DeBlasio’s Last New York City Budget: He Predicts Even More Inequality and Gentrification, or Else NYC is Toast, Because Those Cashing in And Moving Out Will Take More Off the Top No Matter What

Mayor Bill DeBlasio released his last budget recently, and it assumes that pre-pandemic trends will continue.  The rich will continue to get richer and the stock market bubble will continue to inflate, thanks to the federal government doing whatever it takes, regardless of the long-term cost, to prevent asset prices from going down.  Despite higher and higher taxes, the rich will stay in New York City and just keep paying.  So will hundreds of thousands of young adults, who will continue to live in less and less space for higher and higher rents and accept higher taxes, fees and fares and diminished public services, including crowding and unreliable service on the subways no elected official is in charge of.  More and more economic activity and educated workers will be concentrated in New York City compared with the suburbs, and in metro New York compared with the rest of the country.

All this will offset the extent to which DeBlasio’s (and all the other NY politicians) public union and contractor supporters will continue to get richer and richer, compared with other workers.   Other workers whose lower pay will keep the cost of living down for public workers and retirees, as the overall inflation rate remains below the long-term trend.  Based on these assumptions, the total city budget will grow more slowly than the total personal income of NYC residents over the long term.  Even if the average New Yorker continues to become worse off, because there will be more and more working adults.

But if that is what has happened, and will continue to happen, then why have NY’s state and local taxes been increased, over and over, and risen as a percent of personal income?  Instead of falling.  Why are debts continually increasing, and with interest payments rising as a share of city residents’ personal income despite rock bottom interest rates (also assumed to be permanent)?   Instead of debts being paid down.  Why does the Mayor plan to hand early retirement deals to city workers age 55 and over yet again, to “prevent layoffs,” after having already agreed to no-layoff guarantees? And why, in this Mayoral campaign, is no one asking questions about any of this – in the place with the highest state and local tax burden in the country, where the media is full of claims that we deserve even less in return because we aren’t paying enough – notably by the police and teachers?

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First off, give credit where credit is due.  As NY state and local government has become a worse and worse deal for city residents, there has been a consistent pattern of wiping out and perhaps falsifying budget data, as reported to the Governments Division of the Census Bureau and otherwise.  For NYC-OMB, the wipeout was of the “full agency cost” table showing how much different NYC agencies actually cost, including pensions and public employee benefits, and how much of each agency’s budget is paid for with city taxes and fees, rather than federal and state aid.  It was cut back from the past two years plus the budget proposal, to the budget proposal alone, and then eliminated entirely.  But suddenly it’s back – in the Message of the Mayor publication, on page 85.

https://www1.nyc.gov/site/omb/publications/finplan04-21.page

It falls into the general pattern of Mayor DeBlasio suddenly doing things, on his way out the door, that he should have been doing all along. In fact, perhaps thanks to $billions in “free money” from Washington – politically free that is, with the costs to others hidden and deferred — he seems more interested in actually being Mayor than he has in six years.

The full agency cost table has not been fully restored.  There is no breakdown of the $883 million in judgments and claims expenditures by agency, as there had been under Mayor Bloomberg, although there is text indicating that much of it is malpractice settlements for the Health and Hospitals Corporation.  The DeBlasio Administration removed the judgments and claims column immediately upon assuming office, after agreeing to large settlements for the “stop and frisk” practices of New York City police officers.  So people couldn’t easily see how much those settlements cost.

Moreover, there is no similar “full agency cost” table for FY 2020 based on recorded expenditures, and FY 2021 as projected through June, for a comparison with FY 2022 as proposed.  Such comparisons had been available under Mayor Bloomberg.  So, as has been the case since, I’ll be comparing DeBlasio’s spending proposal with years before he took office, with data I put in spreadsheets at that time.   The proposal does contain more year-by-year trend detail for individual agencies, some of which I will reference.

This raises an interesting question:  which year best represents the values and priorities of the DeBlasio Administration, as opposed to unusual circumstances, FY 2021 or FY 2022?  The answer is neither. The former was a year of extreme economic challenges for New York City due to COVID-19, while the latter will be a year of massive “free money” that will almost certainly be offset by a much worse deal for ordinary city residents as all those federal (and New York State and MTA) debts are paid for.   Ultimately I decided to compare the FY 2022 proposal with FY 2007, an economic peak year, and FY 2014, Bloomberg’s last budget.  And look at the economic assumptions behind DeBlasio spending so much of future New Yorkers’ money on his way out.

The spreadsheet for this analysis is here.

First, some background as to where the city stood in 2019, before COIVD-19 hit.  As discussed here…

Mostly due to a long series of retroactive pension increases for those cashing in and moving out, and wage settlements in excess of inflation, the mean earnings (including benefits) of state and local government workers in Downstate New York (including the suburban counties where City of New York workers are allowed to live by state law) exceeded the mean for the Finance, Insurance and Real Estate sectors, while also being a record high 52.1% higher than the mean for other private sector workers.  These private sector workers included self-employed, freelance/gig economy workers, who now account for 26.2% of NYC workers. 

Back in 1969, the mean earnings of Downstate New York state and local government workers was only 15.3% higher than the mean for private sector workers outside the FIRE sector.  That increased to 21.2% higher in 1983, 39.7% higher in 1996, and 30.1% higher in 2007 before rising to 52.1% higher in 2019 – a very good year for NYC’s private sector workers.  The public union drive to work the political system to take more and more, while squeezing private sector workers to take less and less, is relentless and irrecoverable.   As neither any politicians nor any media source is willing to describe just how far things have gone, compared with elsewhere and compared with the past, the entitlement just grows and grows.  Under Mayor DeBlasio and Governor Cuomo, that entitlement has spread to private sector workers who get money from government contracts, including the construction industry and the school bus drivers.

The city’s pension funds assume the wages of city workers will increase by one percent more than inflation per year.  Otherwise, even more money would have to be contributed to the pension funds.  And yet the median wages and self employment income of average private sector workers have lagged inflation, in part because more of them have been turned into temps and contract workers.

Meanwhile, in Upstate New York the mean earnings (including benefits) of state and local government workers exceeded the mean earnings of private sector workers by 72.1% in 2019, up from the government workers earning 54.0% extra in 2007 and just 10.5% extra in 1969.  To limit the tax burden on and economic decline of Upstate New York, the State of New York has shifted more and more of this cost to Downstate New York in general, and the people of New York City in particular.

So how have less well off New York City private sector workers been able to afford paying more and more to public sector workers and contractors, both those who work in New York City and those who work in Upstate New York? In part this has been a matter of numbers.  From the economic peak of 2007 to the economic peak of 2019, the boom in New York’s economy relative to the rest of the country was the greatest since the 1920s, as employment soared.  And many of those additional employed workers chose to live in New York City.

In the U.S. as a whole total work earnings increased by just 19.6% more than inflation from the economic peak of 2007 to the economic peak of 2019, far less than the 28.6% increase in total investment earnings (dividends, interest and rent) and the 46.7% increase in government transfer payments (Social Security, SSI, Medicare, Medicaid, etc).  The Downstate Suburbs, Upstate Urban Counties, and Upstate Rural Counties also saw extensive growth in total transfer payments (by 37.3%, 36.5%, and 36.5%), but even less growth in work earnings (by just 12.8%, 10.9%, and 6.6%).  Those transfer payments were being transferred from workers who lived in New York City, where total work earnings increased by 31.1% from 2007 to 2019.  For that reason the total personal income of NYC residents increased by an incredible 31.5% from 2007 to 2019, adjusted for inflation.

It isn’t that the average New Yorker was becoming that much better off. It was that there were so many more workers living and working in the city.  According to American Community Survey data discussed here…

From 2000 to 2019, the number of employed New York City residents soared by nearly 850,000.  But the number of households with work earnings — fell slightly, remaining at about 2.5 million.   The number of households with Social Security income increased by nearly 200,000, or about the same amount as the net increase in the total number of occupied housing units.  It took the construction of 380,000 housing units, gross, to get an increased of 200,000 occupied housing units, net.

Housing has continued to be occupied by Baby Boomers now moving into retirement, including cost-privileged housing – rent regulated, Mitchell-Lama, public housing, owned units purchased at pre-housing bubble prices.  Meanwhile, the young workers surging into the city were forced to double and triple up, sharing apartments and even rooms, because rents soared and they couldn’t afford their own place. Comparing the 2000 Census with the 2019 American Community Survey, the median gross rent increased 42.0% — after adjustment for inflation – even including all those cost-advantaged apartments the Millennials did not get.  For market rate apartments, the increase must have been greater. 

The median work earnings of city residents were lower in 2019 than they had been in 2000.  The percent of city renters paying at least 30.0% of their income in rent increased to more than 50.0%. The City of New York budget benefitted with a big increase in property tax revenues as a percent of the personal income of city residents, as a result of the increase in rents as a percent of city residents. Squeezed at work, squeezed in the housing market, squeezed by higher taxes and crowding on an unreliable subway, young workers nonetheless continued to pour into New York City – at least through 2015.  They were the exploitables.

So did $billionaires.   Or at least the empty luxury apartments they were expected to buy before they stopped doing so, also several years ago.

And then COVID-19 hit.  So now what?

The proposed New York City budget assumes that after a brief blip, the 2007 to 2019 economic boom will resume, reducing the burden of soaring city expenditures.  And if that doesn’t happen?  It isn’t DeBlasio’s problem, and his supporters get theirs off the top no matter what, so who cares?

As noted on page 24 of the Message of the Mayor, after falling in FY 2021 Manhattan office rents are forecast to resume rising, while remaining above the level of only a few years ago.  (Some commercial real estate analysts predict a 10 percent decrease in rents could lead to a 40 percent decrease in values, which would not be unprecedented historically).   U.S. inflation is forecast to rise by far less than its long-term average of 3.2%.  The average NYC wage is forecast to increase by more than inflation, as it did for a few years in the run up to 2019, and in contrast with the decades before.  Have you heard about all those empty apartments, and rich people threatening to move to Florida?  The total personal income of NYC residents is forecast to rise by nearly the U.S. average, and never fall in any year.  And the inflation-adjusted Gross City Product is forecast to rise by more than its long-term average every year through 2025.

Remember that amazing 31.5% increase in the inflation-adjusted personal income of New York City residents from 2007 to 2019, in the biggest boom in a century?

For 2022, the DeBlasio Administration predicts the total personal income of all city residents will be 40.3% higher than in 2007!  That means in the three years including the pandemic, the total personal income of NYC residents is assumed to jump by about 10.0% more than inflation.

And as a result, the inflation-adjusted increase in city expenditures of 38.1%, from FY 2007 to FY 2022 as proposed, and the increase in city expenditures funded by city taxes and fees of 37.3%, will become more affordable to city residents rather than less, according to the DeBlasio Administration.   The total wages and benefits of city workers are proposed to be just 35.0% higher in FY 2022 than in FY 2007, adjusted for inflation, with increases of 25.3% in wages and salaries (despite a limited increase in total city employment), a 67.3% increase in pension costs, and a 39.8% increase in other fringe benefit costs.  Medicaid payments to the state and cash welfare costs are proposed to be just 10.0% higher, with a 61.1% in other spending aside from personal services (like contracts with service providers), and a 58.3% increase in debt service.

The big increase in pension spending took place during the Bloomberg Administration, after the public unions scored political deals in the state legislature to increase benefits in 1995, 2000, 2008 (for teachers) and most of the years in between.

From FY 2014, Bloomberg’s last budget, to FY 2022, DeBlasio’s last budget as proposed, the total personal income of New York City residents is forecast to rise by 32.0%, adjusted for inflation.  Total net city expenditures are forecast to rise by just 22.4%, while city-funded expenditures are forecast to rise by just 18.9%. The total earnings of city workers are proposed to increase just 19.7%, with increases of 19.1% for wages and salaries, just 12.3% for pension contributions, and 28.2% for other fringe benefits.  As for the latter, the Message of the Mayor notes on page 223… 

A significant amount of hospital and medical costs related to the COVID-19 pandemic are estimated to have been imposed on the City’s health insurance program for treating and testing city employees, retirees and dependents. The City expects to be reimbursed for such costs from the federal government under the fiscal stimulus program. The health insurance estimates reflect the agreed upon health care savings resulting from both the May 2014 and the June 2018 agreements reached between the City and the Municipal Labor Committee. Together, these two agreements are expected to produce recurring annual savings of $1.9 billion. In addition, the City is seeking unspecified annual labor savings, currently earmarked in fringe benefits, of $1 billion per year commencing in fiscal 2023.

So the unions agreed to massive fringe benefits savings twice, as announced in the media, and as a consequence fringe benefit expenditures…increased by 39.8% more than inflation from FY 2007 to FY 2019, including an increase of 28.2% for FY 2014 to FY 2020 alone.  That doesn’t sound like much of a concession to me.  But then the media can be counted on not to question statements like that.

Perhaps because I’ve done this analysis before, I can easily see the FY 2022 budget proposal shows something very different from what was presented in the city’s budget proposal for FY 2019 – before the pandemic.

From FY 2014, Bloomberg’s last budget, to FY2019, the peak of the biggest boom in nearly a century, the DeBlasio Administration projected the personal income of NYC residents to rise by just 20.0%, adjusted for inflation. The Bureau of Economic Analysis later reported that a 19.7% increase had actually occurred once the data came in (subject to revision), less than the 28.6% increase in total City of New York expenditures, and the 36.4% increase in city-funded expenditures.  So the burden of city government was reportedly rising compared with city residents’ total income. Which makes sense given rising taxes as a percent of income, mostly in higher property taxes from apartment higher rents for city residents without special deals. The multiple rounds of “tax the rich.”  And the service cuts.

So if that was the situation during the greatest economic boom since the 1920s, with the large Millennial generation determined to press into New York City no matter how bad it got for them and how much it cost, how can NYC OMB justify a projection of soaring total personal income for the city during and after the pandemic?

For spending by type and agency, here is a table.

Lets repeat some additional charts I’ve provided in previous years.

With the DeBlasio Administration’s personal income forecast on steroids, with a 32.0% inflation-adjusted increase predicted during his tenure, the only agencies whose budget as proposed will have grown by more are the Department of Education, with a gain of 41.1%, the Department of Homeless Services, with a gain of 83.5%, and the subsidy for the NYC Health and Hospitals Corp, with an increase of 289.9%.

Other increases are proposed at 6.7% for the New York City Police Department, which has not been defunded and is not proposed to be, 18.4% for the NYC Fire Department, 14.9% for the Department of Correction, despite a big decrease in the number of inmates and mandatory overtime due to staffing shortages, 11.6% for the Department of Sanitation, despite the reduction in the organic recycling program, 35.4% for the Department of Health and Mental Hygene, despite all the crazies running around and the city being flummoxed by COVID-19, 4.5% for the City University, and 33.1% for the offices of elected officials.  And 13.1% for all the other agencies combined, including those who fund and sometimes operate the city’s infrastructure and public amenities like parks, zoos, libraries, botanic gardens, museums.

All these gains are in excess of inflation, in a situation when the pay of most U.S. workers has lagged inflation, and the total city workforce has only grown modestly.

At the Department of Social Services the total budget is proposed for a FY 2014 to FY 2022 increase of just 4.5%.  An increase of 37.7% for city workers and service contracts is offset by a decrease of 5.7%, adjusted for inflation, for city payments to the state’s Medicaid program and for cash welfare payments.  Meanwhile, the DeBlasio Administration cut the budget of the Administration for Children’s Services budget by 9.5%, adjusted for inflation.

Both the total budget of Health and Hospitals Corporation, and total cost of the state’s Medicaid spending in NYC, are vastly greater than is shown on the city’s books.  The HHC itself, in fact, is substantially funded by Medicaid. That huge increase in the city’s separate subsidy payment to the HHC merely offset cutbacks from FY 2007 to FY 2014, leaving the inflation adjusted HHC subsidy down by 12.4%, adjusted for inflation, for the FY 2007 to FY 2022 period as a whole.  Medicaid payments to the state and cash welfare payments increased by 10.0% over the period as a whole.  

New York City and the states counties are among the only local governments anywhere that are required to pay for substantial share of the increasingly costly federal-state Medicaid program.  New York City is especially burdened.  But thanks to a deal pushed by then county executive and now congressman Tom Suozzi (who should have been elected Governor instead of Eliot Spitzer), the growth of the local share of Medicaid has been capped. Meanwhile, cash welfare payments have been falling for nearly 50 years. 

The Administration for Children’s Services budget fell 19.2%, adjusted for inflation, from FY 2007 to FY 2022, as the Department of Education budget soared 59.2%.  That is an increase of 59.2%, adjusted for inflation, at a time when enrollment was falling as the large Millennial generation exited school.  

Other agency budgets also soared from FY 2007 to FY 2014, due mostly to soaring pension costs as a result of the retroactive pension increases of 1995, 2000, 2008 (for teachers) and all the ones in between.  The Bloomberg Administration responded to this heist by refusing to sign new labor contracts unless the unions agreed to somehow offset some of this shift of money from taxpaying workers who paid the bills.  The unions waited until they could sign deals with the DeBlasio Administration instead, which shifted the costs even more to taxpayers, service recipients, and transit riders.   The Cuomo Administration agreed to stop talking about how much New Yorkers spend on public schools, and asserting that the children deserved a better education in return, in exchange for a deal to cut pension benefits for new hires only.

For the entire FY 2007 to FY 2022 period the budget of the NYPD increased by 20.7% more than inflation, with the NYFD up 38.0%, the Department of Correction up 22.3%, the Department of Sanitation up 21.6%, the Department of Health and Mental Hygene up just 10.0%, the Department of Social Services excluding Medicaid and cash welfare up 34.6%, the City University up 49.9%, elected officials up 37.1%, and all other agencies combined up 37.1%.

On a straight dollars basis rather than percent, the majority of the inflation-adjusted increase in city expenditures during the DeBlasio Administration has gone to the Department of Education.  Total city spending will have increased by $18.5 billion in 2021 dollars from FY 2014, according to the proposal for FY 2022. Department of Education funding will have increased by $11 billion.  

What did the city’s children get in return?  Universal pre-K?  Not really.  The total number of children served by the Department has fallen even with this, as the Millennials exited school.  Per student spending doubled, adjusted for inflation, from 1997 to 2017, to a sky-high level that exceeded the spending of such gold plated districts as Greenwich, Westport and Darien in Connecticut.   The number of students per instructional employee fell below 8.

Even as all talk of “school reform” disappeared, extra help for city students was replaced by more out of classroom time and assignments. And under the budget proposal the city’s schools, which got schools got 7.6% more this year despite falling enrollment and slashed services with no childcare and teaching on Zoom, will get another 7.2% next year.

Seeking even more, and noting that the police have become unpopular, someone, presumably the United Federation of Teachers, printed up a bunch of signs and bumper stickers that said “De-Fund the Police, Fund Schools.” I’ve seen them around Brownstone Brooklyn over the past 12 months.  Under the budget proposal, however, the NYPD budget for FY 2022 would be $682 million higher than in FY 2014, adjusted for inflation.  Of course a lot of that is gold-plated pensions and overstaffing.  Wages and salaries are proposed at just 3.1% more, adjusted for inflation, in FY 2022 than in FY 2014, with the number of officers remaining at 35,000.  That is 2.2 times the U.S. average relative to population, and more than just about any other major urban county.  

The NYFD budget, with perhaps one-third the number of uniformed workers, would have a budget increase of 772 million during the DeBlasio Administration, according to the budget.  The Department of Homeless Services budget will be higher by more than $1 billion.  

One sees the same pattern if the entire FY 2007 to FY 2022 (as proposed) period is examined.  The increase in the city budget, adjusted for inflation, was $27.4 billion.  The increase in the Department of Education budget was $14.0 billion, more than half, and that was after spending has previously soared from FY 1997 (back when NYC school spending really, truthfully was low – as I said at the time) to FY 2007.  Including a 20 percent teacher pay increase (funded by an 18 percent property tax increase) granted by Mayor Bloomberg in exchange for more time spent with children, one that DeBlasio reversed (the more time with children part).   Even before the big win this year – no time with children.

Other FY 2007 to FY 2022 increases, as proposed, would be $1.86 billion for the “de-funded” NYPD, $1.37 billion for the NYFD, $1.31 billion for the Department of Homeless Services, and $1.66 billion for the Department of Social Services, including an increase of $731 million in cash welfare and Medicaid payments to the state – presumably mostly the latter.

The police demand even more money, or else.

https://nypost.com/2021/05/15/how-nycs-rise-in-shootings-could-affect-commutes-to-school-work/

“The increase in brazen, broad-daylight shootings just confirms what we already knew: violent criminals have no fear anymore,” Police Benevolent Association President Pat Lynch told The Post.  “They know that the police are underfunded, understaffed and hobbled by pro-criminal politicians and a broken justice system,” he added.

As noted, there are the same 35,000 officers as before.  Perhaps those officers have decided to allow an increase in violence as a way to extort more money?  Or perhaps the number of officers don’t have quite the influence on the extent of crime the police claim.  Funny but in the old movies, it is the criminals who say your money or your life.

The teachers also demand even more.  The former head of the national teacher’s union, who was once head of the NYC teachers’ union, says teachers should not return to in-classroom teaching – even in September — unless social distancing is maintained, requiring more teachers per classroom.

https://www.chalkbeat.org/2021/5/13/22434244/teachers-union-aft-weingarten-school-reopening-fall

Weingarten also called for maintaining three feet social distancing requirements for students, which might require more teachers and smaller class sizes. “For the most part, this will mean fewer students in each class — effectively aligning health and pedagogical best practices,” she said. That would help the union grow its membership, and Weingarten argued that this would help students academically too.

This is the same union that continually works to ensures that class sizes are large despite a ratio of fewer than eight students per educator (and falling) by cutting deals for more out of classroom time.  And endorsing a candidate who promises them two teachers per class.

https://www.bloomberg.com/opinion/articles/2021-03-30/nyc-mayoral-race-candidate-scott-stringer-on-value-of-experience

HW: You recently criticized Mr. Yang for taking on the teachers union around the pace of school reopenings. Tell us what your positive vision is for education…

SS: My proposal is for two teachers in every classroom, a master teacher and an assistant teacher. That would give kids in public school a real shot at intense one-on-one education — having two teachers that can deal with so many of the social issues, education issues in the classroom…Part of my plan will be to attract another 7,000 teachers to the system and keep them in the system beyond five years. Our teacher residency program will provide stipends for teachers in the last year of their education to come into classrooms, spend time with a senior teacher and begin to feel that this is a profession worth pursuing for the long term.

That is actually the United Federation of Teachers proposal to get more and more dues paying members for more and more money despite falling enrollment with no more education.  In New York State’s rural counties, there are now just 6.5 students per instructional employee.  New York City’s working serfs pay for that high-end jobs program too.

The public unions also want an early retirement incentive, once again allowing those who were promised a full pension at age 62 after 30 years of work to get a full pension at age 55 with just 25 years of work.  For anyone who didn’t take the many other deals to allow retirement at age 55 previously.  

The claim is that it would “save money,” allegedly because of looming layoffs.  It was initially proposed for all state and local government employees in New York State.  But it was decided that only those in New York City should have to pay the additional taxes, or face the service cuts, required to make the additional pension contributions such benefit increases require.

https://dc37blog.wordpress.com/2021/03/31/early-retirement-incentive-battle-begins-in-albany/

DC 37 and other New York City unions are engaged in lobbying the state legislature for temporary Early Retirement Incentive (ERI) legislation that would allow the City’s long-serving public workers in certain tiers the option to retire early without a reduction in their benefits.

The bill is an important part of the union’s effort to stave off a repeat of the threat of potential layoffs of 22,000 New York City public workers. Last September, the New York City Central Labor Council negotiated a last-minute agreement with Mayor Bill de Blasio to suspend threatened layoffs until the end of this June. More recently, the passage of the American Rescue Act and related funding for New York City guaranteed layoffs will be delayed an additional year through at least June 2022. The ERI, however, would add further protection from a new administration and a future chance of layoffs.

The fact that many NYC businesses and private sector workers were devastated by the COVID-19 crisis is apparently something to take advantage of, even thought they lost nothing.

“The pandemic crippled our city’s economy. It ravaged our communities, costing many New Yorkers their lives and livelihoods. Municipal workers who guided this city through the darkest days of the pandemic, were in danger of losing their jobs at the worst possible time. That is why this legislation is so important,” said Garrido.

https://www.uft.org/news/you-should-know/qa-on-issues/early-retirement-incentive

The state Legislature aligned with the UFT and included funding for an early retirement incentive in the final state budget. However, we must still reach an agreement with the mayor and the City Council. We hope we can reach an agreement that provides this well-deserved opportunity for many of our members. The UFT will work hard to negotiate these crucial details as quickly as possible.

Note there is no mention of preventing layoffs.  Under the budget proposal, the Message of the Mayor, page 247, total City of New York employment is expected to increase, not decrease.  That includes pedagogical employees of the Department of Education.  And he granted all those eligible titles a no layoff guarantee in exchange for – nothing.

According to a copy of the legislation someone sent to me, for every teacher who gets the deal, according to the Fiscal Note from the City Actuary, city taxpayers would have to pay an additional $85,000.  For every other city worker it would cost $96,500. But these are the same people, hired by the unions in association with the Comptroller, who said that all the prior pension increases and incentives would “cost nothing” or “save money.”

The costs presented in this Fiscal Note depend highly on the realization of the actuarial assumptions used, as well as certain demographic characteristics of NYCERS, TRS, and BERS, and other exogenous factors such as investment, contribution, and other risks. If actual experience deviates from actuarial assumptions, the actual costs could differ from those presented herein. Costs are also dependent on the actuarial methods used, and therefore different actuarial methods could produce different results. Quantifying these risks is beyond the scope of this Fiscal Note

Not measured in this Fiscal Note are the following:

* The offsetting reduction in salary due to retirements earlier than

expected.

* The impact of potential new hires replacing members who retire due

to the ERI Program.

* The initial, additional administrative costs to implement the

proposed legislation.

* The impact of this proposed legislation on Other Postemployment

Benefit (OPEB) costs.

That is to say, the extra cost of having the city provide retiree health care for ten years before Medicare picks up most of the tab, instead of three, is estimated at zero.

Legislative findings. The legislature finds and declares that the retirement benefits provided for in this act are designed to achieve cost-savings for public employers and to avoid layoffs of public employ- ees in this time of fiscal need. Therefore, the retirement incentive benefit provided for in Subpart A of this act and the age 55/25 years retirement benefit provided for in Subpart B of this act are intended only to be temporary in nature for employees who are eligible to receive and qualify for the applicable benefit during the applicable time peri- ods specified within each Subpart. Further, nothing in this act shall be construed to create an expectation of a future or continuing retirement benefit for any public employee who is not eligible to receive and qualify for the retirement benefits in this act during the applicable time.

Just one time.  Just an emergency.  Gee stock prices are high, so the funds are doing well, so it really won’t cost anything!

However, in the Chronology of the NYCTRS plan that was deleted from the annual reports once Scott Stringer became Comptroller (but attached to this post as the NYC Teachers Pension Deals document)…

We find that plan had an early retirement incentive in 1991.  And 1995, 1996, 1997, 1998, 1999 and 2000 – during an actual nationwide teacher shortage, caused by enrollment growth as the Millennials flooded into school.  (As opposed to the phony “teacher shortage” in the face of falling enrollment and student-teacher ratios as the Millennials left school, due to deals to reduce time spent teaching).  There was another early retirement incentive in 2002.  When Mayor Bloomberg, facing soaring pension costs and forced to cut services and raise taxes, refused to grant additional retirement at age 55 for those promised retirement at age 62, the UFT sued the city for age discrimination.  He then agreed to a deal to allow all teachers to retire at age 55 after 25 years of work, in 2008.

That deal, the actual goal of “school reform,” ended school reform. And was followed by big cuts in benefits for later-hired public employees – at least on paper.  

In other words, the unions are just getting started.  Especially with two candidates for Mayor who got where they are today by voting for every one of those past deals as state legislators, and then remaining silent about the rest when the beneficiaries installed them in other offices.  Stringer and Adams.

And the unions representing public workers in the rest of the state? They are not happy that the pension deal only applies to New York City.  They want another deal to retire at 55 too.  As in the past, New York City residents would end up absorbing some of the tax increases and service cuts to pay for that too.

https://www.timesunion.com/opinion/article/Let-public-workers-retire-early-without-penalty-16119024.php

Tucked deep into the 2022 state budget was an early retirement incentive exclusively for teachers and other public sector workers in New York City. A comprehensive incentive for employees statewide was introduced in the Assembly’s and the Senate’s one-house budgets, but kicked out of the final deal by Gov. Andrew Cuomo.

Public sector workers outside of New York City have few advocates to help them right this terrible wrong.

As noted, including the cost of pensions and other benefits the average state and local government workers in Upstate New York is paid 72.1% more than the average private sector worker.  And they feel cheated that they aren’t getting more.  With no one reporting the actual situation, that is an attitude they take to work every day, just as in New York City.

With the prior round of pension increases (mostly) ending in 2008, most of the increases in pension costs as a percent of wages and salaries took place before Mayor DeBlasio was elected. From FY 2007 total City of New York taxpayer pension contributions increased from 25.0% public employee wages and salaries to 35.0% overall, from 19.4% to 32.8% (and 40.0% for teachers) in the Department of Education, from 46.8% to 59.0% for the NYPD, from 57.2% to 64.7% for the NYFD, from 26.2% to 40.1% for the Department of Corrections, and from 20.3% to 34.6% for the Department of Sanitation.  Compare that with your employer’s contribution to your 401K.

For all the other agencies, the FY 2007 taxpayer contribution was around 10.0% of payroll, rising to around 18.0% of payroll in FY 2014.  The non-uniformed, non-teacher city workers are in the NYCERS pension plan, which has the least costly retroactive pension increases and was the best funded in FY 2007.  But with everyone who matters politically in on the 2008 25/55 deal for the UFT, there has been a desperate attempt to shift the costs and cover them up.  That included less funding for NYCERS as opposed to the NYSTRS plan for teachers.

From FY 2014 to FY 2022 the DeBlasio Administration cut overall taxpayer contributions from 35.0% of payroll to 33.0% of payroll, using yet another temporary stock market bubble as an excuse to shift the cost of past pension deals to future city residents.  The big decrease was for the Department of Education, to just 23.7%.  Taxpayer contributions to agencies with workers who are mostly a part of NYCERS saw their taxpayer pension contributions rise as a percent of payroll.  So did the uniformed agencies, other than Sanitation.

The shift of taxpayer contributions to the further future, for political deals that the United Federation of Teachers cut in the past, means that actual Department of Education spending – measured the way the SEC would require a private corporation to measure it – is even higher.  We’ll pay for it later.

Just like the MTA debt that cost nothing – to those who ran it up and ran off to retirement in Florida.  According to the Message of the Mayor, page 231… 

NYCT projects that it will close CY 2021 with a cash surplus of $3.1 million. NYCT has projected deficits in CY 2022, CY 2023, and CY 2024 of $2.3 billion, $1.7 billion, and $1.7 billion respectively. These deficits are expected to be offset by gap-closing and other government actions including Federal stimulus funds and potential tax, fee, and further fare increases.

With inflation-adjusted taxpayer contributions falling at the Department of Education, DeBlasio granted teachers higher total wage and salary gains than employees of other non-uniformed agencies.  But the big gain at the Department of Education was in “other than personal services,” including contracts with private sector organizations.

After public employees in New York City’s social service agencies failed the poor in the 1960s and 1970s, more and more of their spending was shifted to such contracts with non-profit social services providers.  In FY 2022, as proposed, these agencies have four times as much money going to “other than personal services” as to public employee wages and salaries.  

After the defeat of school reform by the United Federation of Teachers, after a massive increase in funding led to demands for even more rather than improvement, the Department of Education is now close to a 1 to 1 ratio of employee wages and salaries to OTPS.  The only way for the city’s schools to avoid service cuts despite funding increases, and not cause massive service cuts in other agencies for even greater Department of Education funding increases, is for the OTPS share to keep increasing.

Or for there to be no children left to pay to educate, because all the young parents leave.  

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Will New York’s young exploitables come back to be further exploited and make the Mayor’s economic forecast come true?  Opinions are all over the map.  (I’ve already contacted the city agency best placed to measure what happens in real time and told them how they can do it. We’ll see if they can sneak actual factual data out).

What is interesting is how the most powerful interests in the city – the public employee unions and contractors, business employers, and the real estate industry, who are normally at each others’ throats over who gets to exploit the serfs more, and who gets the blame, are all on the same page.

Come back to New York City! and work your ass off says big business.  This time we’ll only make you work as an unpaid intern for four months before we allow you to advance to semi-paid gig economy freelancer.

Come back to New York City! and pay up for housing says the real estate industry.  We’ll give you four months free rent for an apartment you share with three other roommates, one of whom shares your room, before the rent jumps up to the normal 50 percent of your income.

Come back to New York City! and pay taxes and fees without expecting much in public services, says Mayor DeBlasio and all the candidates to replace him.  It will be the sexiest summer since our generation got it on before AIDS!  With the drop in ridership, you won’t even notice the service and maintenance cuts in the subway, and if garbage piles up in the parks you can show what a good community member you are by volunteering to clean it up yourself!

Come back to New York City!and pay lots of state taxes that end up being spent elsewhere in New York State, including “dedicated” taxes for the MTA, say Governor Cuomo and other politicians from outside the city.  Pay the debts and retirement costs left behind by those already gone to Florida, or the to grave, and keep the game going for more to follow them.