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.
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.
We are told that we have a crisis. The two Pennsylvania Railroad tunnels under the Hudson River are more than 100 years old, are deteriorating, were damaged by Superstorm Sandy, and could need to be shut down for repair at any time. Cutting off the approximately 46,000 New Jersey Transit and Amtrak riders who use the tunnels to get to Manhattan between 7 am and 10 am on a typical weekday. The solution: a Gateway Tunnel plan that would take 20 years and $20 billion. We are told that we have a crisis – the Port Authority Bus Terminal is aging, deteriorating, unable to cope with rising traffic, and liable to become unusable due to the deterioration of its concrete decking. The solution: the construction of an interim terminal, and then a new terminal, for more than $10 billion, taking at least 10 years and perhaps 15.
This is what happens when you plan for every interest group to be paid off, years of hearings where every NIMBY activist has their say, years of planning in which every conflict is settled by the addition of more money, and a construction process in which metro New York’s rapacious consultants, contractors and construction unions are allowed to turn essential projects into perpetual gravy trains. That is what happened at the World Trade Center site, with its massively expensive and much delayed PATH station, at the Fulton Street Transit Center site, and at East Side Access. Extra years, extra billions, extra campaign contributions for incumbent politicians, but no extra benefits for the serfs who will have to pay the interest on the associated debts for the rest of their lives, long after the beneficiaries depart for Florida or the grave. If this were a real emergency the politicians would find a way to make all these vetoes, sinecures, and extravagances go away. What would they do then? Here is a summary of what people who follow these issues are saying.