Sold Out Futures by State: Debt and Infrastructure for FY 1972 to FY 2019

The federal government just passed a $ 1 trillion “infrastructure bill” that, for a while, will increase the amount of federal funding for infrastructure.  Most of the actual spending, however, will be continue to be done by state and local governments, just as has been the case in the past.  The modest increase in spending, adjusted for inflation, is intended to address a backlog of needed projects.  But federal funding is only one source of money for state and local infrastructure.  State and local taxes are another, and bonds, usually paid off over 30 years, are a third. 

The extent of infrastructure varies from place to place.  In rural areas the only public infrastructure might be a county or town road, supplemented by power supplied by a rural electrification co-op, and telephone and postal service cross-subsidized by those in cities.  Instead of paying for public water, sewer, and solid waste collection, people provide these for themselves.  In cities, on the other hand, there may be mass transit, public sidewalks, airports, seaports, public water, sewer, solid waste collection, and in some places public electric utilities.  So do low-density rural states spend less on, and receive less in federal funds for, infrastructure?  Do states with low past infrastructure spending also have low debts?  How are the estimated $1.4 trillion infrastructure spending shortage and the $3.2 trillion in state and local government debt distributed around the country?  Read on and find out.

Sold Out Futures: A State-By-State Comparison of State and Local Government Debts, Past Infrastructure Investment, and Unfunded Pension Liabilities Through FY 2019

In two years of the COVID-19 pandemic, with society under stress, we have seen increasingly strident political fights over whose cultural attitudes and preferences should be imposed on others, who should get to contribute less to the community, and who should get to take out more.  In the shadows, however, is a bipartisan consensus as to who should be made worse off and be sacrificed the rest of their lives to pay for it all.  Ordinary people in later born generations, those who will be living in the United States in the future.   The pandemic has given politicians of all alleged views, and the interest groups that back them, an excuse to do, to an even greater extent, what they have done for 40 years.  Cash in the common future to address the perpetual “emergency” of the present.

So it was in Washington in 2020 when The Donald and the Republicans, having already sent the federal debt soaring to cut taxes for the rich and then ran a federal deficit equal to one-quarter of the U.S. economy.

https://larrylittlefield.wordpress.com/2021/03/15/federal-reserve-z1-data-for-2020-the-king-of-debt-went-out-with-a-bang-and-our-children-and-grandchildren-will-be-poorer-for-the-rest-of-their-lives-to-pay-for-it/

And so it is in Washington today, where Biden in the Democrats claim their plans will be “paid for” – meaning the burden shifted to the future would only be as great as it was under Trump and the Republicans.

It is in this context that for the fifth time, I have reprised an analysis of state and local government finance data from the U.S. Census Bureau, for all states and for New York City and the Rest of New York State separately, with data over 49 years, to determine the extent to which each state’s future had been sold out due to state and local government debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions.   You’d think that the extent of disadvantage for the later-born, and who benefitted from creating it, would be the number one issue in every state election, and the number one topic of debate in the media.  Instead, it remains under Omerta, especially here in New York.  Shouted down under the comforting culture war issues that Generation Greed prefers.  So, although standing up for the later born and common future may amount to nothing more than standing on the beach shouting into a hurricane as a social tsunami heads for shore, over the past month I have updated the “Sold Out Future” analysis with data through FY 2019.  This post, a national summary and explanation of where the data comes from and how it was used, and the next three, will show what I found.

New Jersey Governor Phil Murphy Should Have Told the Truth About Generation Greed

Four years ago, I asked if newly-elected New Jersey Governor Phil Murphy would be the first to tell the truth about Generation Greed.

Will New Jersey’s Phil Murphy Be the First To Tell The Truth about Generation Greed?

Telling his new constituents exactly what share of their state income taxes, local property taxes, transit fares and toll payments were going not to public services and benefits they were getting today, but rather to costs shifted forward to the present by past New Jersey politicians, and the older and former state residents and special interests they had pandered to.  Costs from past debts, inadequate past infrastructure investment, and underfunded and retroactively enriched public employee pensions.  The tell would be to reduce taxes, tolls, and transit fares to a level that only reflects the public services and benefits that the State of New Jersey and its local government are providing to New Jerseyans today.  So people would see what the public services they are now getting actually cost.  And then fund all the costs from the past with a separate, additional income tax, property tax, transit fare and toll surcharge that everyone could see. The Generation Greed surcharge.  It would be right in their face, not in some report no one reads, day after day and year after year.

Governor Murphy (like the rest of them) chose not to go that route.  And despite an economic upturn, stock market bubble, and gusher of federal money that the later-born will be sacrificed to pay back someday, that temporarily made his options and decisions much less painful than they could have been, and will ultimately be, he was nearly thrown out of office, barely winning re-election against Republican challenger Jack Cittarelli.  Meanwhile, Democratic New Jersey Senate President Steve Sweeney has apparently been ousted by a truck driver and politician novice running a low-cost campaign.

The top issue, according to pollsters, was taxes.  Even though New Jersey’s total state and local government tax burden, as a percent of state residents’ personal income, doesn’t come close to what we’ve been forced to pay in New York.  Even at their lower tax total, today’s New Jerseyans apparently don’t feel they are getting fair value for their money.  Well of course they aren’t. 

The MTA (and New York State and the New Federal Infrastructure Plan): Five-Plus Decades of Investing in the Suburbs and Disinvesting in the City

The era of large-scale federal infrastructure investment, from the 1950s through the 1970s, coincided with the era of suburban development and urban decline.  I don’t think that was a coincidence.  Cities had paid for their own infrastructure with local money, were still paying bonds for that infrastructure, and it was aging. The federal government then paid for brand new, up to date infrastructure for suburbs, and for rural areas that became suburbs, with taxes collected in part in cities, even as urban infrastructure declined.  Federal investment was limited to new infrastructure only at the time.  Most older central cities never recovered, and those that did only began to do so in the early 1980s, after the Reagan Administration cut federal investment and added local flexibility to how it was used.  More of it was then used to fix existing infrastructure, not just subsidize new suburban and exurban development.

Now it is 50 to 70 years later and the infrastructure of the suburbs is aging.  And because of lower densities, and thus more liner feet of road, water pipe, and sewer pipe per taxpayer, it will be more costly to replace with local taxes.  Some in the Strong Towns movement believe the suburbs are facing the sort of infrastructure decline the cities faced 50 years ago as a result. 

https://granolashotgun.wordpress.com/2016/01/12/teachers-pipes-and-pavement/

An issue that will be most acute in private communities responsible for their own local infrastructure, where people live so they can control who walks on their streets and not share a tax base with pre-1960 neighborhoods. Who will pay up when private sewage treatment plants fail and have to be replaced?  Did you hear about what happened at that collapsed Florida condo, where residents had argued for years about paying for fixes before disaster struck?

The older generations who live in these suburbs are used to getting things, but not fully paying for them.  The “I’ve got mine jack,” tax cut generations.  And here we have another federal infrastructure bill, enacted by suburban and Sunbelt Baby Boomers according to their preferred lifestyle, a lifestyle that poorer Millennials cannot afford and the global environment cannot sustain, to be paid for by those Millennials in the future, because most of it going to funded by soaring federal debts. With higher levels of governments (federal and state) making the choices as to how even the future money of city residents will be spent, how will New York and other older cities fare this time?

As an analogy this post will compare the suburban and city projects that the MTA promised in the Program for Action, released in early 1968 when it as formed, with the system expansions and maintenance of existing infrastructure that actually took place in the five-plus decades since.  And go from there.

Transportation Infrastructure: 2017 Census of Governments Data

For as long as I can remember, I have heard in the media that the United States doesn’t spend enough on infrastructure.  And for as long I as can remember, more and more money has been spent on other, more immediate priorities, even as federal, state and local government debts have risen.

On the other hand, I have come to see all such statements, by all interests, as essentially self-serving.  “Studies” are produced by interest groups seeking more for themselves, and pretending that they will be paid for by money dropping out of the sky, not by having other people left with less, now or later.  These are replicated by a media seeking an easy story.

So how much has the United States spent on infrastructure? How has this changed over time? And how does New York City, where the transportation infrastructure is smaller than it was 70 years ago as a result of the loss of the West Side Highway, and the 3^rdAvenue and Myrtle elevated rapid transit lines, compare with the national average? Census of Governments data will be used to find out.

The National Transit Database: Comparative Operating Cost and Fare Revenue Trends from 2008 to 2018

It has been just under three years since I last downloaded and tabulated data from the Federal Transit Administration’s National Transit Database.

https://larrylittlefield.wordpress.com/2017/05/11/metro-ny-transit-costs-data-from-the-2015-national-transit-database/

Since the data is published every year, I have long hoped that some other organization would use the data and publish reports showing what it says, having someone else to it as part of their job.  That hope increased after the New York Times used the data as part of its series on the New York City Subway.   And after Governor Cuomo directed the MTA to hire a consultant to study “MTA Reinvention.”  Moreover, the NTD now includes a spreadsheet titled “Metrics” with almost all the basic cost and service efficiency ratios one might want to see. As of the date of this post that spreadsheet for 2018 is on page 2 (tab at the page bottom), though it will be moving down as 2019 data is published.

https://www.transit.dot.gov/ntd/ntd-data

There has been, however, no public discussion of what National Transit Database data shows about New York’s transit system since the NY Times articles.   So rather than allow this information to remain among the unsaid, I decided to at least analyze the operating budget.  (I’m not sure there really is a capital budget, since under the prior MTA capital plan, regardless of what officially passed, most of the money never actually arrived and most of the work was never actually done).

Infrastructure: Census of Governments Employment and Payroll Data for 2017

This series of posts based on Census of Governments state and local government employment and payroll data for March 2017 (and 2007 and 1997) continues with a post on infrastructure functions:  highways and streets, mass transit, air transportation, water transportation, government-run electric and gas utilities, water supply, sewerage, and solid waste management.  Along with related private sector activity.  When I joined New York City Transit out of graduate school in 1986, I was told it was the largest industrial/blue collar employer in New York City.  It probably still is, with the other functions described adding as many blue collar jobs, and jobs with contractors many more.

In the past 10 years or so, subway riders have experienced a drastic decrease in their quality of life despite rising fares, relative to the very low inflation of the period.  This is something I have attributed to costs from the past – the big pension increase in 2000, with huge costs deferred until later, and decades of zero state and city funding for the MTA capital plan, with money borrowed instead.  But after reviewing the data for these functions, I have begun to wonder if even worse is coming. And not just at the MTA. But we will have water!

Sold Out Futures by State in 2016: Debt and Infrastructure

Debt and infrastructure investment are supposed to go together.   State and local governments have operating budgets and capital budgets, and constitutions and charters that say that while money may be borrowed for capital improvements, the operating budget is supposed to be balanced.

During the Generation Greed era, however, that isn’t what has happened. For the U.S. as a whole, total state and local government debt increased from 14.1% of U.S. residents’ personal income in FY 1981 to 22.7% in FY 2010, even as infrastructure investment diminished. This was a matter of generational values, not just a matter of government.  One finds the same trend in business – more debt, less investment – during the same years, with the short term high of having more taken out relative to the amount put in contributing to perpetual political incumbency and sky-high executive pay.  A generation, it seems, has decided to cash in the United States of America and spend to proceeds before it passes away.

Transportation: Census Bureau Public Employment and Payroll Data for March 2016 and March 2006 (And Related Private Employment)

One of the depressing aspects of reading the book Greater Gotham  is seeing, summarized in one place, how a generation built much of the infrastructure and created most of the institutions that make New York City what it has been and is today.   What a generation!  Most of the firsts – the Brooklyn Bridge, Central and Prospect Parks, the first Croton Aqueduct and Reservoir, the first rapid transit lines, etc. had been built before the consolidation of the five boroughs into the City of New York in 1898.  But after consolidation public investment went into a massive overdrive.  One in stark contrast with the past 20 years, when despite addition of 600,000 jobs, 1 million people, and $billions in additional tax revenues, the city and state have failed expand the city’s infrastructure significantly and, in the case of the subway, failed to adequately maintain the infrastructure that already existed.  That infrastructure and public amenities such as parks and libraries had been cash cowed and left to rot by the generations that departed to the suburbs, partially restored in a revival that few expected at the time (thanks to the best of another generation), but then left to rot once again by those same sorts of people who wrecked the city to start with, and who still control the state government, notably the state legislature.

But how many people are employed allowing New York City to fall apart, at the highest state and local government tax burden (excluding taxes on oil, gas and mineral extraction) in the country, while attempting to defer the consequences until another generation of insiders can retire to tax-free Florida?  This post will use data from the Governments Division of the U.S. Census Bureau, and Employment and Wages data from the Bureau of Labor Statistics, to find out with regard to transportation.

Will New Jersey’s Phil Murphy Be the First To Tell The Truth about Generation Greed?

Coming into office eight years ago, New Jersey Governor Chris Christie faced a fiscal disaster, following decades of shortsighted but popular policies that robbed the future. He talked like a problem solver, and could have made difficult choices to raise taxes and tolls, and reduce public services for everyone, not just for transit riders.   But since the majority of New Jersey residents don’t follow state and local government closely, this would have meant Christie received all the blame for all that had gone before. So he punted, and shifted costs from the past further into the future, to the extent that this was possible. As a result he won a second term. But the future continues to become the present, and the bills continue to come due. He is leaving office as one of the most despised politicians in the country.

Coming into office today, therefore, New Jersey Governor-elect Phil Murphy also faces a fiscal disaster, this time at the peak of an economic cycle rather than in a deep recession. A fiscal disaster that is certain to get even worse when the next recession hits and the stock market corrects to something like fair value. And he faces those same two options. Raise taxes, cut services, and perhaps tell his public employee union supporters that they have to give up more to get back in solidarity with their fellow state residents. And be blamed for all of the above. Or hope that state residents have gotten used to how bad things are under Christie, kick the can a little further, and try to sneak into a second term before the additional bills come due. And then leave office as despised as Christie and outgoing Connecticut Governor Malloy.

But there is a third option.   Interested Phil?