEA data on where New York’s money comes from and where it goes. Basically, it comes from Manhattan, and goes everywhere else.

NYC Private Employment: An All-Time High

|

As I reported here, in 2007 total private employment in New York City, based on re-benchmarked annual average non-farm wage and salary employment data from the New York State Department of Labor, was slightly higher than at the peak in 2000, but below the all time peak in 1969. If you think this might understate the boom in the city’s economy you are right, because a rising share of those working in the city’s private sector are not wage and salary employees at all; they are self-employed business owners, freelancers, and independent contractors, and thus not captured by the Current Employment Survey data cited above. Based on recently-released data from the Bureau of Economic Analysis, which includes the self-employed, the number of private sector workers working in New York City roared past the 1969 peak in the late 1990s and has remained there ever since. It is a stunning boom hidden from the most commonly cited economic statistics, centered initially in Manhattan, spreading to Brooklyn, and moving on to the Bronx and Queens.

They Call This Gentrification?

|

To judge by the press and popular perception, Brooklyn is rapidly evolving into a very different kind of place. Actors and celebrities are moving into Brownstone neighborhoods, now mostly populated by parenting yuppies. Artists and fashion models have moved into Williamsburg. Tourists from Europe and Asia vacation in Prospect Park. And natives who are too good for mass transit continue to reside in neighborhoods represented by Anthony Weiner and Lew Fidler. The wave of affluence spreading out from Manhattan has even pushed into formerly poor neighborhoods such as Bushwick and Crown Heights, brining fears of displacement and hordes of real estate developers in their wake.

Recently released Local Area Personal Income data from the Bureau of Economic Analysis, however, tells a different story. The per capita income of Brooklyn, which equaled the national average in 1969, the first year of the data series, and was 92 percent of the national average (8 percent below average) as recently as 1990, fell to 82 percent of the national average in 2000, the peak year of the previous economic boom. In the second-to-peak year of this economic boom, 2006, it was still just 82 percent of the national average, a loss of 18 percent from 1969. While different neighborhoods may be subject to different trends, it hardly seems as if the affluent are rushing into Brooklyn and washing everyone else out.