Tag: Albany

With another round of sacrifice coming in Albany, likely to be shared among those with less political clout, the Greater New York Hospital Association has started dishing out the propaganda. And with the New York Times no longer simply repeating what it says as fact, the factoids instead appear in this New York Magazine article.

The main GNYHA argument is apparently that because those who work in or with New York hospitals get more compensation, costs are higher, and therefore the government needs to give them more. That is the same argument top executives use for their own compensation across corporate America – because I voted while on your board to pay you more, you should vote on my board to pay me more. It is the same argument that public employee unions use to ratchet up their pensions – because you cut a deal with union A, we in union B deserve that deal too. It conveniently ignores the labor market most people are in, one where pay and benefits have been cut to remain “competitive.” Competitive for what? Competitive to attract the dollars spent by those with choices. As opposed to money received from the government, into which people have to pay whether they like their deal or not.

In general, research and news articles on public employee pensions have focused on state systems. Why? Because there are only 50 of them. But the separate NYC pension system is larger than that of most states, and more troubled than all but a few of them, even though NYC taxpayers have contributed more to those pension funds that those living just about anywhere else. Because the state legislature has granted richer and richer pensions to NYC public employees, the richest of whom live outside the city. It seems that some researchers, having finished with the states, have moved onto the cities, and one finds that NYC's pension funds will run out of money in 2021.

But that's not a problem for anyone that matters. The rich will continue to get around in black cars and send their kids to private schools, donating to their own "public" parks if they want them. The public employees will live in the suburbs, before taking their tax-free pensions to Florida, drive everywhere and park for free with their placards. The pensions are guaranteed by the New York State Constitution, and the senior citizens in the New York State Legislature and Congress will make sure today's senior citizens make absolutely no sacrifices. Only the serfs and younger generations will lose, as public services and benefits face an institutional collapse.

Thomas DiNapoli, having been appointed State Comptroller by Speaker Sheldon Silver and the rest of the State Assembly in the wake of the now-convicted Alan Hevesi’s resignation, is running for election against a Republican opponent, Harry Wilson. My general voting rule is to vote against all Republicans at the federal level, on generational equity grounds. To vote against all Democrats at the local level, because they always support the interests of producers of public services (who in NYC often live elsewhere but contribute to campaigns here) against the interests of those who use those services, whether that is fair or not. And to vote against all incumbents of either party at the state level in New York, where politicians of both parties are guilty of both offenses.

Thus far the campaign for State Comptroller has revolved around one issue, albeit an important one, the proper assumed future rate of return for assets of the New York State pension system. This ignores, among other things, the New York City pension system (some times it seems like DiNapoli and Wilson are running for Comptroller of a state that New York City is not part of), the fair level of pension benefits, all those pension enhancements, the level of past employee and taxpayer contributions and the fair level of both, and the debt and capital investment issues I covered in the previous two posts. For these ignored reasons, as illuminated by the information presented in those posts (which you should read), I will not be voting in favor of DiNapoli remaining State Comptroller.

In my previous post, I showed how the future of New York City, the rest of New York State and New Jersey have been diminished by retroactive pension enhancements for active and retired public employees, and past pension underfunding. That post contains two spreadsheets with a series of charts and a table that I will continue to refer to here.

This post will talk about the weight on two sides of a seesaw, the negative weight of state and local government debts, and the positive weight of past state and local government capital construction expenditures, investment in public buildings and infrastructure. Older and former residents of a community are on one side of the see-saw, and younger and future residents are on the other. If the older residents bore the weight of more capital investment, while leaving behind less debt to weigh future residents down, the quality of life of those future residents will be lifted up. That essentially describes the condition many in older generations were born into. If, on the other hand, older and former residents contribute less in capital investment, while shifting more debt onto those who follow, the quality of life of younger and future residents of that community will be diminished as their taxes rise. So how have New York City, the Rest of New York State, and New Jersey fared by these measures compared with other states and the U.S. average? Lets look at the charts and table and find out.

The quality of life, the extent and quality of state and local government public services, and the level of state and local taxation are not determined solely, or even primarily, by policy decisions made in a given year. They are also determined, in large part, by decisions made in the past that provide current and future residents of a community with assets, or stick them with liabilities. This post, and the two spreadsheets attached to it, use data from the Governments division of the U.S. Census Bureau to evaluate how residents of New York City, the Rest of New York State and New Jersey have fared by this measure, compared with other places and the national average.

One spreadsheet contains data on state and local debts, pensions, and capital construction expenditures for FY1972 and all years (excluding those for which none was collected due to budget cuts) from FY1977 to FY2008, for New York City, the rest of New York State, the U.S. total, New Jersey, California and Illinois, presented in a series of ten line graphs (Charts 1 to 10). The second presents similar data, in a table set to print on two pages, for all 50 states plus the District of Columbia for FY 2007 alone, and ranks these states (plus NYC and the Rest of the State if they had been separate states) according to a single “sold future rank.” I suggest downloading the spreadsheets, and printing out charts 1 to 10 and the table, to follow along as you read the rest of this post and the one following.

If New Jersey Governor Chris Christie thinks the City or State of New York, which have higher taxes as a share of personal income than New Jersey, will pay for ARC, forget it. Andrew Cuomo evidently said that ARC project is important to New York. It is in fact important to New Jersey, and New York is already paying for part of it via the Port Authority. Without ARC, those working at high wage jobs in Manhattan might be more likely to live in New York City or suburbs on the New York side of the river. With ARC, those workers are more likely to live in New Jersey. That is the difference.

If Governor Christie and other parties can come up with a less expensive alternative, more power to them. Were it up to me, the new tunnel would have hooked into Penn Station to start with, perhaps continuing on to the Sunnyside Yards so NJT trains could relay there. But otherwise, New York’s elected officials should work to get that money diverted to projects such as East Side Access and the Second Avenue Subway that New York is struggling to fund. Give Christie $1 billion of the Port Authority money to get through next year’s budget, and use $2 billion for New York’s long term needs.

As noted in the spreadsheet attached to this post, direct expenditures by the City of New York fell from $210.97 per $1,000 of city residents’ personal income in FY 1972 to $164.77 per $1,000 of income in FY 1987, a decrease explained by having the Medicaid program shifted to the state’s books and the end of massive public school expenditures on the Baby Boom generation. A similar decrease was recorded for local governments in the rest of New York State. Since then, total direct expenditures by the City of New York have been essentially unchanged as a share of residents’ personal income in peak economic years, based on FY2000 and FY 2007 data, while local government expenditures increased in the rest of New York State, the United States and New Jersey.

The total salaries and wages paid to employees of the City of New York, however, fell as a share of the income of all New York City residents from FY1987 to FY 2000 and from FY 2000 to FY 2007. So did the city’s direct expenditures on Libraries, Corrections, the Fire Department, the Department of Sanitation, and Judicial and Legal. Police Department expenditures increased as a share of city residents’ income from FY 1987 to FY 2000 and fell from that year to FY 2007, while Parks, Recreation and Culture and Housing and Community Development expenditures fell and then rose, but all were lower as a share of city residents’ income in FY 2007 than they had been 20 years earlier in FY 1987. Mass transit operating expenditures plunged as a share of city residents’ personal income over the period. Where is all the money going? Download the spreadsheet attached to the post linked above, print out the worksheet marked “output,” and read on.

That is one of several possible explanations for a data anomaly I have discovered in the state and local finance data from the U.S. Census Bureau. The State of New York has a pension system that covers both state employees and the employees of local governments outside New York City. New York City has its own pension system. State taxpayers, including New York City taxpayers, contribute to the state pension system, presumably in an amount sufficient to provide for state workers. Local governments outside New York City, using taxes collected outside New York City, also contribute to the state pension system, presumably in amounts sufficient to provide for their own workers. New York City taxpayers have to pay into the New York City pension system to cover the pensions of local government employees in New York City.

The Census Bureau provides pension data for pension systems, not the state and local governments that contribute to them. So I only had one number for all pension benefits paid by the state system, both to former employees of the state and former employees of local governments outside of New York City. To provide a separate number for each, I decided to make an assumption that the share of the total benefit payments that went to the former state workers must be in proportion to the share of the total pension contributions made by the State of New York. But the results were bizarre – the presumed state pension benefits soared from FY 2000 to FY2007 as a proportion of state residents’ personal income, while the presumed local government pension benefits fell. So I decided to look more carefully at the state versus local taxpayer contributions to the New York State pension fund. What the hell is going on up there?

The spreadsheet attached below presents data similar to the local government finance data presented in this post and also written about in two others. But whereas the former spreadsheet contained local government finance data for fiscal year 2007 alone, this spreadsheet presents local government finance data for the years 1972, 1987, 2000 and 2007. These were all up years for the economy, beginning with the administrations of New York City Mayor John Lindsey and Governor Nelson Rockefeller, through the most prosperous year of the administrations of Mayor Ed Koch and Governor Mario Cuomo, the peak economic year for Mayor Rudi Giuliani and Governor George Pataki, and the peak economic year of Mayor Michael Bloomberg with Governor Pataki’s last budget.

The years were chosen to be fairly comparable with each other, to separate changes in local government finance due to long run policy changes from those related to economic booms and busts. Economic crashes and fiscal crises followed each of them, with the worst for New York City following 1972. The quality of life was substantially lower for nearly 25 years after that; in some cases the quality of public services in New York City has never fully recovered. Is New York heading into another era like that one? And did that era every fully end?