State and Local Taxes in FY 2004 and 2014: Census Bureau Data

When measured as a percent of state residents’ personal income, the combined state and local government tax burden of New York State and, in particular, New York City is uniquely high compared with other states. Reputedly high-tax states such as Massachusetts, New Jersey, Connecticut and California aren’t even close. The only states where the tax burden is higher than, or even close to, New York are large, low-population states with extensive tax revenues from oil, gas, or other mineral production: Alaska, Wyoming, and more recently North Dakota, where a “fracking” boom has given way to bust. In these states residents and other businesses pay little in taxes – in Alaska they actually get checks. The Census Bureau data for FY 2004 to FY 2014 shows New York’s tax burden rising further, even as the average U.S. state and local tax burden remained close to 10 percent of personal income, about where it has been for decades. And yet all one hears in New York’s media is demands for still higher funding, and higher taxes, and higher staffing, and higher pay, and richer pensions made by New York’s public employee unions and the politicians they control, particularly in those in the New York State Legislature.

While the U.S. average is stable, the data shows a divergence among states. In many other states with above average state and local tax burdens in FY 2004, those burdens also increased further by FY 2014. And in many states where the tax burden was already below average in FY 2004 it fell even further, even in the face of soaring pension costs that have pressured state and local government budgets throughout the country. In several Midwestern states – Wisconsin, Ohio, and Michigan – the tax burden fell from somewhat above average as a percent of income to average or somewhat below, despite weak per capita income growth. In these aging states, public spending on seniors is rising, not only through federal programs that our current President has promised to protect (and his party has promised to protect for current beneficiaries but not younger generations), but also for the pensions and benefits of retired public employees. So the shrinking tax burden just adds to the downward pressure on other state and local government services, which benefit other age groups.   What do those three states, plus Pennsylvania which has a below average tax burden despite soaring pension costs, have in common? A spreadsheets, further commentary and charts follow.

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State and Local Government Finance: Census Bureau Data for FY2014 Compared with FY 2004

The Governments Division of the U.S Census Bureau released its detailed state and local finance data for FY 2014 on January 31, and I have compiled it and produced a couple of large tables – one for all state governments and one for all local governments by state – comparing that year with FY 2004. The data shows, by category, the amount of revenues (property taxes, federal aid), expenditures (public school spending, police department spending) and debt for every state in the country and, at the local government level, for New York City and the Rest of New York State separately.

To be comparable across states and across the years, the data is presented per $1,000 of the personal income of all the residents of each state. Think of it this way. Your household else spends X percent of its household budget on food, X percent on housing, etc. And, via the taxes and government fees you pay, X percent of its income on public schools, X percent on police, etc. The data is presented per $1,000 rather than as a percent to make the data for small categories easier to see. I plan to write a series of posts, with additional tables and charts, for different aspects of state and local government finance separately. But in the triumph of hope over experience, in this post I will explain where the data comes from and how it was compiled, provide the whole database for download up front, and invite people to look at the numbers themselves at the same time I do, and decide for themselves what the data means. Before getting my take on it.

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Furbos and Fessos

I found this discussion of the similarities between Donald Trump and Silvio Berlusconi very thought provoking.

http://www.economist.com/news/united-states/21712157-fomenting-cynicism-and-partisan-divisions-his-best-chance-surviving-his-term-donald

In those bits of Italian society from which Mr Berlusconi drew his strongest support, it is a high compliment to be deemed a furbo, or a sly, worldly wise-guy. The furbo knows how to jump queues, dodge taxes and play systems of nepotism and patronage like a Stradivarius. In contrast the fesso is the chump who waits his turn and fails to grasp how badly the system is rigged, or how much of his taxes will be stolen. The fesso might cheer a new clean-air law in his city, naively taking an announcement by the elites at face value. The furbo wonders who in the environment department may have a brother-in-law with a fat contract to supply chimney scrubbers…

Living in that sort of society comes with costs. For decades anthropologists and political scientists have weighed the advantages of living in a high-trust, highly transparent country like Sweden, and measured how corruption and squandered human capital harm places like Sicily.

Then again, when you have had a furbo generation or two in charge, what is the alternative?   A generation or two the minority of which has preached, and even acted, as fessos, but the majority of which has acted as furbos with regard to the common future? The Trump/Clinton generation. And they desperately insist on no one even talking about it, “controlling the narrative” by talking about anything else.

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The DeBlasio Budget: Hiding the Facts

What is the most important fact about Mayor DeBlasio’s budget proposal?

http://www1.nyc.gov/site/omb/publications/finplan01-17.page

The unsaid.  During the Bloomberg Administration the “Budget Summary” document had included summary tables that showed how much money was spent on each agency for wages and salaries, how much for pensions, how much for other benefits, how much for interest, how much for lawsuits, how much for other non-personnel costs such as contracts and supplies, and how much of each function is funded by the city, and how much by other layers of government.

Last year DeBlasio provided that table for his budget proposal, but not for past years.  But I was able to make a comparison with that table from prior years and write this post.

https://larrylittlefield.wordpress.com/2016/05/12/new-york-citys-fy-2017-budget-proposal-more-for-those-who-have-more-leaves-less-for-those-who-have-less/

This year DeBlasio has apparently ordered that this information be omitted from the Budget Summary altogether, which is exactly the sort of stuff I fear we can expect from Trump.

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Like School Reform, At This Point Financial Reform May Be A Fool’s Errand

In my previous post, I repeated my thought experiment of reinventing the school system from the ground up, leaving past deals, favors, patterns and privileges behind. Creating alternatives that were less costly and better for teachers, parents and students. But what do I suggest for the existing school system? Reform? No.

School reform has been defeated by the teacher’s union in New York and places like it, and by those who want to cut funding for education to keep taxes down elsewhere.   In part due to soaring pension costs, the result of past pension increases in some place and underfunding in others. It’s time to face it. The idea that people had a right to expect more from the education system in exchange for more funding?   In New York they took the funding, revolted against expectations, and now demand even more funding.   The right alternative is to stop trying, stop lying and pursue alternatives in entirely new organizations. In this post I intend to extend that concept to New York City’s leading industry: finance.

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Schools Are Obsolete II

Not long ago, New York City Comptroller Scott Stringer, as part of a campaign to obtain the support of the United Federation of Teachers, released a report critical of the financial practices of the charter school network Success Academy. A page 21, the report noted:

https://comptroller.nyc.gov/wp-content/uploads/documents/FK15_092A.pdf

“Success Academy invoices to DOE bi-monthly for per pupil funding for general and special education services that it provides to students who reside in New York City. For Fiscal Year 2015, Success Academy was entitled to receive $13,777 per year for each of its students who reside in New York City. Further, Success Academy was entitled to receive an additional $10,390 per year for each student that was mandated to receive and was provided special education services for between 20 to 60 percent of the school instructional week, and an additional $19,049 per year for each student that was mandated to receive and was provided special education services for more than 60 percent of the school instructional week.”

My first impression is that’s a whole lotta money. For non-special education children, that is $275,540 per 20 students and $165,324 per 12 students. On the other hand, I know that this is less than the amount NYC district schools receive. Does that make me think that charter schools are a better deal? In part. But what it mostly does is further convinces me that education needs to be rethought and reorganized from the ground up. For that amount of money, or even less money, a new system, unencumbered by the deals, favors, practices and privileges of the past, could provide far better values for students, younger and future teachers and taxpayers alike. For the existing system, school reform has been defeated and its time to face it. Only by making a clean break will anything get better, or even avoid getting worse.

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Local Area Personal Income Data: The Unsaid

Not long ago, the U.S. Bureau of Economic Analysis released its Local Area Personal Income data for 2015.

https://bea.gov/newsreleases/regional/lapi/lapi_newsrelease.htm

And I downloaded some data, using the “interactive data” tool to the right on the website, to see if various trends I have observed in the past have continued.   The data show that the Tri-state area continues to be a much richer than average part of the U.S., due mostly to those living and working in Manhattan (many of the richest of whom live in the suburbs), but Brooklyn, the Bronx and Queens remain relatively poor. Manhattan is rich enough that New York City’s share of the nation’s personal income is stable even as its share of the nation’s population continues to fall. In New York State the total earnings per worker of state and local government workers (including employee benefits) continues to soar relative to the earnings of most private sector workers, who are left worse off as a result. The idea that lower wages for private sector workers are offset by, and in some sense caused by, higher employer costs for employee benefits hasn’t been true for more than two decades, and Obamacare did nothing to alter this. And more and more people have become self-employed, freelance, and contract laborers, rather than being employees at all, and the average earnings of such workers continues to fall. A series of charts and some discussion follows.

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