Tag: Albany

From today’s New York Times: “According to the analysis, pension contribution rates for civilian employees in local governments will soar to 30.3 percent by 2015, from 7.4 percent of payroll this year. Contributions to police and fire department retirement plans are expected to increase to 41.1 percent in 2015 from 15.1 percent this year…If there is any silver lining, the trends appear to have somewhat curbed Albany’s appetite for extending pension enhancements to public employees to placate labor unions, which wield enormous clout and lobbying dollars in the capital. ‘I’m alarmed,’ said Assemblyman Peter J. Abbate Jr., a Brooklyn Democrat and the chairman of the Assembly’s Labor Committee, who is one of the capital’s more reliable union allies. ‘Bluntly,’ he said, ‘I’ve spoken to a lot of the union leaders and their lobbyists and said I don’t want to see bills that will cost the counties and the state millions of dollars.’”

Public services are doomed. This discussion doesn’t even include other retiree benefits such as health insurance, or all the debts people like Abbate have foisted on the next generation, future revenues that have been encumbered, costs that have deferred, infrastructure that has not been maintained. This is exactly the combination that produced the 1970s disaster for NYC, but now it will be the 1970s in the whole state. Alarmed? He and his backers, fellow members of Generation Greed, should be celebrating if their goal is to destroy the state. And I don’t want to hear about the “shared sacrifice” of slashing the pay and benefits of future public employees to pay for this, in exchange for having all workers – including those current – do a less good job. I’m not fooled by this. “Bluntly,” in taking and taking and not caring about the resulting harm to others, you any those like have done and are evil. PUT BANKRUPTCY ON THE TABLE.

Back when the Brennan Center was releasing reports showing how undemocratic and phony the New York State legislature is, I recall reading comments from Sheldon Silver and Joe Bruno, its leaders, in the newspaper. They didn’t come right out and say it, but reading between the lines they pretty much implied that if New Yorkers knew what those who grab and perpetually hold sinecures through our non-elections were like, they would be glad there were only three men in the room when anything important was at stake.

I bring this up without comment, other than to point out that decisions to sell out New York’s future (now the present) to free up money to hand out to interest groups in the present (now the past) were generally bi-partisan and had the support of both leaders, and many member of their generations. Is that really worse than what has been going on recently? In any event, credit to Gatemouth, whose history of the last time the Democrats were sort of in charge in the 1960s meant that no one who read it is surprised. I’m never surprised by something bad for ordinary people, particularly those in younger generations, coming out of Albany.

The U.S. Census Bureau has released 2007 data on the financial status of state and local government pension plans in the U.S. The data is at the state level, and is at present separate from data from the rest of the finance phase of the 2007 Census of Governments, so only limited conclusions may be drawn from it, but I’ve calculated some ratios to see how New York compares. What the data shows is that New York State’s pension plans, and in particular New York City’s pension plans, tend to be on the extreme end compared with other states by a variety of measures. There are more retirees relative to the number of workers in New York. Public employees contribute less to their own pensions here. For New York City, payments to pensioners and others are draining existing assets at an above-average rate. And, perhaps in an attempt to get out of the hole, New York’s plans were among the most highly invested in risky stocks in fiscal 2007.

On June 29th 2007, the last trading day of that fiscal year, the S&P 500 was at 1,505.70, while as I write this it is at about 925, a loss of 38.6%. Based on the assumption that the pension funds earn 8 percent per year, it should be at 1,756 by now starting at June 2007. Then again, starting at June 2000, when that assumption was made by state law, it should be at 2,960, or triple its actual level. It’s based on assumptions like those that all those pension enhancements over the past decade were described as “free.”

Loyal Democrats and Republicans would prefer to look at the goings on in Albany these days as an aberration, one that doesn’t reflect the deeply held values of their particular tribe. I don’t see it that way.

The attached spreadsheets compress National Transit Database data for 2007 operating costs into two three-page tables. The first shows operating costs per each hour a revenue vehicle (bus or rail car) is operated in revenue service, per unlinked trip, per passenger mile and per employee work hour. The second shows fare revenue per trip, and the percentage of operating costs covered by the fare. Data is provided for all automated guide way (AG), commuter rail (CR), heavy rail (subway or elevated) HR, light rail (LR), and ferry boat (FB) systems. My chief contribution to the tables is to limit the number of demand response (DR) handicapped paratransit systems, and bus (MB) systems, that are included, to the largest and a few others in New York State, as there are many such systems throughout the country, most quite small.

The data shows that the total cost New York City Transit pays to operate a subway car for an hour is lower than any comparable system other than Chicago, which apparently wasn’t paying enough of its pension, retiree health care, and track maintenance cost in recent years, resulting in a massive fiscal collapse and a near meltdown in service. Long Island Railroad and MetroNorth costs to operate each rail car for an hour were much higher than the subway — and other similar commuter rail systems. NYCT buses do not have a similar advantage per revenue vehicle hour, and are in fact relatively expensive due to relatively high costs per employee work hour. NYCT bus costs are among the lowest per trip, however, as its buses are fuller. The subway covered 67% of its operating costs in 2007, down from prior years but better than virtually any other public system, MetroNorth (59.3%), the LIRR (46.3%), or PATH (41.4%). NYCT buses covered 36.9% of their operating costs, better than most but about the same as Westchester’s Bee Line (36.2%) and Long Island Bus (34.9%), something I hadn’t expected.

The National Transit database is out for 2007, and this time there is data that is either new or at least new to me. For selected items, time series data is presented for each year from 1991 to 2007, showing how the MTA (and perhaps other transit agencies) got into this mess. I’ve analyzed the data for two MTA subsidiaries: New York City Transit (NYCT), my main concern and former employer, and the Long Island Railroad (LIRR), for comparison’s sake. The “download” portion of the attached spreadsheet also contains the same information for other MTA subsidiaries and New Jersey Transit, for those who want to go further. The expenditure detail doesn’t include such relevant items as pension costs, borrowing, debt service and retiree health care expenditures, which can be used by those skilled in political deception (or perhaps self-deception) to shift costs to, and suck revenues, from the future.

What the data does show, however, is that during the 1990s the amount of revenue provided to NYCT, both in fares and subsidies, was drastically reduced adjusted for inflation, both per-ride and per hour a revenue vehicle was in service. In 1993, just prior to the start of the administration of He Who Must Not Be Named, the NYCT had $2.92 per unlinked trip in revenues (operating and capital), including $1.30 from the fare, in 2007 dollars. By 2000 that had fallen to $1.90, a decrease of 35 percent, including $1.01 from the fare. For each hour it operated a revenue vehicle (bus or subway) in1991 NYCT received $264.65, including $94.50 from fares. By 2000 that had fallen to $155.64, a 41.2 percent decline, including $82.87 in fare revenue.

Those who follow the news might have read of a report by the State Comptroller, Thomas DiNapoli, that the state pension plans have lost lots of money over the past year. In 2011 (after the current members of the state legislature have been re-elected) local governments will have to pay more into the pension plans as a result. And as a consequence, residents of those localities would face soaring taxes, deteriorating public services, or a combination of the two. In response Comptroller DiNapoli proposes that such localities be allowed to defer the additional required pension contributions, in effect borrowing from the pension funds at eight percent interest per year, and thus shift the cost to future taxpayers, perhaps those around after current taxpayers have cashed in and moved out or died off. More off the books debt to add to the massive on the books debt. Governor David Paterson responded that what the state really needs to do is reduce pension benefits for future public employees which, if as a result of lower total compensation those employees are less motivated and qualified, would reduce public services for future state residents.

In the press, this was presented as a conflict between the two, but to me Paterson, DiNapoli, and all politicians of their generation, regardless of party, have more in common than they have differences. Neither Paterson nor DiNapoli is willing to call out those who received the past benefits associated with our current predicament. And note the word in common to both proposals with regard to sacrifices: future. For Generation Greed, that is what (and who) has been sacrificed over and over again.

At one time all localities in New York State were allowed to limit their desirable local government jobs to local residents. Beginning in the late 1950s, however, a series of state laws have gradually prohibited New York City from excluding suburban residents from taking city local government jobs, while continuing to allow the suburbs to exclude city residents from suburban local government jobs. Often New York City’s own elected officials, as part of contract or political deals with public employee unions, specifically requested the very state laws that discrimnated against the city. In part because their backers were moving to the suburbs and wanted to keep their city jobs in the family. Now, according to the Daily News, unions and members of the City Council are proposing lifting the remaining restrictions, including those on managers.

Whether residency restrictions in public employment make sense in general is debatable as far as I’m concerned. Whether it is fair to permit them outside New York City but not for New York City is not. But I have never once, in all the years I’ve followed public policy, read about a single NYC politician demanding that local governments in the suburbs also be forced to open up their civil service jobs to New York City residents. Not once. Ever. Have I missed something? And if not, how can it be explained that this gross inequity is among the unsaid?

The New York Times reports that the budget of individual NYC public schools will be cut 5 percent next year, following a cut of 3 percent last year. Despite the federal government borrowing $trillions our children and grandchildren will have to sacrifice to repay to provide stimulus money to those schools. Despite a huge New York State tax increase for the well off, to be followed by additional state tax increases on everyone else, to increase school state aid. Despite NYC property and sales tax increase, disproportionately directed to the schools. Despite the fact that total spending on the New York City schools, including retirement benefits, will be going up not down, even as the money most New Yorkers earn, and wht they can afford, is going down. Total spending up, spending in schools down. But the Times doesn’t ask the question why.

Recently we read that teachers that no principal wants to take responsibility for, previously paid to do nothing, will be stuck in some children’s classroom. Today the Times reports that Fair Student funding, which would have ended the practice of qualified teachers moving on to the schools of the affluent while the poor get a revolving door of the uncertified and unqualified, will be postponed a year — and probably forever. The teacher’s union is thrilled. Also reported by the Times the schools face “deep cuts in after-school and weekend programs,” the kind that give disadvantaged children a chance. An end to summer school and a return of fiscal social promotion seems certain. That is where the money isn’t going. Where is it going? No one will say. 

So rather than require the retired to pay the same taxes on the same income as everyone else (it is their debts, Medicaid costs and pensions that are destroying public services after all), the senior citizens in the New York State Legislature chose to raise New York’s already high taxes on wages to bail out the MTA. But, according to the legislature and councilmember Lew Fidler, who first came up with the idea, businesses will pay the 0.34% payroll tax, not workers. The New York City Partnership, which represents large businesses, was in favor out of the goodness of its heart. Or was it?

For the benefit of the hack attorneys who are running our governments into the ground, I have braved the dust to pull out Public Finance In Theory and Practice, a textbook from my student past. Tax levies, the book (and common sense) informs us, impose “burdens which the individual taxpayer will try to avoid or pass onto others. To determine who pays, we must thus look beyond the tax statutes and the pattern of statutory incidence, i.e., beyond those on whom the legal liability rests.” So who will be paying the MTA payroll tax? I’ll bet it isn’t those who ran up the debts and retiree obligations it will be going to pay for.