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.
The big revelation when former Mayor Bloomberg put all the costs for most big New York City agencies, including pensions and fringe benefits, on one page, and deducted federal and state aid to show city-funded expenditures, was how expensive the so-called uniformed services – police, fire, correction and sanitation –are for city taxpayers. While health and welfare and education cost as much and more overall, there is substantial federal and state funding for those services. In FY 2014, according to New York City’s February 2014 Financial Plan Budget Summary, the uniformed services cost $17.4 billion, 23.5% of the $73.8 billion in total spending by the City of New York. As for city funds, however, these services cost $16.5 billion, 31.5% of the $52.25 billion in total city costs.
Many other city services, moreover, are provided by private, often non-profit organizations, or other agencies such as the Metropolitan Transportation Authority. What is spent on these services in a given year is what they cost that year. The uniformed services and the public schools, on the other hand, have retirement benefits that are much richer than those of other city workers, let along private sector workers, and these benefits that can be gamed or suddenly increased by the state legislature. Thus we are actually still paying more today, and will pay still more tomorrow, for work provided by the uniformed services in FY 2014, as a result of pension spiking and retroactive pension increases. But how much did they cost at the time, how did that compare with FY 2004, and how does this compare with the national average, the rest of New York State, and other states? That is the subject of this post.
New York City was long known as America’s welfare capital, with a large dependent poor population and extensive services for them. But one doesn’t hear much about that anymore. New York State has also had the highest Medicaid spending in the United States, but one doesn’t hear much about that anymore either. The data shows New York still spends more on aid to the needy than most other states, as a share of its residents’ personal income, but the gap between New York and the rest of the country closed between FY 2004 and FY 2014. As the gap closed, aid from the federal government to New York shifted to other places. Today, moreover, most of this “social” spending is on health care, and thus on older people, not on those with lower incomes. A discussion of these trends, with tables and charts, follows.
For the United States and most parts of it, the decade from FY 2004 to FY 2014 saw soaring public employee retirement costs, and weak growth for taxpayer income. In response to these trends state government assistance for public elementary and secondary schools fell relative to the income of all state residents, and total spending on public schools fell as a share of everyone’s income as well. But there was an offsetting factor. School enrollment fell as a share of the total population, and in many cases in absolute numbers, as the very large “Baby Boom Echo (Gen Y, Millennials) Generation exited school with smaller generations behind them.
At the same time, and perhaps driven by the same demographic shifts, state and local government spending on public higher education increased when measured per $1,000 of everyone’s personal income. But how did different states compare, and how was per-student elementary and secondary school spending affected? That is the subject of this post.
The Governments Division of the U.S Census Bureau released its detailed state and local finance data for FY 2014 on January 31, and I have compiled it and produced a couple of large tables – one for all state governments and one for all local governments by state – comparing that year with FY 2004. The data shows, by category, the amount of revenues (property taxes, federal aid), expenditures (public school spending, police department spending) and debt for every state in the country and, at the local government level, for New York City and the Rest of New York State separately.
To be comparable across states and across the years, the data is presented per $1,000 of the personal income of all the residents of each state. Think of it this way. Your household else spends X percent of its household budget on food, X percent on housing, etc. And, via the taxes and government fees you pay, X percent of its income on public schools, X percent on police, etc. The data is presented per $1,000 rather than as a percent to make the data for small categories easier to see. I plan to write a series of posts, with additional tables and charts, for different aspects of state and local government finance separately. But in the triumph of hope over experience, in this post I will explain where the data comes from and how it was compiled, provide the whole database for download up front, and invite people to look at the numbers themselves at the same time I do, and decide for themselves what the data means. Before getting my take on it.
What is the most important fact about Mayor DeBlasio’s budget proposal?
The unsaid. During the Bloomberg Administration the “Budget Summary” document had included summary tables that showed how much money was spent on each agency for wages and salaries, how much for pensions, how much for other benefits, how much for interest, how much for lawsuits, how much for other non-personnel costs such as contracts and supplies, and how much of each function is funded by the city, and how much by other layers of government.
Last year DeBlasio provided that table for his budget proposal, but not for past years. But I was able to make a comparison with that table from prior years and write this post.
This year DeBlasio has apparently ordered that this information be omitted from the Budget Summary altogether, which is exactly the sort of stuff I fear we can expect from Trump.