Category: News and Opinion

IS THIS A SIGNIFICANT ENDORSEMENT FOR JOHN LIU’S MAYORAL CAMPAIGN?

Quite often in politics seemingly insignificant endorsements eventually bear lots of surprising fruit. In this year’s NYC mayoral race, such an occurrence could be shaping up. There are five top candidates in the democrat’s September primary, and the consensus amongst political pundits appears to be that the winner of this primary will be the next mayor of New York City.

High local spending on health and welfare functions has long differentiated New York City from local governments in the suburbs and elsewhere in the United States. Much of that money is not paid for by city taxpayers, but merely passes through the city’s after being collected by the federal and state governments, which also set the rules. There are huge issues and possibly huge changes in health care finance, but most of these involve the federal and state governments, not the city and not the Mayor.

Even leaving aside required local contributions to New York State’s Medicaid program and the Health and Hospitals Corporation, which I discussed in the initial post in this series, New York City’s health and social services infrastructure is huge. As proposed for FY 2014, the city’s Administration for Children’s Services, Department of Homeless Services, Department of Health and Mental Hygene, and Department of Social Services (excluding welfare and Medicaid payments) combined are expected to spend $7.9 billion. Of this amount, less than one-third is to be spent on city personnel, with the rest going to health and social service contractors, generally in the non-profit sectors. Given that we have just been through a national economic calamity, and given that the City of New York is facing an ongoing fiscal crisis, one might expect that spending on programs for the poor would have increased strongly. But did it?

Apologies for the staleness of some of the items. If it gets any worse, not even C-Town will stock them.  

This post previously appeared on "Saying the Unsaid In New York." The data referenced is in a spreadsheet attached to this post.

New York City relies on its infrastructure for its prosperity and quality of life, and the deterioration of that infrastructure in the 1970s is one of the factors in the city’s near-death experience. The city borrowed so much money, in the Lindsay and Beame Administrations and before, for infrastructure and for other things, that by the time the fiscal crisis came around debt service was soaking up all the money, leaving no room for maintenance. It was a terrible legacy for that generation of city leaders to leave to those who followed, and the city has yet to fully recover from it. But this generation of city leaders, including the current Mayor and those running to replace him, may have repeated it. The state legislature, with regard to the MTA, almost certainly has. And while painful sacrifices would be needed to avoid a repeat of New York’s 1970s fate, that is not what any of the candidates running in New York’s rare actual elections (the one for Mayor) is suggesting. They are suggesting lots of goodies will follow if they are elected, almost none of which involve city infrastructure.

This post appeared previously on "Saying the Unsaid in New York." While the public schools account for the highest total amount of New York City spending overall, with health and social services coming in second, a substantial share of the funding for those services comes from the federal and state governments, not city taxes and fees. Of the $50.7 billion in “city funds” in the proposed FY 2014 budget, according to the “Budget Summary” document, the four so-called uniformed agencies – police, fire, corrections, and sanitation, account for $16.8 billion. The Department of Education accounts for $13.9 billion, with $10.6 billion for the health and welfare agencies and $9.4 billion for everything else put together.

While the Department of Education has been favored at the expense of other public services in this fiscal/pension/debt crisis, the uniformed agencies have been favored in virtually every crisis – the latest being no exception. While inflation will have increased 11.9% from FY 2008 to FY 2014 (and most people’s wages going up by far less), total city spending will have gone up 20.7% under the FY 2014 budget proposal. Spending on the four uniformed agencies combined will have gone up even more – by 26.9%, with much of that increase having already happened. Total New York City personal services spending is projected to have increased 11.8% from FY 2008 to FY 2014, or about the rate of inflation. The projected increase for the four uniformed agencies combined is 22.3%, or about double, including 26.0% for the NYPD. And yet the head of the Patrolmen’s Benevolent Association, the Uniformed Firefighters’ Association, and the Uniformed Sanitationmen’s Association show up at City Council hearings each year to tell New Yorkers they deserve less protection, less clean and passable streets, less work overall unless they get even more money. Why do they make such claims? Unless you are reading my posts for the first time, you know why.

This post appeared previously on "Saying the Unsaid in New York." During the Bloomberg Administration, no public service has received a greater increase in funding, received more attention, and been the source of more conflict than the New York City public schools. As I noted in this post with spreadsheet attached, funding for the schools increased enormously from FY 2002, the last pre-Bloomberg budget, to FY 2008, just before the recession fully hit. That funding had also increased enormously from FY 1997, when the city’s share of state aid was at a low, to FY 2002 thanks to pressure from the Campaign for Fiscal Equity Lawsuit. As a result the city’s schools, which had historically been underfunded, were highly funded on a per-student basis in FY2008 – and very highly funded if one looked at spending on instructional employees alone.

Since the start of the recession city spending has continued to grow faster than inflation, as discussed in the prior post. Total spending by the Department of Education increased more than overall city spending during the FY 2008 to FY 2011 period, and less from FY 2011 to FY 2014, due mostly to the influence of the federal stimulus package and its expiration. For the entire FY 2008 to FY 2014 period, if the Mayor’s budget proposal were adopted, overall city spending will have increased 20.7%, and inflation will have gone up 11.9%, but Department of Education spending will have grown by 23.6%. More than average. Personal Services spending, which excludes the fast growing Medicaid and debt service categories, will have gone up 11.8% overall, slightly less than inflation, and 12.1% for the Department of Education, slightly more. But wages and salaries at the Department of Education, which affects how many teachers and other workers may be hired and how much they may be paid, would have actually fallen 2.5% from FY 2008 to FY 2014. So why is that?

I wrote a series of posts on the New York City budget last February, at a time when Room Eight was not working. Only one could be posted on this site at all. With the new budget set to take effect, and with candidates for Mayor publicly promising us all the extras we are going to get for nothing, while quietly negotiating how much less we are going to get for how much more, I am going to repeat them.

Since the financial crisis morphed into the Great Recession in 2008, Americans have been told to pay more for government, accept less, or both. That has been true in New York City as well, with ongoing service cuts in every budget despite a 7.0% property tax increase, a state income tax increase, and a new MTA tax on all workers (but not the retired or investment income). Along with fare increases, toll increases, and other increases. The recession, as officially measured, is long over, and New York City’s private employment is not only higher than it had been before the recession started, but also probably reached a historic high in 2012, finally surpassing the level of 1969. And yet New Yorkers are still being told to accept less and/or pay more to the government. This post and those after are about the reasons why.

I’ve been otherwise occupied, and it’s been nearly three weeks since I’ve cleaned out my Facebook posts—not that there are many of them. FWIW, I’m doing it for posterity, since many have probably gone stale.

Two groups of people have been getting richer: the executives who sit on each other’s boards and vote each other a rising share of private sector income, and retired public employees whose unions have cut political deals for retroactive pension increases. Everyone else is getting poorer. There is, in other words, the executive/financial class, the political/union class, and the serfs.

The pay and benefits of the serfs is determined in negotiations with people who have an interest in keeping them as low as possible, either to keep more money for themselves or to be in a better position to offer better value to their customers. Everyone wants to get more for less, whether they are shopping for labor or as consumers, but in the end these relationships are voluntary, so an equitable agreement has to be reached. But the public employee unions and executives negotiate their pay and benefits in secret with their cronies, and then pass the bill on to powerless others who are made worse off, taxpayers/public service recipients and shareholders. Here in the U.S. they continue to take more and more, and express outrage at anyone who dares to question their entitlement, even in the wake of a Great Recession that made everyone else much worse off. But things are different elsewhere. And that may be instructive.

The U.S. Census Bureau has released its public education finance data for FY 2011, and I have once again downloaded and compiled it. That year New York City spent $22,517 per student, somewhat lower than the average of $23,382 for the Downstate Suburbs but far more than the $17,440 for New Jersey, $18,945 for Upstate New York, and $12,367 for the U.S. as a whole. As usual I have adjusted some of these figures for the higher average private sector wage and cost of living in some locations, notably Downstate New York and New Jersey. This reduces the NYC figure to $17,548 per child, still 41.9% higher than the U.S. average but below the average for Upstate New York.

New York City’s “non-instructional” spending has always been very low compared with other areas. In FY 2011 the city’s “instructional” spending was $11,791 per student with adjustment, above the adjusted averages of $11,258 for the Downstate Suburbs and $7,895 for New Jersey, above the average of $10,726 for Upstate New York, and 82.5% higher than the U.S. average of just $6,461. Examining instructional wages and benefits alone, New York City’s adjusted figure of $10,326 per student was 81.5% above the U.S. average – nearly double — but slightly below the average for the Downstate Suburbs at $10,645. The city’s instructional wages and benefits per student had been above the average for the Downstate Suburbs the year before. The city remained well above the average for Upstate New York and New Jersey by this measure. Moreover, on an unadjusted, straight dollar basis the city spent $13,250 per student on instructional wages and benefits in FY 2011. That is $265,000 for every 20 students, or $159,000 for every twelve. Based on city budget documents, this figure has gone up considerably since. Additional commentary, and the spreadsheets, may be found on “Saying the Unsaid in New York.”