Tag: Albany

In my previous posts on the MTA, I suggested that the subway and commuter rail systems should break even on an “auto equivalent basis.” That is, fares and other operating revenues (from advertising in the cars for example) should cover the cost of buying, maintaining, and operating the subway and railcars, and collecting the fares. I also suggested that “rent” paid by drivers, in the form of tolls, in exchange for transit riders giving up their share of the street should cover the cost of the rail infrastructure. And local government contributions and station operating revenues (in store rents and station advertising) should cover most of the cost of the stations.

But what should be included in the costs to be covered as described? In particular, pension contributions, according to MTA consolidated budget documents, are expected to equal 20.7% of payroll (including overtime) in FY 2011, rising to 22.7% (and probably more (in FY 2014). Is that part of the cost of transportation today? And what about retiree health care? Yes and no.

You may not have chosen to believe me, when I pointed out that the retroactive pension enhancements for public employees, particularly for NYC teachers, would destroy public services, particularly the NYC schools, because so much more money would have to be spent on the pension plans and not the classroom. But now we have independent confirmation from both an independent actuary and the Center for Retirement Research at Boston College that the NYC Teacher pension plan is one of the handful of most desperately underfunded major pension plans in the country. Two sources with two points of view, neither of which is right wing anti-union anti-worker although that is the shrill excuse the unions are making.

And you may not have chosen to believe me when I showed that as a result of the pillaging of corporations by those who run them, lower interest rates, and lower inflation, the expected future rate of returns on pension assets is much lower than most public employee pension funds assume. But would you believe John C. Bogle, founder of investment giant Vanguard Funds and the last honest man in finance? I certainly have, which is why I haven’t believe the BS Wall Street has been putting out for 15 years.

In an overview of the remaining options for the MTA, I suggested that the buses and the payroll tax/taxi surcharge revenues be transferred to New York City and the counties, and the subway and commuter rail systems be required to break even on an auto equivalent basis – covering the cost of buying, maintaining, and operating the rail cars and collecting fares. This left other operating expenses to be covered by other revenues.

I had forgotten to mention paratransit, but that service should also be transferred to NYC and the counties, along with the buses, and along with paratransit reimbursement revenues. I’m not sure they could do a better job than the MTA, given that NYC has very high school bus costs despite having a much lower than average share of its children take school buses to school, in part because a well organized industry makes lots of campaign contributions to the New York City Council. But I’m not sure they could do worse either, given the insane cost of NYC paratransit per ride and the soaring share of people who somehow qualify. This post is about the maintenance of the infrastructure, and the stations.

In my post on a way out for the MTA, I proposed making the subway and commuter rail systems semi- self funded. They would be required to cover their costs on an “auto-equivalent” basis, with riders paying for the ongoing purchase, maintenance and operation of railcars and the collection of fares through fares – but not for tracks or stations. Motor vehicle drivers, after for comparison, pay to purchase, maintain and operate their own motor vehicles, but they drive on streets funded by general taxes (as well as highways and bridges funded by gas taxes and tolls). A simple requirement for specific costs to be covered could cure some of the dysfunctional politics that is destroying the transit system.

I swore off suggesting solutions to New York’s state and local public policy problems some time ago, on the grounds that there is not chance that any of those suggestions would be implemented. Let’s face it, most of those in charge don’t actually think there is a problem, because things are working out very nicely for themselves and those who help keep them in office, and the damage to others is irrelevant as long as it can be deferred or blamed on someone else. And when things get really bad they can always do what con artists always do – take their pensions and skip town.

But what the hell. The financial situation of the MTA is something I happen to know a great deal about, and I don’t want to remain silent in the face of the propaganda and rationalizations that everyone in New York politics is determined to make. They should not be allowed to pretend it isn’t happening. And they shouldn’t be allowed to pretend, even now, that nothing could be done about it. So here it goes.

They are just a way for current workers and retirees to give back nothing while claiming they have sacrificed, while public services are destroyed. That's what happened in New York City in the 1970s, after all, despite Tier IV. Just ask an honest actuary writing for Governing Magazine. Two recent reports, he said, show "the obvious need to adjust pension and retirement benefits of current employees as well as new hires — a concept that until now was avoided by politicians across the country and is now a heated topic pending in several courts today." That’s because “the stock market alone cannot save today’s pension funds from the $800 billion in underfunding problems that they have accumulated from overly generous benefits increases, a decade of stock-market underperformance, and employer underfunding. To make matters worse, nearly $2 trillion of liabilities of retiree medical benefits program are almost completely unfunded.”

For his opinion as to what should be done, read the linked article.

There was an interesting article in the Wall Street Journal this morning. Residents of affluent school districts in Kansas have sued to overturn state rules that limit their ability to raise taxes and increase school spending. “Kansas is one of a handful of states that limit how much money local school districts can raise from property taxes—a restriction to ensure a rough parity in spending across the state,” according to this source. “Lawyers for Kansas Republican Gov. Sam Brownback noted that parents can spend as much as they want on their children's education through private tutors. But courts in Kansas and across the U.S. have repeatedly held that states have an obligation to ensure equity—or at least, get as close as possible—at public schools…The state's position has drawn strong support from parents and school administrators in poor districts across Kansas.”

While only a handful of states have the same limitations as Kansas, most states have much more equal school financing than New York. In many southern states, in fact, school districts cover entire counties while in the Midwest states cover a much larger part of the school bill. Tabulations of school spending inequality that I have read, ironically, always have the true Blue States of the Northeast and West coasts with the most unequal school funding, and the Red States with the least. Perhaps that explains “liberal guilt.” The liberals are guilty, and in the past used to feel that way.

I try not to just cite articles, but here's one people in NY really ought to read. It is a commentary by Hawaii Governor Neil Abercrombie in a local newspaper. "Together we must face a fiscal deficit of $844 million over the next two years. Every possible solution is on the table for consideration. This includes improving our current tax system so that everyone pays their fair share."

To see who isn't paying their fair share according to the Governor, read the article.

Let's say the New York State legislature is representative of what New Yorkers really are, as opposed to what they would like to think or tell others they are. Then which team really represents New York? I'd like to nominate either the Isaiah Thomas Knicks or the Mets.

Those close to Governor Cuomo have called his budget revolutionary. But it is far from the revolution someone like myself might have suggested. Under his proposal, instead of paying higher taxes for the same public services, New Yorkers will pay the same taxes – highest in the nation – for diminished public services. Those who have made out on the deal might not grab as much extra. But they are certainly not giving anything back. Particularly Generation Greed. Let’s provide some examples.