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 worker if even worse is coming. And not just at the MTA. But we will have water!
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.
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.
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.
I was a mass transit fan when mass transit wasn’t cool. My first job after graduate school was at New York City Transit, in logistics and inventory control in the mid-1980s, and I was a loyal transit rider for decades (though if I had gotten into bicycle transportation sooner, I might weigh 40 pounds less today). And I studied transit systems, read books about them, and after the development of the internet allowed those with similar interests but not much free time to communicate, made the acquaintance of other transit buffs and transit historians.
For much of the time from the late 1970s to today, metro New York’s rail transit system was on the upswing. Management improved, some of the worst labor abuses of the past were done away with (at least on the subway), and money was invested. As a result reliability improved, the inflation-adjusted cost per vehicle revenue hour fell until the mid-1990s, ridership increased and filled the trains, and the cost per rider fell even faster. Today ridership and revenues are vastly higher than 20 or 30 years ago on all major rail transit systems in metro New York, and those transit systems have been the engine of the New York Metro economy. If I and other transit buffs could go back in time 30 years, to the crime and grime and constant breakdowns of the 1980s, and know nothing of today other than how high ridership and transit revenues now are, what would we have thought the transit system would be like in 2017? We certainly would not have expected the disaster we seem to be facing. And collapsing systems despite soaring ridership are present elsewhere in the U.S. as well.
It has been a few years since I downloaded and compiled mass transit finance data from the Federal Transit Administration’s National Transit Database, so I redid the analysis to see if anything had changed since 2012. Boy, it sure has. Between 2012 and 2013, based on that data, the reported operating cost of the New York City subway soared by 27.2% in just one year, an increase of more than $1 billion. There were no similar spikes among other major transit agencies in Metro New York. Suddenly the share of the subway’s operating costs that is covered by the fare is merely somewhat better than Metro North and the Long Island Railroad, instead of much, much better. And the wages and benefits of NYC subway workers, per hour worked, are the second highest behind PATH among major U.S. rail systems, instead of lower than those of NYC bus workers.
I’m not saying the figures for either year are false. In fact, as you’ll read, I have a possible explanation. But the new figures sure solve a lot of political problems. For TWU head John Samuelsen, who came out of the bus division and might have been catching heat from subway workers. For Governor Cuomo and suburban politicians, who might have been catching heat for the vastly higher level of subsidy for the suburbs. And for LIRR workers and their unions, who might have been concerned that featherbedding and graft would become more of a public issue, despite their control of – actually I’m not sure which politicians they control. But let’s take a look at what the data now shows, for 2015 and over the past 25 years. This post will cover operating costs, and the next one revenues.
If there is one thing that virtually every public policy commentator and politician seems to believe, it is that more should be spent on infrastructure. And yet the direction of public policy has been in the exact opposite direction, with maintenance often unfunded or funded by debts that now soak up a large share of revenues dedicated to roads, bridges, airports, and transit, water and sewer systems. The trend has been at its worst in the Northeast. And as costs from the past, including pension funding and debt service, increased between FY 2004 and FY 2014, expenditures on the future – on the infrastructure – decreased when measured per $1,000 of personal income. It’s a trend that, according to anecdotal evidence, continues to this day, with consequences that continue to appear over time as the sold out future becomes the present.