Tag: Albany

In my previous post, I showed that extremely high public school expenditures drive the high taxes, generally high property taxes, in the portion of the state outside New York City. But what about New York City? Its public education spending, according to the U.S. Census Bureau, is and recent decades always has been below average as a share of its residents’ personal income. Spending on community colleges, parks, recreation, natural resources and libraries is and almost always has been low. So where does the money go?

New York City’s spending, as a share of its residents’ income, is far above average in means tested social benefits, in spending on housing and community development, public housing, social services, and cash welfare – although cash welfare expenditures are now a pittance compared with the other categories. Spending on police and corrections, as well, is and has been high. Another group of spending categories where New York has always been high, however, accounts for a growing share of the city’s tax burden, and a growing cause of spending cuts in other categories: debts, pensions, and employee health care, for retirees in particular. After a brief respite, and as in the terrible decade after the fiscal crisis, city residents are facing rising taxes due to the past, with less and less in public services return in the present, as those who benefitted walk away with a bundle of loot.

As shown the spreadsheet attached to my previous post on local government revenues, New York’s state and local tax revenues were 47.0% above the U.S. average in New York City as a share of its residents’ personal income, 26.8% higher in the Downstate Suburbs, 17.5% higher in Upstate urban counties, and 24.0% higher in Upstate rural counties. The next few posts are about expenditures, and seek to identify the higher spending associated with those higher taxes. If the reader has not done so already, they can follow the link above, download the spreadsheet attached to it, print out the “Print Tables” worksheet (it will print on six pages) and follow along.

The data show that compared with local governments in other places, New York City spends more on housing and community development, public hospitals, social services, and aid to the state for Medicaid, along with police and correction. Mass transit and solid waste spending are also high in the city, but then many places do not have municipal solid waste collection and few have a transit system as extensive as New York. City residents are also burdened by huge pension and debt costs, cost shifted from the past with no current public services in exchange. In the rest of New York State, meanwhile, public school spending is sky-high relative the income of those who reside there. The specifics follow.

We are in a situation in which wages and prices may be stagnant for some time to come. So a property tax cap that merely limits increases to 2.0% per year would mean higher and higher property taxes compared with the incomes of the people who were paying them. Worse, because of the pension enhancements of recent years, pension spending is set to soar. A property tax cap that exempts pension spending and debts, like the one in New Jersey, is no cap at all. It is a fraud.

What the leaders of the state legislature are going to want, I would imply from recent comments in the press as quoted below, is to defuse the issue while having taxes continue to soar, as the pay and benefits of those who keep the in office continue to rise, and the standard of living of everyone else who isn't a senior citizen continues to fall. What will be offered is symbolic change, a "victory" for the new Governor. But it won't take long for people to see that nothing has changed, and to become even more confused, angry, and open to demagoguery.

Local government is where the rubber meets the road in the public sector, the level of government were most public services are directly provided. This post compares local government revenues for the United States, New York State, different parts of New York State, and selected other states in Fiscal 2007, the year of the most recent Census of Governments conducted by the U.S Census Bureau. The attached spreadsheet contains data for revenues, and for expenditures and debts — which will be discussed separately to keep post lengths reasonable. The data is for all local governments in a given area added together, to adjust for varying local government organization in different places. The measure of revenues, expenditures and debts, for the most part, is the amount per $1,000 of the income of area residents. This adjusts for the level of per person income, and the level of population, in different places. It may be understood this way: New York City spent $9.18 for every $1,000 city residents earned on its police force. So for every $1,000 earned by city residents, they may have spent $250 on housing, $120 on food, $30 on utilities…and $9.18 on the police as part of their taxes. Other adjustments have been made to make the comparison between places as fair as possible. If the reader hasn’t already, he or she should read this post with background data and data on state governments.

The data show in FY 2007 (as in past years) local government revenues absorbed a much higher share of area residents’ income in all areas of New York State, compared with the U.S. average, the average for New Jersey, and selected other states: Connecticut, Massachusetts, California, Illinois, North Carolina and Texas. The difference in revenues was accounted for by relatively high local taxes –sales taxes, individual income, corporate income, and other non-property taxes (such as real estate transfer taxes) in New York City, and high sales and property taxes in the rest of the state. Although state taxes are only modestly above average in New York, in part because local governments receive majority of sales tax revenues here, the combined state and local tax burden as a share of personal income was 47.0% above the U.S. average in New York City, 26.8% above average in the Downstate Suburbs, 17.5% above average in Upstate Urban counties, and 24.0% above average in Upstate Rural counties.

As I showed in the spreadsheet attached to this post, the State of New York spent $35.02 on Medical Vendor Payments for each $1,000 in income of state residents in FY 2007, compared with a national average of $23.02, and $4.97 per $1,000 of personal income on state Public Hospitals compared with a national average of $4.00. Much of that was paid for through the Medicaid program, as was the $7.64 per $1,000 of personal income spent by New York’s local governments on Public Hospitals and Medical Vendor Payments combined, compared with a national average of $6.28. With Medicaid a state government rather than local government function in New York, and in most of the country, this post extends my overview of state government finances with a specific analysis of Medicaid spending by state in 2008.

Most of the data in the attached spreadsheet is from the Medicaid Statistical Information System (MSIS), generously tabulated for me by one of its staff members since its Datamart program no longer works on my home computer, now that I have an I-Mac rather than a PC. The data do not include Hawaii and Utah, because they had not completed their submissions as of the date of this tabulation. The data show that New York State spent $45.30 in total Medicaid payments (to public and private providers) per $1,000 of state residents’ personal income in FY 2008, far above the average of $24.34 for 48 states plus the District of Columbia, or the $22.83 for the adjacent states combined – New Jersey, Pennsylvania, Massachusetts, Connecticut, and Vermont. Only New Mexico spent more on Medicaid as a share of its residents’ income at $46.11, mostly because the income of that state’s residents is so low. In addition to spending more, New York covered a higher share of its spending in state and local taxes. For regular Medicaid (not categories with an enhanced federal match), the federal government covers 57 percent of Medicaid costs on average but just 50 percent in New York (as well as New Jersey, Connecticut, and Massachusetts). The regular federal matching share in New Mexico is 71 percent. A discussion of where New York spends more follows.

This post will compare trends in state government finance for the State of New York and the U.S. total for all states for FY 1972 to FY 2007. The data is in the spreadsheet attached to the previous post, a post contains background information on how it was compiled and what it means. Overall, the data shows that New York’s state and local tax burden is about at the level it had been decades earlier, but spending has shifted. A cut in taxes during the 2000s was not associated with falling spending, but rather with rising debt and deferred pension costs. Rising pension contributions and health care spending, particularly for senior citizens, are crowding out other public services and benefits, a situation that likely became worse following FY 2007. Without low interest rates, the state’s situation would be much more severe. Direct state spending on Parks, Natural Resources and Highways, in particular, is down from what it had been and well below the national average. (Public Transit will be discussed under local government). New York’s state education aid was above the U.S. average in FY1972 and, after a significant increase, FY 2007, but it had been below average in FY 1987 and FY 2000. New York’s state spending on public higher education is somewhat higher than it had been, but remains well below the U.S. average.

Every five years, the U.S. Census Bureau conducts a Census of Governments to record the organization, employment, and finances of every state and local government in the country. The most recent census year was 2007. The organization and employment phases of that effort have long since been completed, but staff turnover, budget cuts, and diminished cooperation from state and local governments (not ours) have delayed the release of financial data until recently. For the past few weeks, I’ve been working to put the detailed data, downloaded from the Bureau, into a format that makes possible a fair comparison between places for the state and local government tax burden (by type of tax), level of spending (by government function), and level of debt. Many adjustments are needed to make such a comparison possible, given differences in population and average income, the varying organization of local government, and variations in the division of responsibility between the state and local level. This post describes the origin of the data, issues in presenting it, and modifications made to it. Multiple posts will follow over the next month or two with the findings. Those interested should read it to understand what it is they will be seeing, and what it means.

The attached spreadsheet contains three worksheets with data on state government, for New York State, the U.S., and a handful of states I have chose for comparison: New Jersey, Connecticut, Massachusetts, California, Illinois, North Carolina, and Texas. As well as providing background, in this post and another to follow I’ll describe how the State of New York compared with other state governments. Before reading the rest of this post, I suggest opening the spreadsheet, and printing the tables in the “Summary 2007” and “NY & U.S. 1972 to 2007” worksheets; each will print on two pages.

"Gov. Arnold Schwarzenegger, the state controller and treasurer decided Monday to delay $2.9 billion a month in payments to school districts and counties sooner than expected so the state can meet debt and pension obligations." That's right, they are not paying for schools, not paying for health care, not paying for transportation, not paying for help for the poor in the worst recession in 80 years. But they are paying the retroactively enhanced pensions, and the debts run up by a generation of tax cutting spenders. And the federal government just voted to help reduce the level of public school layoffs caused by the soaring cost of teacher pensions by increasing school subsidies, and offset it by cutting food stamps.

As some readers might recall, I wrote a series of posts based on a model of how much the pensions initially promised to New York’s public employees should have cost, how much they were underfunded based on excessive investment return assumptions, and how much some of the major pension enhancements (among the dozens) of the past 15 years and pension spiking have added to the cost. I found that most of New York’s public employees were promised pensions that, properly funded, would have cost 11.8% of their pay, with 8.8% paid by taxpayers and 3.0% by the employees themselves. For those in physically demanding jobs, the total cost would have been 16.2% of pay, with 13.2% paid by taxpayers; for police and fire it was 29.6% almost all paid by taxpayers. Subsequent deals and pension spiking have (just deals I’m aware of) more than doubled the expected taxpayer cost of pensions for teachers and those benefit from the “traditional pension incentives” repeatedly offered, while also drastically increasing the cost for workers in other categories.

Let’s say, however, that you are not a person who is in a position to live decades without contributing any thing to anyone else, and force other people who are worse off to pay for it, the way the public employee unions and politicians have? What does the model say about your retirement, assuming retirement for you will mean what it has generally meant historically – a few years of leisure at the end of a long working life? To answer that question, I have added a “reasonable” retirement scenario to the model, and find that you had better be saving 10.0% of your salary or more, assuming you are paying for your entire retirement yourself (or almost all of it).

That's what he said, but it isn't true. He had no trouble saying no when he wanted to, unlike his members who are required to say yes. What he said yes to is what he has done. Silver's supporters have been given taken the highest state and local tax burden as a share of personal income in the U.S., and have provided less in return, mostly by diverting resources to those who do not work. Yes the Republicans and their contractor and Wall Street backers got their piece and their tax breaks too. And to keep the serfs from objecting, most of the cost was pushed off to a future none of them cared about to be inhabited by people none of them care about either.  We will pay more and more, and get less and less, as the beneficiaries die or leave for Florida with the difference.

Pataki and Bruno are gone, Thank God, but their damage lives on. Silver's still increases.  There were no dictators.  Silver and his backers got their piece of our hides.