Category: News and Opinion

Readers of this site may be interested to find out what life is like in New York City, as told to the rest of the country by the Associated Press. “Allison Weiss Brady, 36, a venture capitalist and philanthropist who is on the board of her family foundation, said she likes to be practical when buying handbags preferring to buy bags in basic colors. Still, she spends $20,000 per season on accessories and typically spends $5,000 per bag, much more than the $2,000 she used to spend a few years ago…Nadine Absolam, a 32-year-old Brooklyn resident, says she likes to have the trendiest designer items, but she said it's getting harder to come up with the cash. ‘My first priority should be my bills. But these designers bring out so many hot items that you must have these things,’ said the Pilates instructor. ‘I am always late with my bills.’ Absolam spends about $1,000 in clothing and accessories per month, about half of her monthly salary.” The Mayor and City Council hear your pain ladies. Among all the public priorities in this over-taxed, debt-ridden city and state, they decided an elimination of the city’s tax on clothing was one of them.

Before resuming my diatribe, let me say there is much to like in the city budget.

The current state policy, which the State Senate seems want to push farther and farther, is to provide more state education funding to school districts that spend the most money, New York City excluded, and then to make New York City pay for it through back door “tax relief” aid for everyone else. No accountability is expected for the added funds. My solution, as I’ve stated in the past, is to have a cap on spending per student at 25 to 33 percent above the national average (adjusted for the cost of living). Not a cap on the increase, keeping existing spending differences in spending as they are forever, as certain cynical, selfish, nasty, dishonest, greedy, immoral, unethical people have often proposed. A cap on the total. Below that cap, no school budget referendums would not be required. Above the cap, one dollar of state education funding would be taken away for each dollar in excess.

I didn’t notice until now, but new data from the New York State Department of Taxation of Finance was released in May for the share of New York State income taxes accounted for by each county. And while for older data I rely on the New York State Statistical Yearbook, which wasn’t published every year, it appears that the 41.3% of income taxes paid by full-time state residents that were paid by New York City residents in 2004 is the most since the early 1970s. The data can be found here. New York City residents accounted for $8.9 billion of the $21.6 billion in state income tax receipts paid by full time residents that year, or 41.3% of the total. Moreover, as New Jersey and Connecticut residents account for $2.8 billion of the $3.8 billion in state income taxes paid by non-residents, I doubt the majority of those non-residents worked in Watertown. Getting back to full-time residents, New York City residents accounted for 40.2% of the returns, 40.7% of the income, and 41.3% of the taxes. The city’s share of the population was somewhat higher, since it has a much higher poverty rate than the rest of the state, and thus presumably more people not filing returns.

As promised, I have attached a spreadsheet with FY 2005 per-child spending by category (instructional wages and salaries, operation and maintenance of plant, etc.) for every school district in the state. In high-cost downstate New York, the figures have been adjusted downward to account for higher wages and costs here – those which received adjustments are identified by an asterisk. The spreadsheet also includes the original data downloaded from the U.S. Census Bureau that I used for the per-capita figures; the census data includes even more detailed categories I chose not to break out. The data, aside from the big city school districts, is sorted by county (in alphabetical order from Albany to Wyoming) followed by school district name. Although my knowledge of the rest of the state is probably greater than the average Brooklyn resident, I have elected to provide the data without comment. While I’m not sure how many people from outside the city read this blog, if you do please look up the data for your school district and let me know what you think of it. Why are things the way they are? Unfortunately, this data came out after the school budget votes this year. But that means this will be the most recent data available when the budgets come up again next year.

For years, pundits inside the city and out have demanded that New York City reduce its high level of wasteful spending outside the classroom, with some asserting that if only New York City’s non-instructional spending were at typical levels it would have plenty of money for teaching. There was perhaps no greater falsehood ever spread in the city’s fiscal debates. Instead, it is the rest of New York State that stands out in its sky-high non-instructional spending relative to the national average, while New York City has always been low. In fiscal 2005, non-instructional spending totaled $3,423 per student in New York City, or $2,554 if the cost of living is adjusted for, well below the national average of $3,400. The Downstate Suburbs (also adjusted for living costs), Upstate New York, and New Jersey (adjusted as well) far exceeded national average at $4,221, $4,350, and $4,449 respectively. The U.S. Census Bureau data on expenditures per pupil may be found in the spreadsheet attached to my previous post here http://www.r8ny.com/blog/larry_littlefield/per_student_revenues_and_expenditures_in_fy_2002_and_fy_2005_a_little_good_news_and_lot_of_bad_news_for_n . A more detailed discussion, including a discussion of changes from FY 2002 to FY 2005, follows.

Through the 1990s, New York City’s per student public school revenues and expenditures were below the national average if adjusted for the cost of living using the modest method I prefer (see the end of the prior post). In Fiscal 2002, however, NYC’s spending per student was $10,882 in cost of living-adjusted $2005, above the national average of $10,084. Unfortunately, the city’s public school revenues per student were only $9,435 at the time, well below the national average of $9,879, as the city borrowed with abandon and kept taxes low during former Mayor Giuliani’s second term. With Mayor Bloomberg making education a top priority, by FY2005 an additional breakthrough had occurred as the city’s revenues per student, adjusted for the cost of living, reached $11,564 that year, above the national average of $10,339. That, I suppose is good news. Almost everything else I discovered about changes between FY 2002 and FY 2005, however, is bad news, with much of it based on decisions made before FY 2002, or subsequently by former Governor Pataki and the New York State legislature. Through FY 2005 Mayor Bloomberg’s fiscal imprint was, in reality modest.

In FY 2002, thanks to 2.5% inflation-adjusted decline in the personal income of New York City residents according to the latest estimates from the Bureau of Economic Analysis, New York City’s elementary and secondary public school spending rose to 4.57% of that personal income, within rounding error of the U.S. average of 4.63%. I thought, and not for the first time, that the city’s public school spending might actually exceed the national average as a share of income in some subsequent year. But it was not to be. As in the early 1990s, government budget reductions lagged the reduction in the tax base, but once they kicked in and personal income began to recover, the city’s public school spending fell as a share of personal income. As I showed earlier based on another data source, the city’s share of state education funding (direct and back-door funding under programs like STAR) was also cut. Meanwhile, spending in the rest of the state stayed at sky-high levels relative to personal income. In fiscal 2005, New York City’s elementary and secondary public school spending had fallen to 4.28% of city residents’ personal income, 7.5% below the national average and 33.7% below the average for the rest of New York State.

Am I the only person who thinks there is something a little wrong about Councilman John Liu voting in favor of naming a street for Sonny Carson?

After all Liu represents the largest Korean community in New York and Carson led the infamous boycott of Korean groceries in Brooklyn.

The attachment program is working again, so I am attaching spreadsheets based on 2005 public finance data from the U.S. Census Bureau and personal income data from the Bureau of Economic Analysis. Since this is not a census of governments year, the Bureau’s data is based on a limited survey, and state and local finance estimates are provided at the state level only. Downloading individual unit data for the City of New York and the Port Authority of NY and NJ, the only units of local government in New York City, however, I have compiled data for both New York City and (by subtraction) the rest of New York State. Once again, for reasons I explained here http://www.r8ny.com/blog/larry_littlefield/bureau_of_economic_analysis_data_pay_per_worker_and_its_public_policy_implications.html , in general revenues and expenditures are most comparable when expressed as a share of personal income. The spreadsheets contain the information as downloaded, and you can see what I did with it.

This just in from Bloomberg (the company, not the Mayor).  At a conference in Las Vegas, the city where casino gambling is legal and legal prostitution is nearby, Bear Sterns is giving a sales presentation to 50 public employee pension fund managers to convince them to purchase the equity tranches of collateralized debt obligations (CDOs). You can read all about it here:  http://www.bloomberg.com/apps/news?pid=20601109&sid=aW5vEJn3LpVw&refer=home.  Per Bloomberg “Worldwide sales of CDOs — which are packages of securities backed by bonds, mortgages and other loans — have soared since 2003, reaching $503 billion last year, a fivefold increase in three years. Bankers call the bottom sections of a CDO, the ones most vulnerable to losses from bad debt, the equity tranches. They also refer to them as toxic waste because as more borrowers default on loans, these investments would be the first to take losses. The investments could be wiped out.” A large share of CDOs are backed by subprime and Alt-A mortgage loans. Please someone tell me the NYC and NY State public employee pension funds aren’t buying these.