Author: Larry Littlefield

The situation our transportation system finds itself in, as evidenced by the proposed 2008 to 2013 MTA Capital Plan, is in part an outgrowth of the broader generational war that has also affected federal, state and local debts of all types, labor deals featuring richer pension benefits for those cashing in and moving out and lower pay and benefits for new employees, and a general decline in infrastructure investment. But it is also the result of the capture of our government in Albany by producers of public services, in the public, private and non-profiteer sectors, at the expense of consumers of public services and taxpayers. If you want to be robbed by public employee unions, you are a Democrat; if you want to be robbed by contractors, you are a Republican; if you want to be robbed by the non-profiteers, you can be either. But if you don’t want to be robbed at all, you are out of luck. Given what contractors have been charging the MTA for capital projects, it is no surprise that money has been borrowed, because there is no way New Yorkers could have collectively afforded to spend so much in the past. Given that, how can we afford to spend that much and more, plus the interest on past debts, in the future?

The 2008-13 MTA Capital plan, if one looks past the press release and presentation and reads the entire document, is a nightmare that implies the transportation system and New York region have little hope for the future. The MTA hasn’t even tried to hide it, perhaps assuming no one will bother to read the entire document and do a little math. The $20.2 billion “core” plan, supposedly intended to maintain what we already have, contains only $8.6 billion in money collected in the six years it would be spent, and almost all of that will purportedly comes from a federal government that may be in no position to deliver. The other $12 billion would be borrowed, and presumably be paid back over 30 to 50 years, adding to the $1.4 billion per year in debt service the MTA is already paying. Even with that additional debt for the Tier I “core” plan, for the absolute basics, the transit system will be subject to 1970s-like deferred maintenance on an epic scale, in the clear words of the MTA itself. And the major improvements, promised for so long, even as insiders in older generations had the government borrow money and in effect transfer it to themselves, will only proceed if another $10 billion is borrowed. And not all of them, just some of them — the rest are put off to a time when the MTA is certain to be bankrupt.

We have two sets of election problems in New York State. One is that gerrymandering and campaign finance abuses make the number of legislative districts that are competitive between Republicans and Democrats slightly smaller that it would otherwise be, allowing the Republicans to control one small part of the government – the State Senate – despite a majority of the voters being Democrats. The New York Times and Citizens Union, among others, are passionate about this election problem and Governor Spitzer was willing to go to the mat for reform last year, before being thwarted by…Republicans in the State Senate. The second problem is that, gerrymandering or no, the majority of legislative and Congressional districts are not competitive between Republicans and Democrats, so there really is no election on Election Day. And given that running against incumbents in a primary is verboten for those who want to remain in good standing in the political portion of the ruling class, there aren’t any of those either.

The Governor and the Times are less concerned with the second problem. The former seems more concerned with winning swing districts from Republicans than creating election challenges in one-party districts for Democrats and Republicans alike. The latter would prefer more primary challenges in one-party districts, despite the fact that only members of the dominant party can vote in those elections, and only insiders and grifters tend to show up and do so. As a resident of a one-party district, I am much more concerned with the second type of problem. While I have either been a non-affiliated voter or minor party enrollee for my entire voting life, I don’t have a problem with the two-party system. It is the one party system I have a problem with. Is anyone willing to do something about it? Governor Spitzer, how about you?

On February 7th, the Residential Resales table in the Sunday Real Estate section of the New York Times reported on two similar, recently-sold houses, one in Oyster Bay, Nassau County, Long Island and one in Fresh Meadows, Queens, New York City. The former was a 3-bedroom, 2 bath, 51-year-old ranch, on a 100-by-100-ft. lot that sold for $535,000. The latter was a 3-bedroom, 1-bath, 67-year-old brick-and-stucco-sided colonial-style house on a 40-by-100-ft. lot that sold for $635,000. According to the Times, the suburban house owed $10,455 in property taxes, while the city house owed $3,729, but city residents also have to pay New York City’s virtually unique local income tax. So in which location would a prospective buyer pay more in taxes overall? The answer, calculated using the TurboTax program, is that the break-even point for a working couple with two children and only wage and salary income would be $225,000. Above that amount, the city income tax would hit hard enough to more than offset the property tax savings, but below that amount the Oyster Pay property taxes would pose more of a burden. The details, and spreadsheet with chart, follow.

It is here. For 50 years, powerful organized interests in collusion with New York’s elected officials have, in backroom deals without public discussion, without public disclosure, without any consideration of anyone else, walked off with large chunks of New York’s subsequently diminished future. The cost of these deals has generally been hidden for a year or two, and then described as the inevitable consequence of circumstances beyond anyone’s control. Or “uncontrollable expenses.” For example, at a time when most Americans, and most New Yorkers, have no retirement plan at all other than Social Security, public employee unions, again and again, have cut deals with elected officials for earlier retirement with richer pensions. The result, when the bills come due, has been higher taxes, diminished public services, diminished public benefits, and lower pay and benefits for future public employees. That is one of the reason we pay so much in taxes for police, yet starting police officers get $25,000 per year. The most recent deal would allow New York City’s teachers to work five fewer years, retire, and thus get paid to do nothing for five additional years. It has been sent to Governor Spitzer for his signature, after passing the legislature virtually overnight with virtually no dissent, just as everything like it passes. This, and not Joe Bruno’s helicopter rides, is the real moral issue, and the measure of Governor Eliot Spitzer’s values.

Long-time readers of my posts may recall this comparison I made a year ago, using the TurboTax computer program, between the federal, state and local taxes owed by two hypothetical Brooklyn couples with the exact same $75,000 middle-class income — one a couple of retired senior citizen homeowners, the other a working couple crammed into a small apartment. I found that the young couple would pay three times as much in taxes, and that while the seniors paid far less in federal taxes, because retirement income is exempt from the payroll tax, the disparity in New York’s state and local taxes was even greater, because retirement income is not subject to state and local income taxes at all. Well, it’s tax time again, and I’ve once again used the Turbo Tax program to do my taxes and theirs. This year I bumped the income of the two couples — Mr. and Mrs. Senior Voter, and Mr. Young and Ms. Younger Hopeful — up to $100,000 to see what changes. The answer is not much. The Young Hopefuls continue to be taxed heavily as if they were rich, while the Senior Voters continue to pay little as if they were needy, despite the exact same income. Adding a child to the Young Hopefuls, and child care costs and child tax benefits, helps little. If Ms. Hopeful were to stay home with the child, the young couple would still pay more in taxes than the older couple, despite lower income.

If you don’t want public services to collapse and taxes to soar, you’d better hope yesterday was an unusual day, and January was an unusual month. According “Rates on $100 million of bonds sold by the Port Authority of New York and New Jersey, with bidding run by Goldman, soared to 20 percent yesterday from 4.3 percent a week ago, according to data compiled by Bloomberg…New York state’s Metropolitan Transportation Authority also had failures, officials said.” Did you hear that? The MTA tried to sell bonds to finance it’s operations, and no one would buy them. All this pontificating about the MTA surplus, and the reality is the agency is going deeper and deeper into debt, but now perhaps it can’t.

Super Tuesday approaches in this ridiculously front-loaded Presidential campaign. Since I’m not with the bastards or the other bastards, I don’t have a horse in this race, and here on Room Eight I try to refrain from making personal judgments about people I know nothing about. For those of you pondering decisions, however, there is something I’d like to point out. The President is just one actor in the federal government, since the Congress — which also has an election that no one is talking about — is equally important. The federal government is just part of the government in the United States; as I explained last August, it controls much of the money but, aside from national defense and the Post Office, actually does very little of the work. The government is just one part of American society, arguably less important than families or businesses and other private organizations. And the United States has problems, both internally and with the rest of the world, that are affecting government, business, other organizations and families alike.

The President, however, isn’t just the CEO of the federal government, he is the leader of and, for other countries, the symbol of the United States. His or her ability to improve the United States and the world rests not only on their ability to have the federal government force people to do things, but their ability to influence people to do things, or not do things, on their own, through their arguments and personal example. Of the remaining candidates, which one is capable of exercising that kind of leadership in your life, in a direction you believe to be the right one?

The rest of the state seems to have all kinds of ideas for capping property taxes. One would give school districts in the rest of the state (but presumably not in New York City) the ability to force the state to pay for their education costs, no matter how high. City residents, would have to pay, but would get nothing. Another would have the state pick up the retiree costs for all teachers. New York City would pay far more in state taxes than it would get in state help, because years of under-funding, fewer teachers and lower pay mean it would have less in retiree costs to pick up. Some want to limit the increase in taxes each year for all school districts. This will ensure the New York City’s lower spending, staffing and teacher pay, relative to the rest of the metropolitan area, will be locked in. Or, if the city is allowed to use local income taxes to increase school spending, the state would presumably raise state income taxes, which city residents also has to pay, to increase school spending in parts of the state subject to a cap. Speaking of the local income tax, Governor Spitzer’s idea, implied by his latest budget, is to have the state pick up more and more of the cost of education in the rest of the state through STAR property tax relief while cutting state aid to the city by gradually eliminating STAR income tax relief.

Mayor Bloomberg is absolutely right. By telling the rest of the state they deserve lower taxes without insisting that the rest of the state spend less money, and not even considering the tax burden in New York City (which is more tilted toward income taxes), virtually every proposal being consider would work to the detriment of the people of the City of New York, and attempt to roll back any improvement in the city’s own schools.