Category Archives: new york city budget

DeBlasio’s FY 2018 NYC Budget, Detroit’s Bankruptcy, and NYC’s Recovery from the 1970s

I was upset that a summary table that showed how much NYC spends on the largest government functions, including debt service and pensions, and how much of this is funded by locally-raised money, was removed from NYC’s “Budget Summary” documents.

https://larrylittlefield.wordpress.com/2017/01/25/the-deblasio-budget-hiding-the-facts/

But there is good news. The table, albeit without a column for spending by agency on judgments and claims and without a comparison with prior years, is back in a more detailed document that came out later, the latest “Message of the Mayor,” page 81.

http://www1.nyc.gov/assets/omb/downloads/pdf/mm4-17.pdf

And that allowed me to easily update the tables and charts I produced last year comparing FY2014, Mayor Bloomberg’s last budget year, with FY 2017, as proposed. A spreadsheet with the tables and charts for FY 2007, FY 2014 and FY 2018 as proposed is attached below.

But in the rest of this post, I’d like to review the “Unsaid” about Detroit’s bankruptcy and New York City’s recovery from the 1970s, and their relevance to NYC today.   Because in my view, despite all that was written and said about those two past events, few have identified the most important reasons why they actually happened.

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Medicaid: The Rest of New York State (Re) Declares War on New York City

After the 1994 election, the one that saw the Republicans take Congress after decades of Democratic dominance, the New York Times published a “portrait of the electorate” based on exit polls. It showed that the 1960s generation was the one most likely to vote Republican that year. “Those hypocrites” I thought. They were “liberals” in their youth when they wanted to get out of serving in Vietnam, and now they are “small government” “conservatives” when they are at their earnings peak and they don’t want to pay taxes, but I’ll bet they’ll be “liberals” again when its time to collect on federal old age benefits. But they surprised me by being even worse than I thought. They still want even more tax cuts for themselves, and even more old age benefits for themselves, such as the Medicare prescription drug benefit. They want to borrow to pay for it. And to ensure our foreign creditors that the money will be paid back by someone else, they also want deep cuts in public services that younger generations need now, and drastic reductions old age benefits — not for themselves but for those to follow them – effective in the future.

With their aging, stagnant populations, the Downstate Suburbs and Upstate New York are now disproportionately occupied by, and almost exclusively represented by, members of Generation Greed. And back in the 1990s I had similar thoughts about their possible upcoming hypocrisy with regard to Medicaid funding, and specifically the local taxpayer share of it. But once again I’ve been surprised, because once again my cynicism was insufficient. They are even worse people than I thought. And it’s past time from them to be called to account for it.

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Local Government Employment in New York: Annual Average Data for 2016

About a month ago, the U.S. Bureau of Labor Statistics released 2016 annual average employment data from the monthly Current Employment Survey. It isn’t the most detailed information with regard to local government, but it is the most timely, so I once again put together a series of charts showing the trends.

The data shows that after a period of austerity, local government employment is rising again in New York State. The increases are not large, and in New York City local government employment is still rising more slowly than private sector employment. But in the Rest of New York State the increase in the ratio of private employment to local government has halted. Moreover, elementary and secondary school employment, which soared in the Rest of New York State under former Governor George Pataki’s “everybody onto the payroll to get a pension” policies, is rising again despite (at least according to the latest data I’ve seen) falling school enrollment. And in New York City, private sector (but presumably mostly Medicaid-funded) home health care employment has soared at a pace and to a level that raises questions about what the heck is going on.

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Bureaucracy: Census Bureau State & Local Government Finances Data for FY 2004 and FY 2014

This, the final post a this compilation of the most recent state and local government finances data from the Census Bureau, is about administrative functions I have grouped together as “bureaucracy.” It includes data on the most governmental of government functions: the kind of activities one might expect to find taking place in city and town halls, county seats, county courthouses, and state capitals. Reviewing applications, keeping records and doing inspections, rather than providing services. The functions included are, as delineated by the U.S. Census Bureau, Judicial and Legal, Financial Administration, Protective Inspection & Regulation, Central Staff, General Public Buildings and, at the state level, Social Insurance Administration (state Departments of Labor). I also include Health, because it overlaps with these categories, as it includes not only “provision of services for the conservation and improvement of public health, other than hospital care” but also “health related inspections – inspection of restaurants, water supplies, food handlers, nursing homes, agricultural standards or protection of agricultural products from disease” along with animal control.

The situation and trend for these public functions is the same as most of the others. Expenditures on public services provided today is going down, when measured per $1,000 of area residents’ personal incomes, as pension expenditures are going up. The result is lower pay and benefits for new public employees, falling state and local government employment relative to population, and – unless there are increases in productivity to offset this – falling public services received. With the rise of information technology, productivity gains in bureaucratic categories are certainly possible, but with public employee unions, civil service laws, and politics they are uncertain to unlikely.

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Public Amenities and Vices: Census Bureau State and Local Government Finances Data for FY 2004 and FY 2014

Living in a city once meant that those who could not afford their own private amenities, such as large backyards, country club memberships, second homes, and bookshelves full of books, could enjoy less expensive shared amenities such as public parks, pools, beaches, libraries, and entertainment. The great supporters of these services and facilities were often wealthy people who did not need them, but nonetheless donated money to support them, because they believed the common people would be ennobled by them. Many libraries, for example, were built with money donated by steel magnate Andrew Carnegie, and many New York State parks are on land donated by people like Averell Harrmian. With the highest state and local tax burden in the country (those states where most of the taxes are on mineral resources aside), one might expect that New York would have more spending on public amenities, as a percent of its residents’ personal income, than other states. But is that true?

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Infrastructure: Census Bureau State and Local Government Finance Data for FY 2004 and FY 2014

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.

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Uniformed Services: Census Bureau State and Local Government Finance Data for FY 2004 and FY 2014

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.

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