DeBlasio and Cuomo Administration Fiscal Policies: A Review

Have you seen all those ads from candidates for Governor?  I can’t seem to avoid them.  You turn the channel and you run into another one.  I’m here to tell you that if you are just a regular person living their life, what is said on the commercials doesn’t matter.  What matters is:

  1. Who paid for them?
  2. What, during the real campaign that takes place in secret, were they promised in exchange?
  3. How and when will you be made even worse off to pay for this?

I’m not in a position to answer those questions about the future.  The deals are secret, and stay under Omerta for eternity.  What we can do is see who the DeBlasio and Cuomo Administrations, with help from the state legislature and NYC council (always eager to cash in the future of the serfs) did in the past. At least to the extent that Comptrollers Stringer and DiNapoli didn’t completely fudge the data they reported to the Census Bureau, also in exchange for consideration, this post will attempt to find out.

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I discussed what data I used, how I used it, and why I used it here.

A spreadsheet with many of the charts below can be downloaded from that post, or here.  

As noted, I’ll measure the actual choices of DeBlasio, Cuomo, the state legislature and city council circa FY 2019, before the pandemic.  When they should have had all the money they could ever ask for, a fortunate circumstance that made them less unpopular than they should have been.

How can FY2019 be fairly compared with the past?  It can only be compared with other peak bubble years.  The Pataki and Bloomberg Administrations were in office at another economic peak in FY 2007; the Pataki and Giuliani Administrations were in office at the peak before in FY2000, and the Mario Cuomo and Koch Administrations in were in office in FY1989, another peak year.  What about the Dinkins and Spitzer/Paterson Administrations?  They didn’t have economic peak years, and only lasted one term, so we’ll have to skip them.

The discussion of the charts in this spreadsheet begins below.

The consensus in New York’s media, based on who feeds them information, is that New Yorkers have cheated those who provide public and publicly-funded services by paying too little in taxes.  This despite the state and local tax burden being higher in New York that in any other state, and higher in New York City than in the rest of the state.  And nowhere else is close.

Still, the data shows that the total state and local government tax burden, per $1,000 of personal income, was essentially flat in New York City from FY 2007 to FY 2019, during the DeBlasio and Cuomo Administrations, following a huge increase from $134.77 to $162.50 during the Pataki/Bloomberg Administrations.  That earlier increase, as we’ll see, was driven by retroactive increases in pension benefits, debts, and soaring spending on Medicaid and schools.  

DeBlasio and the state legislature wanted to raise taxes further, but Cuomo would not go along.  That was the first fight between them.  Instead, Cuomo wanted to accommodate making those who work for, or are funded by, state and local government better off relative to other New Yorkers — by cutting services and further deferring costs instead of raising taxes further.  And that’s what happened.  The New York City tax burden edged up from $92.89 per $1,000 of city residents’ personal income in FY 2007 to $93.05 in FY2019.  The New York State tax burden edged down from $69.61 per $1,000 of state residents’ personal income to $67.30. 

The overall tax burden on city residents slipped slightly from $162.50 per $1,000 of city residents’ personal income to $160.35.  The chart, however, presumes that the burden state taxes is divided between NYC and the rest of the state in proportion to personal income.  It isn’t – MTA taxes are only collected downstate, and the exemption of public employee retirement income from taxation favors the rest of the state, where even the highest paid former NYC public employees live.

In the rest of the NY State, the total tax burden also jumped from $120.18 per $1,000 in personal income in FY 2000 to $135.47 in FY 2007, before slipping to $133.04 in FY 2019.  The local tax burden edged down in the rest of the state while edging up in NYC.

BTW, you see that reduction in the tax burden from FY 1989 to FY 2000, during the early Pataki and Giuliani Administrations?  Knowledgeable people understood at the time that taxes weren’t actually being cut during those years, they were being deferred.  We started paying them after 2000, and are still be paying them two decades later.

Some of the trends on the spending site that affected New York – rising Medicaid expenditures and rising public employee pension costs – affected other parts of the country too.  But like Governor Cuomo, most politicians elsewhere chose to further defer costs and cut services and benefits rather than increase taxes further.  In fact, the U.S. average state and local government tax burden fell from $106.83 per $1,000 of personal income in FY 2007 to $101.06 per $1,000 in FY 2019.  The tax burden has been going down in already low tax states just as it has gone up in high tax New York.

One way Cuomo was able to hand out money to interest groups without raising taxes was to slash aid payments to local governments.  Some reduction would have been expected, since most NY state aid payments are for schools, and school enrollment was falling as the large Millennial generation exited.  It was a national trend from FY 2007 to FY 2019.  But you’ll notice that New York State aid to NYC per $1,000 of city residents’ personal income also fell from FY 1989 to 2000, as Millennials entered school and enrollment was rising.  To make the state aid formula work out this way, at one point a NYC child was defined as less than one child.  General municipal aid, meanwhile, is now sent everywhere in the state except NYC, using taxes collected in part in NYC.  

The FY 2007 to FY 2019 decrease in New York State aid to NYC was 22.1%, from $56.45 per $1,000 of personal income to $43.97.  The decrease in state aid to the rest of the state was 11.8%, from $43.24 to $38.11.  NYC was also getting richer compared with the rest of the state during these years.  That could partially explain this difference.  So today, with NYC having one of the worst economic situations in the country, is the rest of the state now being forced to sacrifice because New York City is getting poorer?

New York is the only state in the country with significant local government aid to state government, mostly for the state’s Medicaid program, with some for the MTA.  Most of that aid is paid by the City of New York.  New York City Mayors from Beame to Giuliani have made an issue of “state mandates,” but nothing changed until candidate for Governor Tom Suozzi’s “Fix Albany” campaign in the 2000s, when an aging population meant Medicaid costs were hurting other parts of the state too.  So how did the fix go?  From FY 2007 to FY2019, the local tax burden of aid to the State of New York on New York City taxpayers fell 14.4%, from $11.33 per personal income to $9.69.  And the local tax burden on taxpayers in the rest of the state decreased 33.3%, from $9.37 to $6.25.  

And in a Census Bureau data quirk, the amount of aid to the state New York’s local governments report sending is now vastly higher than aid from local government that the State of New York reports receiving, whereas they had once been about the same.   It is fair to say, however, that the money drained from NYC to the rest of the state increased during the Cuomo Administration.

While state aid to local government was going down in New York, federal aid to New York State as going up – even before the pandemic (most federal aid to local governments passes through state governments first).  This is part of a national trend driven by rising expenditures on Medicaid, mostly for seniors.  

Medicaid is one of the few categories of federal aid for which New York State gets more than its pro-rata share of federal assistance, but rising federal to state aid is a national trend.  The national average federal to state aid increased 10.9% from $33.90 per $1,000 of U.S. personal income in FY 2007 to $37.59 in FY 2019.  Federal aid to New York State increased 15.9% from $41.71 per $1,000 of state residents’ personal income to $48.33.  But all of this additional federal money, and the additional surge of federal money from FY 2019 to today, was borrowed, like money that offset the city and state tax cuts in the Pataki and Giuliani administrations in New York.  Americans, including New Yorkers, are going to be made worse off to pay for it in the future.

Most federal aid directly to local government goes to local housing authorities and disaster relief.   New York City has traditionally gotten quite of bit of this due to its large public and publicly subsidized housing system. Federal aid to New York City edged down from $10.43 per $1,000 of personal income in FY 2007 to $9.48 in FY 2019, as the New York City Housing Authority fell into ever greater disrepair and a large share of theoretically entitled households did not receive Section 8 housing vouchers.  But the FY 2019 level was still higher than the $6.42 in FY 1989, when New York City had a large subsidized housing construction program – with city money — under the Koch Administration.

During the DeBlasio Administration soaring rents and property prices led to soaring property tax revenues for the city.  The burden of both fell primarily on later-born generations, who were not fortunate enough to have scored subsidized or rent regulated apartments, or buy houses at pre-bubble prices and have lower property taxes locked in, in the past.  In the past, the fact that NYC residents were also burdened by a virtually unique local income tax kept the overall NYC property tax burden to about the national average.  Under DeBlasio, however, the property tax burden soared from $31.12 per $1,000 of city residents’ personal income to $43,82, well above the U.S. average of $30.36.  So now NYC residents have above average property taxes and a local income tax.

That is how the DeBlasio Administration had so much money to hand out to various interest groups.  Never have the interests that own the state legislature – the real estate industry and public employee unions, contractors, and government-funded non-profits – been able to take as much from New Yorkers at the same time.  Generally, in the past NYC has either had relatively expensive real estate but relatively extensive and good public services (the 1950s) or lousy public services at high taxes but cheap real estate (the 1970s).  

With sky high school spending, but without a local income tax, property taxes have always been very high in the rest of New York State.  With a lower decrease in state aid than NYC received, a larger decrease in local to state aid than New York City received, falling school enrollment, and the property tax cap instituted by the Cuomo Administration, the property tax burden in the rest of the state edged down slightly from $50.07 per $1,000 of state residents’ personal income in FY 2007 to $46.87 in FY 2019.  The total New York City property tax burden, with an additional local income tax, in now nearly as high as the average for the rest of the state, without a local income tax (except in my hometown of Yonkers).

With more Millennials earning income, and fewer in school, one would expect elementary and secondary education spending to fall per $1,000 of personal income, while per student spending remained the same.  In many Red States, however, per student spending was slashed from already low levels during the FY 2007 to FY 2019 period, while in New York State it soared from already high levels.  U.S. elementary and secondary education expenditures fell from $44.52 per $1,000 of U.S. personal income in FY 2007 to $39.01 in FY 2019 – slightly lower than the $40.17 in FY 1989.

School spending in the rest of New York State fell only slightly from $60.76 per $1,000 of personal income in FY 2007 to $57.70 in FY 2019.  School spending there is not just about education, but also a state-funded gold-plated welfare program for areas in economic decline.  Thus, the pressure to keep sending more state aid regardless of enrollment.  

New York City’s elementary and secondary education expenditures soared from $43.28 per $1,000 of personal income in FY 2007 – about the national average even though NYC has relatively fewer children and more of those were in private school – to $51.89 per $1,000 of personal income in FY 2019.  This at a time when NYC’s income was soaring by the most relative to the rest of the country since the 1920s.  Where did the money go?

Here is the spending change from Bloomberg’s last budget, FY 2014, to DeBlasio’s economic peak budget in FY 2019, adjusted for inflation.  Spending on the NYC schools increased by $8.26 billion, accounting for nearly 60.0% of the $14.0 billion inflation-adjusted increase in City of New York expenditures.  This is NYC OMB data, and includes pension and benefit costs.  The NYPD was “defunded” by an increase of $1.1 billion.  This as school enrollment and crime were falling, as were the inflation-adjusted wages, salaries and benefits of NYC’s private sector workers.  

There was also an increase in spending of $1.05 billion on the Department of Homeless Services (147.1%) and $761 million on Department of Social Services spending other than cash welfare and Medicaid.  Though the number of addicted and homeless people was going up.  Medicaid aid to state government fell by $596 million over the period, although the rest of the state benefitted more from Suozzi’s Albany fix.

One might say these shifts are product of the DeBlasio’s emphasis on early childhood education, but that isn’t true.  So great was the decline in Grade 1 to 12 school enrollment from FY 2007 to FY 2019 that even offering additional years of education to those younger didn’t mean that more children were being served in total.  Instead, school spending per child soared – mostly on pensions, retiree health care, and out of classroom assignments for teachers.

Even adjusted downward for the higher cost of living here, NYC school spending per student is now far above the U.S. average, or New Jersey, Massachusetts, Connecticut – anywhere other than the Rest of New York State.  Adjusted for inflation it doubled from FY 1997, when it really was low, to FY 2017, and it has kept rising since.

Just comparing NYC with other parts of the Northeast, and skipping the cost of living adjustment, shows how high spending per student was by FY 2019– more than double the U.S. average – and how much it has risen.  And yet as everyone who gets their information from local media knows, members of the United Federation of Teachers and others in the schools don’t owe the city’s children much of anything because the rest of us have cheated them out of $billions.  Something no politicians had dared to question since then Governor Cuomo did, and was met with this propaganda campaign.

https://www.nysut.org/news/2015/february/video-ad-campaign-attacks-cuomo-education-gimmicks

One part of this attack was that New York doesn’t tax $billionaires – its state income taxes and (other than for retired public employees, who are fully exempt) are too low.

Though higher than anywhere else, higher than in the past, and higher still per $1,000 of personal income when New York City’s local income tax is included.  That is one argument that state politicians in the rest of the state make.  The City of New York should receive less state aid and shoulder more state-imposed burdens, they believe, because the State of New York allows it to tax its own citizens (other than retired public employees) with an additional income tax.  It should be noted that while California has a very high state income tax burden, it has low property taxes (at least for older long-time residents), and its overall tax burden is much closer to the U.S. average than New York’s.

The conflict between Cuomo and DeBlasio kicked off when DeBlasio wanted to raise the city income tax, and keep all the money, and Cuomo wanted to raise the state income tax, and redistribute some of the additional taxes collected in the city to the rest of the state.  In any event, with more and more income concentrated in the hands of the 0.1%, who in reality were and are highly taxed, both city and state income tax revenues increased per $1,000 of the personal income of all city and state residents.  The NYC increase was from $19.60 per $1,000 of city residents’ personal income in FY 2007 to $21.70 in FY 2019.  As in the case of property taxes, where the DeBlasio Administration benefitted from soaring rents and housing prices on Millennials and immigrants new to the city, in the case of income taxes it benefitted from income at the top from the “everything bubble.”  With the income from that bubble concentrated downstate, the state income tax revenue increase was smaller, from $38.11 per $1,000 of state residents’ personal income to $39.88.

One might say that while the DeBlasio’s biggest priority was increasing spending on the Untied Federation of Teachers, the Cuomo Administration’s biggest priority was having New York State follow the national trend of decreasing state corporate taxes.

https://www2.deloitte.com/us/en/pages/tax/articles/weekly-state-tax-management-new-york-state-corporation-tax-reform.html

New York State’s corporate income tax revenues, per $1,000 of state residents’ personal income, fell by half and approximately match the U.S. average.  Manufacturing companies upstate, like retired public employees, don’t pay any taxes.  Nice try, but the upstate economy continued to decline regardless. 

In New York City, on the other hand, the tax burden on business remains uniquely high, thanks an additional local corporate business tax, and the additional unincorporated business tax.  The latter applies to self-employment income in excess of $100,000.  Beyond that level, gig economy workers are forced to pay the state personal income tax, the local personal income tax, the MTA payroll tax, and the unincorporated business tax.  In a few years when $100,000 is only worth $50,000 in today’s money, even food delivery workers may be subject to all those taxes, and the shift to self-employment will nail workers at the state and local tax level as well as the federal level (via FICA).  Although still very high, NYC’s local business income tax revenues fell by 42.4% FY 2007 to FY 2019, when measured per $1,000 of city residents’ personal income, from $17.03 to $9.80.  

The 2007 figure was unusually high – city business tax revenues had been just $11.05 per $1,000 of personal income in FY 1989.

This is interesting.  New York City sales tax revenues decreased from $15.11 per $1,000 of city residents’ personal income in FY 2007 to $12.20 per $1,000 of personal income in FY 2019.  There were no sales tax cuts I can think of – I can only recall sales tax increases.  There were no reductions in the sales tax base – none of that stupid Pataki/Giuliani stuff about no tax on clothing if you buy at certain times.  And as much as some Baby Boomers might wish to believe that Millennials are poorer because they live too richly, as far as I know there is no sales tax exemption for smartphones, lattes and avocado toast.  You can’t blame e-commerce either – this was the period when Amazon etc. started being forced to collect sales taxes, after having previously not done so.  Moreover, the rising income of city residents was topped off by an incredible boom in tourists buying goods and services, swelling sales tax revenues.  

The only explanation is that a rising share of New York City residents’ personal income is going somewhere other than taxable goods and services. Where?  

Regardless of the propaganda you have heard, Millennials have been more likely to be in the labor force, and have saved far more of their incomes, than Baby Boomers and Gen Xers had at the same ages.  For those older, ever rising health care costs, which are sales tax exempt, reduce money available to spend on other things.  So, savings and health care, though a data error or intentional misreporting cannot be ruled out.

Even so, I think rising property taxes and housing costs are a better explanation.  While the state and local tax burden was flat overall from FY 2007 to FY 2019, more of it was shifted to young workers and free-market renters in higher income and property taxes.  And while soaring rents diverted spendable dollars at the time, overpaying for for-sale houses does so permanently.  I had written years decades ago that the Northeastern housing bubble of the 1980s had led to stagnation for the small business consumer economy for most of the 1990s, as people spent a decade trying to get out from under inflated mortgage payments.  Those at the back end of the Baby Boom, who overpaid after the large number of early boomers had bought most of the housing up, were most affected.

The urban housing bubble of the 2010s may have the same impact in NYC right now.  More of the income of NYC residents is going to rent and mortgage payments, leaving less for spending on taxable goods and services.

Returning to the spending side of the ledger, the most costly parts of state and local government budgets are public schools, previously discussed, and Medicaid, overseen by the state government in New York.  The Cuomo Administration tried various means to slow the growth of Medicaid expenditures, including a global cap that meant that if one part of the health care system scored increases in spending other parts would face cuts.  As shown, it didn’t work.  In theory, the gap between New York’s Medicaid spending and the U.S. average should have shrunk, as Obamacare enacted the sort of coverage expansions for other parts of the country that had already happened in New York.  Instead, the gap in spending beneficiary between New York and the rest of the country remained huge.  

One can see that public hospital expenditures did not soar in New York state, and remain lower per $1,000 of state residents’ personal income than they had been in FY 1989, during the Koch and Mario Cuomo Administrations.  NY state public hospital expenditures edged up from $11.77 per $1,000 of state residents’ personal income in 2000 to $12.73 in 2007 to $13.37 in 2019, with a shift from state (mental) hospitals to local (general) hospitals.  Most of New York’s public hospital expenditures is funded by Medicaid.  The City of New York increased other subsidies to its Health and Hospital Corporation by $775 million (inflation-adjusted) from FY 2014 to FY 2019, but the Bloomberg Administration had cut it earlier.  HHC was getting $240 million less in non-Medicaid city funding (after adjusted for inflation) in FY 2019 than it had been in FY 2007. 

“Medical Vendor Payments,” spending on private and non-profit health care providers, has continued to soar, despite relatively low payments for well care and physicians in New York, and (from what I read) a freeze in reimbursement rates for hospitals that went on for more than a decade.  For New York State, there was a 34.7% increase in Medical Vendor Payments spending per $1,000 of state residents’ personal income from $35.71 in FY 2007 to $48.09 if FY 2019.  The U.S. average increased 44.1% from $22.72 to $32.72.

This is, therefore, a national trend, although NY’s Medicaid spending per beneficiary was already sky high to begin with.  The Cuomo Administration started covering up the failed cap by taking spending from one fiscal year and booking it in the next, running up a huge off-the-books debt – just as the Lindsay and Beame Administration did in the run-up to the New York City’s near bankruptcy in the mid-1970s.  Despite rising federal Medicaid aid, the increase in New York’s spending is a disproportionate burden on the state.

Much of the increase went to home health care employment in New York City, which was soaring exponentially before the federal government indicted a bunch of people for Medicaid fraud.  After one year off to see if they were serious, the stunning increase resumed.  In many years of the 2010s the home health care industry accounted for a quarter or more of New York City’s private sector job growth.

Some of this is accounted for by an aging population, and some of it is accounted for by a shift away from nursing homes, but even taking employment in all the senior-related industries together and dividing it by the population age 75 or older, NYC’s employment has soared.  

It is far higher than the rest of the state by this measure, even though the same state government administers Medicaid in both places.  This deal may be what offsets all the other ways the state disadvantaged New York City compared with the rest of the state during the Cuomo/DeBlasio years.  NYC gets more Medicaid money in exchange for losing everything else.

The biggest story in New York, however, has been the massive cost of public employee pensions and other retirement benefits.  New York City taxpayers have paid a higher share of their own personal income on public employee pension contributions over the years than have taxpayers anywhere else in the country.  That includes taxpayers in the rest of New York State, whose pension system has its rules set by the same New York State legislature as the New York City pension system.  Despite NYC residents having paid far more in over the decades, the New York City public employee pension system is one of the worst funded in the country while the New York State system, which covers local government workers outside NYC as well as state workers, is one of the best funded.

After the 1995, 2000 and (for teachers) 2008 retroactive pension increases, and all smaller pension increase and early retirement incentives in between, New York City’s taxpayer pension contributions soared from 0.5% of city residents’ personal income in FY 2000 to 2.2% in FY 2011.  The pension deals, and much of the damage, pre-ceded the Cuomo and DeBlasio Administrations.  In FY 2019 NYC taxpayers were still 2.0% of city residents’ personal income.  But I suspect that the costs of past pension increases, which were described as costing nothing because the 2000 and 2007 asset price bubbles would supposedly pay for them, continues to be shifted to the future, thanks to the latest asset price bubble.  When it deflates, city residents will have to pay even more, in higher taxes or reduced services.

The politicians and public unions will tell you that “normal” taxpayer pension costs for most workers are less than 6.0% of payroll for most workers, and any higher costs are because “Wall Street stole our money.”  Then why were NYC taxpayer pension costs much higher a decade or two after the pension increases that “cost nothing” passed, and despite yet another asset price boom, the “everything bubble?”  There was a small reduction in New York City taxpayer pension contributions as a percent of the public payroll from FY 2014 to FY 2019, as the Federal Reserve kept increase rates low and stock and bond prices soared.  That probably means that some of the contributions that weren’t made then will have to be paid later.

Both Cuomo and DeBlasio had an opportunity to reverse some of the damage to New York’s taxpayers and service recipients from all those pension increases, by making the self-dealers who scored them give something back.  Both wanted public union and contractor support, however, so instead they cut services, allowed infrastructure deterioration, deferred costs to cause even more harm later, and slashed the compensation of later-hired public employees.  

In fact, Governor Cuomo and Mayor DeBlasio arranged for New York City taxpayers to carry most of the cost of the private sector pension increases for construction industry around the year 2000, in soaring costs for infrastructure projects.  DeBlasio also had city taxpayers pick up the tab for the private school bus companies. Just as the federal government has picked up the tab for private pensions that became underfunded after benefits for Generation Greed workers were increased beyond what they had been promised when hired.  All this will be paid for by later-born workers who don’t get pensions, have had their Social Security benefits cut, and will have those benefits cut further.

While the pensions of the uniformed employees are the most costly, pension and other benefit spending soared – as wages and salaries stagnated – in other city agencies too.  That stagnation then became the justification for not doing as good a job.

Thanks to the soaring cost of benefits for the retired, the mean total compensation (including benefits) of state and local government workers in Downstate New York exceeded the mean compensation of private sector workers (including the self-employed) in the Finance, Insurance and Real Estate sectors in 2019 – was well as being 50%+ higher than for other private sector workers.

When it comes to social spending on non-seniors, in NYC it edged up from FY 2007 to 2019 per $1,000 of personal income, even as cash welfare benefits continued to fall.  Elsewhere, everything fell.  The failure to enact the reversable child tax credit at the federal level even as exemptions for dependents were eliminated from the tax code and senior spending soared shows who matters, and who doesn’t.  In NYC, cash welfare payments fell from $2.82 per $1,000 of city residents’ personal income in FY 2007 to $2.38 in FY 2019.  Nationwide, it’s down to $1.25.  

When it comes to social services, however, you can’t say NYC’s homeless, substance abuse and mental health crisis is due to disproportionately low spending.  NYC spending on social services was $13.37 per $1,000 of state residents’ personal income in FY 2019, more than triple the national average of $3.83 and far higher than the rest of NY state and surrounding states.  That was up from $11.87 per $1,000 of personal income in FY 2007.  Social services spending in the U.S. as a whole, the rest of the state, and surrounding states continued to fall $1,000 of personal income.  Ever-increasing social problems probably forced the DeBlasio Administration to increase spending.  With nationwide rush to grab more state tax revenues by legalizing potentially harmful and addictive substances and activities, expect more costs and more social problems on the street, regardless of how much is spent.

It may be Monday morning quarterbacking, but it’s worth pointing out that the DeBlasio Administration cut public health funding in the run up to the COVID-19 pandemic.  When you want to run for President, mundane functions like these take a back seat to little special programs staffed by your political supporters.  

Then again Governor Cuomo cut funding for the NY State Department of Labor, before hundreds of thousands of New Yorkers lost their jobs and then had to wait months for the unemployment insurance payments they were entitled to and had paid into for years or decades.

New York State’s higher education spending has always been relatively low, since more students attend private colleges and universities here.  But it was cut per $1,000 of personal income from FY 2007 to FY 2019 under the Cuomo and DeBlasio Administrations, as the Millennials exited, while increasing elsewhere.  Enrollment has been plunging further, so one wonders what will happen to SUNY and CUNY.  My view – if the UFT and NYSUT didn’t fully own the state legislature, instead of (or in addition to) having high schools offer AP classes, we’d have community colleges offering the last two years of high school, complete with vocational training.  But SUNY and CUNY weren’t going to give Cuomo and DeBlasio lots of campaign contributions to run for higher office, and won’t do so for the next set of fully owned pols either, so that’s moot.

It would seem the DeBlasio Administration didn’t “defund the police,” as New York City local government police expenditures were at $9.22 per $1,000 of city residents’ personal income in FY 2019, down from the peak of $10.57 in FY 2000 but about the same as the $9.47 in FY 2007 and the $9.19 in FY1 1989.  In Census Bureau data, moreover, the City of New York reports police spending without pensions and other employee benefits. So what you are seeing in this chart is only half the total.

In reality, total spending on the police force has soared, here and elsewhere, as the police were defunded by the rich pension deals of the retired police.

While police spending remained high, there was a decrease in corrections expenditures in New York during the Cuomo and DeBlasio Administrations, as the number of people in state prisons and local jails decreased.  NY state corrections expenditures fell from $3.32 per $1,000 of state residents’ personal income in FY 2007 to $2.29 in FY 2019, compared with $2.79 nationally.  And New York City local corrections expenditures fell from $3.29 per $1,000 of city residents’ personal income in FY 2007 to $2.32 in FY 2019 – far lower than the $5.22 in the year 1989.  But NYC is still above the U.S. average of $1.68 per $1,000 of personal income, and – as is the case for police – only about half the NYC corrections expenditures are included.

It’s outside my area of expertise, but with the debate over bail reform I’ve realized that despite all the cop shows, all the lawyer shows, all the judge shows, and all the CSI shows, most of us have no idea how the criminal justice system actually works.  The police do an investigation, make an arrest, and a couple of months later there is a trial, after which someone is let go or sent to prison?  Nope.  I read the guy who drove his car into a bunch of pedestrians in Times Square five years ago is about to go on trial now.  Part of that is the pandemic, but what happened back in 2017 when he was arrested? 

Today we are told we have a choice between allowing the police to arrest those too poor to make bail and have them serve their entire sentence before a trial.  Or allowing those with a long history of violent crime convictions to remain at large for years, committing additional crimes, before any trial takes place.  Would someone please make a show about the criminal justice system that actually exists?

That said, New York’s state government judicial and legal expenditures, including the courts, district attorneys, the state attorney general, and public defenders, fell from $2.44 per $1,000 of personal income in FY 2007 to $2.06 in FY 2019.  So, the Cuomo Administration did de-fund the courts to an extent, but there is still vastly more spent here than the U.S. average of $1.36.  And it could be that this apparent decrease in spending was just another shift to rising pension and health benefit costs, tabulated separately, as for every other public service in New York.  

There was a smaller decrease in local government judicial and legal expenditures, both in NYC and the rest of the state.  

The most telling event of the Cuomo and DeBlasio administrations was when they each tried to claim that the other were responsible for the MTA, so they wouldn’t have to do anything or come up with any money to improve it.  The transit system was the foundation of the Manhattan-driven economic boom that threw off all the tax revenues for the whole state, but after the 1980s it was both defunded and de-managed.  Service and maintenance were cut even as Millennials chose transit in larger numbers, to the point where the future of the transit system has been permanently impaired.  Governor Cuomo finally declared a “state of emergency” in mid-2017, after he had been in office for six years and DeBlasio had been in office for three.

https://www.nbcnewyork.com/news/local/mta-state-of-emergency-new-york-governor-andrew-cuomo-declares-after-chronic-lirr-subway-problems/191935/

Neither had noticed how much worse things were getting for ordinary New Yorkers, because like most members of the political/union class they drive everywhere and think mass transit (and bicycles) are for serfs.

Cuomo and DeBlasio inherited this situation, and as the chart shows.  New York City’s mass transit spending fell from $20.54 per $1,000 of personal income in FY 1989, in the Koch/Mario Cuomo Administrations, to $15.02 per $1,000 of personal income in 2000, and stayed low for decades.  Eventually, Governor Andrew Cuomo and Mayor DeBlasio did increase funding for the agency, compared with a low point in 2007.  But not compared with many other years, and with regard to the state of the infrastructure, more spending now doesn’t make up for a couple of decades of past spending that wasn’t done.  The hole is too big.

Moreover, New York City has gotten less and less for its transit capital dollars, something I’ll talk about in the next post.  And much of the capital money that has been spent has been on real estate projects like the World Trade Center shopping mall or the post-disaster replacement of infrastructure that was already there. Meanwhile, the rest of the system continued to decay.  That was the situation before the pandemic.

And long term, when it comes to capital construction expenditures, they have gone to the rest of New York State, not New York City.  After a brief debt-driven burst for NYC late in the Bloomberg Administration, the Cuomo and DeBlasio Administrations shifted such expenditures to the rest of the state.  And much of what was spent in NYC was on road projects such as the Staten Island Expressway widening, and transit projects that were really real estate projects. 

Basically, Cuomo and DeBlasio, like other politicians of their generation, were only willing to spend on infrastructure when money could be borrowed, and thus no one really paid for it. So more and more public debt was incurred against the MTA and the state transportation trust fund until the maintenance of the city and state infrastructure stopped.

Governor Cuomo, however, did have the Port Authority keep borrowing.

Although the Bloomberg Administration ran up a lot of debt and didn’t do much for the transit system, it did invest in parks, recreation and culture, which the Giuliani Administration had disinvested in.  But DeBlasio was more like Giuliani than Bloomberg or Koch with regard to the parks, recreation and culture, even though parks – along with mass transit – were the only public services that taxpaying childless young Millennial workers actually used.  The parks became more important than ever during the pandemic, when people couldn’t socialize inside and could only gather outside. That’s when many people realized the public sector couldn’t be counted on, and moved away to places where they could get private outdoor space. NYC parks, recreation and culture expenditures fell from $2.22 per $1,000 of city residents’ personal income in FY 2007 to $2.07 in FY 2019 – well below the U.S. average.  

The Cuomo Administration cut state parks expenditures from $0.57 per $1,000 of state residents’ personal income in FY 2007 to $0.50 in FY 2019.  There had already been a big cut from $0.72 per $1,000 of personal income in 2000.  

So how would I sum up the fiscal choices of the Cuomo and DeBlasio Administrations?  As I noted in the first post in this series, I see both of them as primarily careerists, those whose primary goal was the advancement of their own career.  That has three consequences.

First, each inherited policies from the past with regard to retroactive pension increases, inadequate pension funding, inadequate infrastructure investment and high public debts, that had made the future worse.  Once one set of politicians increases their own popularity by advancing revenues, deferring costs, running up debts and neglecting basic infrastructure, so they could hand out lots of goodies to those on the inside without making everyone else pay the price up front, those to follow face a dilemma.  If they impose sacrifices to turn this around, they’ll end up taking the blame for what their predecessors have done.  

So, careerists such as Cuomo and DeBlasio instead seek to cash in the further future.  And that’s what they did.  That is also what each administration in New Jersey and Connecticut has done – kick the can down the road.

The most telling set of statements of their administrations concerned the collapse of subway service in New York City.  After losing the battle with DeBlasio to evade responsibility for the MTA, Cuomo whined it wasn’t fair to him personally that he was being held responsible for the decline of the transit system – because his predecessor Governor Pataki had gotten away with it.  That’s the only fairness they’re concerned with.

Second, sexy little new initiatives that they could be personally associated with has value to careerists like Cuomo and DeBlasio, whether the Buffalo $Billion, Thrive NYC, Moynihan Station, or universal pre-K.  The ongoing task of providing the public services that everyone rely on does not.  The city and state of New York end up with lots and lots of little initiatives, each with their own bureaucracies, while neglecting to provide quality public services even at high taxes.

Third, the organized, self-interested producers of public services matter most to careerists such as Cuomo and DeBlasio, because they offer money and political support in exchange.  The consumers of public services matter less – they can be conned with culture war promises.  The later-born and the poor don’t matter at all.

Now that we know where the money went, the next post will discuss management – how much we got for it.

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