Category Archives: state tax burden

The New York City and State Budget Crisis: The Circumstances Beyond Their Control Are Only Beyond Their Control Because They Cut Deals to Make them Beyond Their Control

It’s a never-ending cycle.  When the economy is up and tax dollars are rolling in, the political/union class and executive/financial class negotiate deals with themselves to take more out, and/or put less in, to the City of New York, the State of New York, and agencies such as the MTA, because there is “plenty of money” and no one needs to be made worse off to pay for it.  Secret deals that are barely reported by what is left of the real news media, the portion of it that is willing to question what is going on and who is benefitting.  Irrevocable deals, deals guaranteed by contract, or by the constitution, even if those who received little or nothing in exchange, were not party to the negotiations, were not really represented there, and didn’t even know about them, are forced to pay for them.

Then a recession happens, and a budget crisis follows.   And the serfs – those who didn’t benefit from the deals, later-born New York taxpayers and service recipients, later hired public employees, those without special deals and privileges – are made even worse off due to circumstances beyond our control, as blame is cast in a circle.   

But are those circumstances really beyond anyone’s control? Even if the New York State constitution seems to put them there, that constitution could be changed, with the vote of two consecutive legislatures and a voter referendum.  One New York State legislature ends December 31st.  Another begins January 1st.  Changes to the state constitution could be on the ballot in November, 2021, as New York City residents went to the polls to vote for Mayor and City Council – if the powers that be wanted that happen.

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Graphic Summary: 2017 Census of Governments Data

Over the past six weeks, I’ve posted a series of analyses of state and local government finances using data from the Governments Division of the U.S. Census Bureau, starting with the 2017 Census of Governments and including similar data for prior years.  The posts include well over 200 pages of text, 296-plus charts, 25 tables, 34 spreadsheets with that data, those tables and those charts, plus additional spreadsheets. It is the fifth time I have done this, based on the Census of Governments, which comes out every five years.

Did you read them all?

If not, I will now attempt to summarize what the data said about state and local government in New York City compared with the rest of the country, prior to the cornonavirus crisis, with a series of selected charts and a sentence or two each.  Most of the data is for all the governments in a state or county added together, with revenues and expenditures divided by the personal income of everyone in that state or county, to adjust for the relative cost of living and ability to pay. The first post in the series, which includes spreadsheets with revenue and expenditure data on the full scope of state and local government activities, and explains where the data comes from and how it is tabulated, is here.

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Bureaucracy: 2017 Census of Governments Data

This, the final analytical post based on a tabulation of state and local finances data from the 2017 Census of Governments, is about the most governmental of activities. 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, adjudicating cases and doing inspections, rather than providing services.  The functions included are, as delineated by the U.S. Census Bureau, Judicial and Legal; Financial Administration; Central Staff, General Public Buildings and Other Administration; Protective Inspection & Regulation; and, at the state level, Social Insurance Administration (state Departments of Labor) and “Other Education,” which includes state public school oversight agencies.  I have grouped them under the title “Bureaucracy.”

The budgets of these functions are small individually, but they add up. In FY 2017, also including public Health, state and local governments collectively spent $18.54 per $1,000 of U.S. residents’ personal income, or 1.85% of the income of everyone in the United States, on these functions.  And 1.6% of the personal income of residents of New York State, which ranked 38thin the country in Bureaucracy spending.

The relative level of spending on Bureaucracy in different states, when adjusted for the total personal income of residents of those states, doesn’t come close to matching what people might believe, based on what they read in the media.  Yes California is 11that $23.63 spent per $1,000 of personal income, and Texas is last at $13.31.  But Massachusetts, 45that $15.15, New Jersey 49that $14.00, and Illinois, 44that $15.41 ranked near the bottom.  Whereas Wyoming was first at $43.78 spent per $1,000 of personal income, albeit with a good chunk spent on Health.   And South Carolina made the top ten at $23.73.

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Public Safety: 2017 Census of Governments Data

The need for different public services rises and falls over time, as demographic and social conditions change.  As this is being written, there is a great need for public Health and Hospital services.   When the Baby Boomers were school age, and when their children, the Millennials were at the same age, the demand was greatest for Elementary and Secondary Education.  The shift from rural America to the cities and then from the cities to the suburbs was associated with high spending on infrastructure.  The different lifestyle preferences and diminished income and wealth of Millennials, and global warming, ought to induce another infrastructure wave.  During World War II, military spending dominated government budgets.

The Baby Boomers drove another shift in public spending priorities, in addition to education.  As perhaps the most criminal generation in U.S. history their young adult years, from the 1960s to the early 1990s, saw a massive violent crime wave that led to a huge increase in spending on Police Protection and Corrections.  As they got older, a white collar crime wave followed.  Subsequent generations have been less likely to commit street crimes as young adults, less likely to be teenage or single parents, less likely to become divorced, less likely to drop out of school.  One might expect that spending on Police Protection and Corrections would have fallen sharply in the years since, per $1,000 of the personal income of those paying for it.

For many elected officials, public union leaders, and contractors, however, the purpose of government spending is to provide money for interest groups in exchange for political support, not to meet the needs of the people.  So spending on a particular function doesn’t always decline with need, let alone due to productivity gains. It fact it usually doesn’t.  That was the case for military spending after World War II, when President and former General Eisenhower warned of the military-industrial complex.   That was the case for public schools in New York City, where spending didn’t increase as the Millennials entered school age in the 1990s, and didn’t decrease as they exited in the 2010s.  How about spending on Police Protection and Correction?

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State & Local Taxes: 2017 Census of Governments Finance Data

In FY 1997, New York State’s state and local government tax revenues totaled $132.88 for each $1,000 of state residents personal income, far above the U.S. average of $102.80, and second in the country behind Alaska, where revenues were inflated by state taxes on oil and gas extraction.  And yet by FY 2017 New York State’s tax burden had increased further, to $138.22 per $1,000 of personal income, now first in the nation.  The District of Columbia and Vermont also had above average tax burdens in FY 1997, and saw those burdens increase further by FY 2017.  In FY 1997, Arizona, Colorado, Florida, Georgia, North Carolina, Oklahoma, Tennessee, Texas, and Virginia all had state and local government tax burdens that were below the U.S. average, though all but Tennessee were above $90.00 per $1,000 of personal income.  And yet by FY 2017 the tax burden in each of these states had fallen further, in some cases plunged, and now all are below $90 per $1,000 of state residents’ personal income, in some cases substantially.

Nationally, the overall state and local government tax burden increased from $102.80 per $1,000 of personal income in FY 1997 to $106.92 in FY 2007, but then fell sharply to just $97.77 per $1,000 FY 2017.  It has been in the vicinity of $100 per $1,000 of personal income for decades.  Almost all of that 2007 to 2017 decrease was at the state government level, with the overall state tax burden falling from $63.11 per $1,000 to just $55.89, and with nearly all types of tax revenues falling relative to income, but corporate income tax revenues falling (on a percentage basis) most of all. State aid to local governments also fell sharply from $37.95 per $1,000 of personal income in FY 2007 to $32.41 per $1,000 in FY 2017, due in large part to fewer children in school (relative to the number of adults with income) as the large Millennial generation exited.  On the other hand, federal aid to state governments increased from $33.90 per $1,000 in FY 2007 to $37.86 per $1,000 in FY 2017, due in large part to soaring Medicaid expenditures, which are substantially federally-funded, and go mostly to the old.

Posts on state and local revenues other than taxes and spending by category will come later.   A detailed discussion of state and local taxes follows.

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Background and Databases: 2017 Census of Governments Finance Data

The coronavirus has accelerated a reckoning for U.S. state and local governments that had been building up for 25 years, and the consequences, which would have gradually become terrible anyway, will be severe.  Those public officials who made, and benefitted from, the past decisions that will lead to a future of higher taxes, diminished services, and deteriorating infrastructure will eventually leave the scene, perhaps soon.  Their replacements, faced with a crisis and the need to inflict pain on their constituents, might wonder how their community ended up in this situation?  How does their state or locality’s tax burden, in total and by type of tax, and spending, by government function, compare with other places, and how has that changed over time?  Who, compared with other places and compared with the past, has been taking out too much, and/or putting in too little? And to what extent would, should, and could later-born and future residents, who got no related benefits, be sacrificed to pay for the self-dealing of the past?

I have been using data from the Governments Division of the U.S. Census Bureau, and other data sources, to answer questions like these for the past 30+ years.  Including the Census of Governments, which takes place every five years, with the latest data for FY 2017 released late in 2019.   While revised data will be released at some point in 2020, given the coronavirus crisis I have decided to compile and analyze that which is now available.  This, the first of a series of posts, will describe where the data comes from and how I tabulated it.  It includes downloadable spreadsheets with data on state and local government revenues and expenditures, by category, per $1,000 of the personal income of everyone in each area, for all 50 states and the District of Columbia.  And data for all local governments combined in each county in New York and New Jersey, and many other selected counties around the country chosen for comparison.  Not only for FY 2017, but also – identically – for FY 2007 and FY 1997, for a 20-year trend.

Subsequent posts will include tables, charts and specific analyses of taxes, other revenues, local government education, state government colleges and universities, public safety, health and social services, infrastructure and amenities, and general government.  But as is my custom I’m making the data available up front, so anyone can download it, look at it, and make up their own mind before getting my take on it. My focus is New York and New Jersey, but there is far more in the spreadsheets linked from this post than I intend analyze on an avocational basis. And anyone could have this data to think about themselves, and have it right now.

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New Yorkers Are Going To Pay More and Be Forced To Expect Less, But Shouldn’t Let Them Say It’s Fair or Blame Circumstances or Scapegoats

I was in Target the other day and noticed their motto:  “Expect More, Pay Less.”   That sure is a hell of a lot different from New Yorkers under the age of 60, and in particular under the age of 40, will be paying into and getting from the federal, state and city governments over the next 20 to 40 years.  At the federal level because of four decades of future selling by Generation Greed that have left us with a massive national debt and underfunded old age benefits – underfunded despite later-born generations already being required to pay in more while being promised less.  At the state level because New York City shares a tax base with Upstate cities and rural areas with extensive needs and dwindling resources, and suburban areas with more power and greater entitlement. And at the city level because one politician after another has cut deal after deal to cash in the future, to further benefit already-advantaged unionized public employees and contractors, who are cashing in and moving out.

The theft has occurred, the money is gone, and “Expect Less, Pay More” is inevitable.  In fact a New York City in the 1970s-style institutional collapse is highly likely, and not just in New York City.  So what will our “leaders,” still beholden to the same interests and generations and still promising to hand them even more, say about this?  I want them to be forced to admit the truth.  And let me tell you what I don’t want to hear.

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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.

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The Amazon HQ2 Deal and New York’s Falling Tax Revenues: The Unsaid

In the past few weeks a sharp decrease in New York City and New York State income tax revenues, and the decision of Amazon to not locate half its H2Q in Long Island City, Queens, have been very much in the news.  Many people have said and written many things about them.  Here is what has not been said.

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Will Connecticut’s Ned Lamont Be the First To Tell The Truth about Generation Greed?

Coming into office eight years ago, Connecticut Governor Dannel Malloy faced a fiscal disaster, following decades of shortsighted but popular policies that robbed the future.  He raised some taxes and cut some services, but mostly kicked the can with borrowing and deferred pension contributions shifted further into the future, and pursued an agenda based on traditional Democratic tribal issues such as guns, gays, immigration and marijuana.   (Republican Generation Greed politicians use the same misdirection).  Since the majority of Connecticut residents don’t follow state and local government closely, however, Malloy received all the blame for all that had gone before.  As a result he was barely re-elected to a second term, and is leaving office as one of the most despised politicians in the country.

Coming into office today, Connecticut Governor-elect Ned Lamont 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. At some point he will either have to 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 Malloy, 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 Malloy and former New Jersey Governor Christie.

But there is a third option.  Interested Ned?

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