Tag: Albany

In Groundwork of the Metaphysics of Morals, ethical philosopher Immanuel Kant asserted a “categorical imperative” that determines whether an action is right or wrong: “I ought never to act except in such a way that I can also will that my maxim should become a universal law.” In other words, if you wouldn’t want everyone to do it, or (in the case of the distribution of benefits and burdens) wouldn’t want everyone to get it or avoid paying it, whatever the consequences, then one cannot morally do it, get it or avoid paying for it oneself. By asserting the right to do, get, or avoid something oneself without considering the consequences for others, one makes an exception for oneself, and that is morally wrong. Kant’s ideas fly in the face of what some politicos say in response to anger at “special interests” – that everyone and everything is a special interest, with none having any greater claim than any other. Not so. There are those who only want for themselves what could work for everyone, and those who want something just for themselves that others would be sacrificed for them to get, with the latter including just about everyone associated with the government of the State of New York.

I point this out not to bore the reader with something out a college philosophy class, but in response to and inspired by comments by Ed Ott, the executive director of the New York City Central Labor Council, as reported by the New York Times. “Going forward,” he said, “if we don’t raise the standards for the lowest-paid workers in the city, and there are literally hundreds of thousands of them, our own levels that we achieved — of wages, pensions and time off — they’re not sustainable.”

Governor Patterson has appointed a commission on MTA finances headed by former MTA head Richard Ravitch. The commission, according to the Daily News, includes state budget director Laura Anglin, city budget chief Mark Page, state AFL-CIO President Denis Hughes, Fordham University President Father Joseph McShane, Con Ed Chairman Kevin Burke and Mysore Nagaraja, former president of the MTA Capital Construction Co. The purpose of the commission is to absorb the blame for fare increases, service cuts, higher taxes on wages, property and jobs – but not retirement income — and the cancellation disguised as a “deferral” of long-promised and repeatedly borrowed for projects such as the Second Avenue Subway. The money will be used to allow transit workers to retire at age 50 with full pension, health care and other retirement benefits after working for just 20 years, rather than at age 55 after working for just 25 years. Once the cost of that benefit is admitted to, after first having being described as “free,” maintenance will be perpetually deferred, and the transit system allowed to deteriorate to the point of collapse, due to “circumstances beyond our control.”

No, that’s not what Governor Patterson said. No, that’s not what the commission will say. That probably isn’t what Mr. Ravitch and the commission members will intend. At this point, however, we have enough experience with the current generation of leadership, particularly at the state level, to predict the future. Our elected officials know that the New York Metropolitan area desperately needs a viable and improving transit system to support its economy. Just as they know that New Yorkers desperately want a Second Avenue Subway to relieve the awful overcrowding on the east side. And they know that city residents, who pay some of the nation’s highest taxes, desperately want viable schools. And at the federal level, this generation of politicians knows Americans desperately need universal affordable health care and a secure Social Security system to avoid poverty due to ill health and old age. So they add extra taxes and/or borrow money allegedly for those purposes, divert it to their friends, and leave the rest with nothing. Then they blame someone else, like a commission, an arbitrator, or the “unaccountable” MTA.

Why do I get the feeling that when it comes to comparative local government spending by category, as shown in one of the spreadsheets attached to this post, I’ve been writing the same thing over and over again for more than 15 years? Some things have changed, to be sure, but the general patterns remain in place. New York City’s local taxes are higher than average primarily due to higher spending on Medicaid and social services; police and correction, interest on debts, and pensions and public employee health care. Mass transit also soaks up a lot of non-fare revenues here, though the savings from New Yorkers being able to have fewer private automobiles offsets this. Spending in other categories is often low, though in the case of public education it is much higher, relative to the national average, than it used to be.

The last time people really paid attention to public finance issues was the early 1990s. Then, most the blame for the problems of the time was assigned to the poor, minorities, immigrants, and those living in older central cities and getting by on welfare. Those grasping for money now should never be allowed to forget this, because by that time cash welfare had already ceased to be a major factor in the city and state budget, despite one million people on public assistance. Today it amounts to virtually nothing even in New York City — $1.2 billion in spending funded by all sources or 0.3% of the income of New York City residents, down from $1.9 billion (or $6.4 billion in $2006) or 1.4% of income in FY 1977. Well, that 84% inflation-adjusted decline is one real change. So where is the money going now? For the most part the same places it did in FY 2005, in FY 2004, in the last Census of Governments year in FY 2002, and in the previous one in FY1997.

As you can see if you downloaded the spreadsheets attached to this post, New York’s state and local taxes continue to be sky high as a share of its residents’ personal income, and did not drop significantly as the economy recovered from the recession earlier in the decade. Only Wyoming and Alaska are in New York’s vicinity, and in these states a huge share of the taxes are paid by oil and mineral taxes, not state residents and businesses. If New York City were a separate state, it would have ranked ahead of both those states with total tax revenues at 15.9% of personal income, 46.1% over the national average, assuming the burden of New York’s state taxes is distributed in proportion to personal income. (It isn’t – the dedicated MTA taxes that are only collected downstate are included as state taxes by the Census Bureau). The state and local tax burden in the rest of the state was 23.4% higher than the national average at 13.4% of income, which would have ranked sixth (behind New York City, Wyoming, Alaska, the District of Columbia, and Maine) if the rest of the state were a separate state.

Unless you are one of the people profiteering off this situation, there are two ways to look at it. You can be outraged that the tax burden is so high in New York. Or you can be outraged that given the high tax burden in New York, we have so many unmet needs with threatened school cuts, the onrushing collapse of public housing and public transit, a shortage of public recreational facilities, and inadequate preventive health care for many. The discussion should be limited to how, and by whom, most of us are being ripped off, not whether or not.

GIS systems seem to have ushered in a golden age of cartography, with younger generations actually paying attention to less boringly named maps such as “mash-ups” that present information geographically. Well, there is a map I’d like to see the MTA produce and post for the benefit of those younger generations, so they can have an idea what is coming. AMNY reports the agency has acknowledged that service is going into decline, caught between rising ridership and increasing disruption due to maintenance problems. “Trains are falling farther and farther behind since at least March 2006. It's worst in the evening rush where NYC Transit rates itself as running 88% of trains on time in March – the most recent data available – down from almost 92% in March last year” according to this source, and “the number of delays is up as well – an average of 27% over the last 12 months.” The mean distance between failures of the subway cars themselves, whose reduction over 25 years is the pride of New York City Transit, is down 12% over a year.

As readers of my prior posts know, service is going to be a lot worse as the practice of paying for ongoing maintenance and replacement with 30-year debt runs its course, and ongoing maintenance and replacement is cut back, perhaps eliminated. Now those debts – not to mention the state and local tax-free, inflation-adjusted pensions for transit workers who get to retire at 55 and demand to be allowed to retire at 50 – have to be paid for, even as dedicated MTA tax revenues plunge. “The situation is worsened by the news that for the third straight month the MTA saw its revenue from real estate transactions drop below budget estimates,” according to AMNY, but to anyone who isn’t being paid to provide a bogus estimate those transaction tax revenues continue to be greater than the MTA has a right to expect. In the future, everyone will be affected by this. But in New York “the future” and “everyone” don’t matter at all politically. If they did, the New York State legislature wouldn’t have made so many decisions over the past 20 years that have wrecked everyone’s future. So let’s show who will be hurt the most the soonest.

Am I a nerd or what? Yes I played a couple of sessions of paddleball with a friend, took two long bicycle rides with my wife, and attended a barbeque with relatives this Memorial Day weekend. But I also downloaded and crunched down fiscal 2005-2006 comparative state and local government finance data from the U.S. Census Bureau. I’ll write about it when I can, but for those with open minds and a willingness to look at tables, I’ve decided to post the spreadsheets right away.

One spreadsheet shows state and local taxes as a share of the personal income of area residents for New York City, the rest of New York State, and all the other states and the District of Columbia. The second shows revenues and expenditures in many categories, generally expressed as the amount per $1,000 of personal income of area residents, for local governments in New York City, the Rest of New York State, the U.S. and New Jersey. The output worksheets are primed to print on 8 ½ by 11 inch paper. I decided to keep track, and it took me about eight hours to get from the start of work to this point, despite being the fastest grunt-worker on earth (or so I believe). A few more notes follow, for those who haven’t read my posts on this subject before.

Annual retrospectives seem to be the custom here at Room Eight, so I thought I’d write about what motivates me to spend my time researching data and writing essays for this site. I do so without pay or compensation of any kind, and without knowing how many people actually download the spreadsheets and read the essays, if any at all. In part I’m just doing what I was trained to do – compile and analyze information bearing on government policy. That’s a skill I found to be worth little in government because public policy generally consists of deals, favors and non-decisions rather than decisions, and for those no background information is required. And in part I’m taking the opportunity to raise questions about those deals and favors, and their effect on people I care about and our future, which is my children’s future. It is a response to my frustration that there are so many open secrets that no one dares to talk about. In general, the only way to get paid to compile public policy information is to work for a privileged group seeking to maintain or expand those privileges at everyone’s expense. A fair analysis of comprehensive information is not in their interest. No one is going to pay you to tell the truth.

Many Americans are feeling outrage over top executives who made risky assumptions, looked good in the short run, paid each other massive amounts, and walked out the door with enormous golden parachutes when their bets went sour. Shareholders — and perhaps in some cases taxpayers — are left with the bill. For the past 40 years, however, elected officials and the public employee unions that support them have done the same thing. Whenever the stock market has been on a tear, they have upped the assumption of future rates of return and handed out “free” pension enhancements, claiming the stock market would pay for it all. And later, when the stock market turned down and pension contributions soared, the resulting tax increases, service cuts, and diminished wages and benefits for newly hired public employees have been described as the “inevitable” result of “circumstances beyond our control.” The prior pension enrichments are never given back, just like those executive bonuses. There have been two such cycles in a general sense, as the attached chart shows. In recent years, however, the state legislature has been even more irresponsible – handing out more pension benefits even when the stock market is down, taxes are rising, and services are being cut.

I was surprised to see the Times venting about the need for elections in an editorial.  “Any New Yorker who is not furious at the mention of their state capital, Albany, has not been paying attention,” according to the newspaper. So we should write letters and ask them nicely to do better, and give them credit for the slightest improvement? Perhaps not. “The place needs a thorough cleaning — a giant broom to sweep out the rascals, starting with the State Legislature. We are not in favor of term limits, but the idea gains currency when most people who get elected in New York State keep their seats until they retire, die or go to jail.” That does seem to be the two options doesn’t it — term limits or perpetual incumbency? Except at the state and federal level, where there is only one option, because they aren’t going to put term limits on themselves. “So, here is how to change Albany: find and support somebody daring and thick-skinned enough to run against the local legislator.” Well, from their lips to God’s ears. But I can’t help but contrast this editorial with the response of the newspaper when I took the trouble to run myself (as I wrote about here)– ignore what I was saying despite repeated requests, and then publish an editorial just before Election Day that said I was one of only two or three people running for election that no one should listen to.

The state budget has passed, but to judge by news reports the Governor and State Comptroller have already said mid-year emergency budget cuts will be required. And we can only assume the victims will be the same as always — New York City schools, which will be diverting hundreds of millions of dollars out of the classroom to the retired as a result of the recent pension deal in any event, infrastructure and the poor. Money will be borrowed, and taxes will be increased — but not on the retired, who pay no state taxes. And all this will happen after the election. It’s one thing for me to say it. It’s another for them to say it. I guess they figure they don’t even have to pretend anymore.