Category: News and Opinion

Just because it is the national average doesn’t make it right, and it is possible that differences in local needs and conditions allow lower spending in some categories while requiring higher expenditures in others. But any deviation, in either direction, should be explained and justified. In New York, on the other hand, the winners tend to take money off the top, with (generally) state legislation guaranteeing them the first bite of the apple, with the bite adjusted upward each year. So when money becomes scarce, it is the losers who are sacrificed, including the one we have already discussed — taxpayers — who saw a big increase in their state and local tax burden as a share of income in New York City, and a smaller increase in the rest of the state, in the last recession. I once described the Campaign for Fiscal Equity lawsuit as the “battle of the losers,” pitting New York’s city and state taxpayers against the city’s children, with the winners laughing up the stands. In FY 2005 they were laughing still. In the most recent state budget battle one of the winners roared and snarled, because its bite didn’t increase as much as it felt entitled to. That is the state of play in “feudal” New York.

It’s Memorial Day weekend as I write this, it’s a beautiful day, and it’s tempting to save some time by just copying my post from last year on the categories of local government expenditures for which New York City and the rest of the state spend more, or less, than the national average. After all, the winners and losers don’t change much from year to year, although the losers sometimes catch up a little in good years (when other interests are sated) and fall behind more in bad years (when victims must be found). But I’ve compiled the data, so I might as well write about it, and the readers could express their gratitude by downloading the spreadsheet linked here (click on the Output tab), printing the two pages, and looking them over. For the less grateful a brief summary table may be found at the bottom of this post, and it shows that New York City spent much more than the U.S. local government average, as a share of its residents’ personal income, on interest on past debts, pension contributions, payments to the State of New York for Medicaid, and Police and Correction. As always. Local governments in the rest of New York State also spent more than average on Medicaid payments, but not to nearly the same extent, and spent about average in the other categories were NYC was high. Elementary and secondary education spending, however, was sky-high as a share of personal income in the rest of the state, but below the national average in NYC. As always.

Last year, after the Detroit Tigers knocked the Yankees out of the playoffs, I wrote an entry comparing Joe Torre and Karl Rove.

http://www.r8ny.com/blog/jerry_skurnik/joe_torre_karl_rove.html

The gist of it was my belief that people are too quick to brand baseball managers losers despite their overall record and too many political folks are too quick to call anyone involved with a losing campaign an idiot.

While New York City’s state and local tax burden is well above average overall, the extent of the difference varies for the different types of taxes. In fiscal 2005, state and local sales taxes (general plus selective) absorbed 3.8% of the personal income of New York City residents and 3.5% of the income of residents elsewhere in the state, assuming the burden of state sales taxes is distributed around the state in proportion to personal income. The national average was 3.8% of personal income, while New Jersey kept gas taxes low, exempted clothing, borrowed money and collected just 2.7% of personal income in state and local sales taxes. Property taxes absorbed 5.2% of the personal income of residents of the rest of New York State; if it were a separate state, only New Hampshire, Maine and Vermont would have been higher. New York City’s property tax revenue was slightly above the national average (3.3% of income) at 3.4%, New Jersey much higher at 5.0%. New York City’s state and local personal income tax revenues, on the other hand, were more than double the national average at 5.6% vs. 2.4%, with the rest of the state also above average at 3.6% and New Jersey below average at 2.2%.   Note:  see the spreadsheets attached to my prior post.  The r8ny attachment program is still on the fritz, but the webmaster created a work around.

The 2005 public finance data from the U.S. Census Bureau is out, along with 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. A spreadsheet with tax data can be found here and here; data on other revenues and expenditures will follow. 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. This post is about state and local taxes; future posts will discuss where the tax dollars go. But if you can’t wait, just read what I wrote last year; the same patterns have repeated as long as I have compiled this data.

The unions of legend were socialist affairs: all for one, and one for all. The unions of today are more capitalistic — run for their own profit, minimizing services and maximizing revenues. For a given amount of money paid by an employer, those revenues are generally greater if the employer hires a larger number of lower-paid workers than for a smaller number of higher paid workers. The reason is that union dues are generally regressive, and take a higher percentage of pay the less the union member earns. As a result public employee unions often push contract provisions that not only are contrary to the interests of the broader community but also are contrary to the interests of many if not most members, in order to get more people paying dues. The current police contract negotiations are a case in point.

Today is my one-year anniversary of posting on Room Eight. Although I was asked to join at the outset, it took me a while to agree to take the commitment on, and to secure my family’s permission for the diverting the time it takes to post here. My view was and is that most people would find my comments on the news of the day of limited interest. Instead, for the most part I have tried to provide unique information based on independent research, in the hope that eventually someone would follow my lead. And although I am clearly writing for a limited audience, that is after all the point of the internet – it allows limited audiences to be served. So although writing, in effect a two- to three-page research report in the evening may not be the best hobby for someone who writes a five- to eight-page research report in the office every day, I hope to continue contributing for a least two or three more years. Or at least until Room Eight readers find they’ve heard it all before, and pretty much know what I’m going to say before I say it.

In 2009, unless something changes, term limits will kick in and 38 NY City Council members will not be eligible to see re-election.

Eight years ago when the situation was similar I had already heard enough gossip and rumors and read press reports that I had compiled a list of many potential candidates for the open Council seats.

That has not happened yet this time. Only 6 candidates have declare their interest in running for an open City Council seat on the NYC Campaign Finance Board website and while I’ve hear a few rumors and there has been some press reports about likely 2009 Council candidates (Assemblyman Denny Farrell, Lower Manhattan community activist Madelyn Wills & Julie Menin), I have not heard nearly as many names as 1999.

A recent Reuters article captures how it is possible that Americans, collectively, have been able to spend about six percent more than they earned each year over the past half-decade. “Between 2001 and 2006, the Moorheads refinanced their three-bedroom San Diego home at least nine times, county records show…Moorhead and her husband now owe $603,000, up from $196,000 when they started, and more than $10,000 over what their house is worth, according to one online estimate. They're likely to lose it soon if they can't somehow make payments greater than their monthly income.” This couple somehow borrowed and spent (and paid in refinancing fees) $400,000 more than they earned in five years, or $80,000 per year. Multiply that by a few million similar middle-income families, and as many lower income households with sub-prime loans, and you have the intermediate-term direction of our economy. This has already gone on longer than I thought it could, but things that cannot go on forever won’t.

…because the additional staff has already been hired. According to Current Employment Survey data from the New York State Department of Labor, government employment fell by 3,100 in New York City and rose by 6,700 in the rest of the state in the 12 months through April 2007. The long-term trend thus continues.