The Sold Out Future By State Analysis Reprised

About a year ago I published an analysis based on U.S. Census Bureau government finances data, for all states and all available years from 1972 to 2016, that showed the extent to which each state’s future (with New York City and the rest of NY State analyzed separately, and the District of Columbia also included) has been sold out. Sold out by past decisions, non-decisions, deals and favors with regard to state and local government debt, past infrastructure investment, and under funded and/or retroactively increased public employee pensions.  The analysis was well received, and best of all many people downloaded the spreadsheet with all the data for all 50 states, all the tables, and almost all of the charts.  I always put up a post encouraging people to download the spreadsheets, look at the data themselves, and make up their own minds before reading my subsequent posts and getting my take on it. Generally people had downloaded charts, but not spreadsheets.  Last year that changed.

What I had forgotten last year, however, but have since remembered, is the multi-step process needed to put readable tables, in JPEG format, into the posts on WordPress.   So this year I added the tables to the posts I just completed on state and local government employment and payroll data from the 2017 Census of Governments, and I found that many people had downloaded them.  I don’t know why some people might prefer pictures of numbers to actual numbers, but apparently some people do.  So I plan to rectify last year’s omission of tables – except for people who downloaded the spreadsheet — from the Sold Out Futures posts with a brief reprise.   The data shows that while the blame for our sold out future is widely shared, New York City’s past taxpayers are the most the most blameless in the entire United States.  And New York City’s public employee unions and contractors have been the most unfair to other city residents.  And nowhere else is even close.

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 worker if even worse is coming. And not just at the MTA. But we will have water!

Put A Solar Roof on the Sunnyside Yard, Not Another Subsidized Development

 

I’m not a big fan of grid-scale solar energy.  The human load on the planet comes down to four things, in order of damage. 1) Non-renewable energy use; 2) The transformation of the surface of the planet for our own use, from urban development to farming to strip mine fishing; 3) The concentrated organic load of our excretions, and those of our domesticated animals; and 4) The aggregation of certain materials into toxic concentrations.  Grid scale solar helps with number one, but makes number two worse.

Last week, however, I read about the MTA planning to expand solar panels to areas I do approve of – rooftops.

https://ny.curbed.com/2019/4/23/18511589/mta-nyc-transit-leases-rooftop-solar-power-profits

These are areas that are already covered by human-created structures, and thus no loss.  The goal is for the MTA to make some money by leasing out the roofs of the structures it owns.   But that got me thinking.

Sold Out Futures by State: The Sold Out Future Ranking For FY 2016

Over the past three posts I’ve documented how today’s and tomorrow’s Americans have had their future sold out and cashed in with regard to state and local government debts, inadequate past infrastructure capital construction, and retroactively increased and underfunded public employee pensions. Over and above the generational inequities at the federal level in government, in the private sector, and even in many families.  Adding it up, on average today’s and tomorrow’s Americans have inherited a sold-out future due to past state and local government deals and non-decisions equal to 46.9% of their personal income in FY 2016. That is virtually unchanged from the 47.1% I found when I did the same analysis for FY 2012, despite a much stronger economy and another asset price bubble.  A mortgage at nearly half your income, my income, everyone’s income that will have to be carried indefinitely into the future, before any public services are provided, before any public benefits are paid, before taxpayers spend a nickel on their own needs.

Unlike the other generational inequities in our society in the wake of Generation Greed, the state and local government burden is greater or smaller depending on where you live.  It attaches to the people there now, unless they move away from it, and may eventually attach to each place’s real estate, since real estate cannot pick up and move.  This final post in the series will rank states, and New York City and the Rest of New York State separately, based on how sold out their futures are.

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.

An Open Secret: MTA Capital Costs Have Soared to Pay for Underfunded Metro New York Construction Union Pensions

I worked in capital budgeting for New York City Transit in the early 2000s, and was shocked to see the price of capital projects soar — despite a recession.   The MTA’s construction costs have continue to soar ever since, contributing to the agency’s $41 billion in debt and deteriorating infrastructure, and this has become a political issue since the New York Times series on the decline of the subway late last year.  Recently, MTA head Joe Lhota promised to implement reforms to reduce those costs.

http://www.crainsnewyork.com/article/20180808/REAL_ESTATE/180809900/mta-chief-says-he-s-doing-something-about-outrageously-high-project-costs

“On some projects the MTA has shelled out seven times more money than European transit agencies have paid for similar initiatives. Lhota said the agency is working to reduce red tape and the high risk that causes contractors to inflate their bids on MTA projects or not bid at all. In theory, increased competition would drive down costs.”

Or at least admitted costs, since “reducing contractor risk” means reducing the MTA’s ability to get restitution when the contractors fail to perform.

What I didn’t know back in 2004, but have since learned, is that the MTA’s contractors have been jacking up their bids in large part not to pay for current workers doing current construction, but rather to pay for the underfunded construction union pension plans. This is something the MTA isn’t talking about, because both the construction unions and the real estate industry, two of the most politically powerful interests in New York, each benefit from the shift at that private debt to the public sector in general, and the MTA in particular.

The Executive/Financial Class, the Political/Union Class, and the Serfs, Redux

Two kinds of people have been getting richer. The top executives who sit on each other’s boards of directors and vote each other a higher and higher share of private sector pay, to the detriment of investors, consumers, and other workers. And retired and soon-to-retire public employees in places like New York City, who cut deals with the politicians they control to retroactively increase their already rich pensions, to the detriment of public service recipients and taxpayers. There is the executive/financial class, the political/union class, and the serfs.

The serfs continue to become worse off, adjusted for whatever point we are in the economic cycle. Today they may be a little better off than the were in 2010, but they will still end up worse off than they were in 2007, at the prior peak, which was worse off than they were in 2000, the one before, which was worse off than they were in 1987, etc. The next bottom can be expected to follow the same pattern. And the serfs continue to be lied to and manipulated by the executive/financial class, the political/union class, the media, and “truth telling” professions such as public employee pension actuaries, city and state comptrollers, certified public accountants, stock analysts, bond raters, and executive pay consultants.

This post uses recently released Local Area Personal Income data through 2016, from the Bureau of Economic Analysis, to document the trend. We had better use it while we have it, because the falsification of federal statistics in the interest of the entitled over-privileged is the logical next step in the direction of our society. And if you are a serf who rides the subway who really wants their blood to boil, be sure to read through to the commentary at the end of this post.