The FY 2012 New York City Budget Proposal: Sanitation
One New York City service where arguments over the quality of work and the effect of the budget have involved real, rather than threatened, changes is the Department of Sanitation. In the fall, Sanitation Workers’ Union head Harry Nespoli warned that as a result of budget cuts, his members would not be able to clear the snow in a snowstorm. And sure enough, when New York City was hit by a major snowstorm the day after Christmas 2010, the snow was not cleared. So how much was the Department of Sanitation budget cut from FY 2008, before the onset of the recession, to FY 2011, the current fiscal year? Anyone want to guess?
Well according to the budget documents I reviewed and tabulated into the spreadsheet attached to this post, total spending by the Department of Sanitation increased 13.1% from FY 2008, before the recession, to the current year, and its spending on Personal Services increased 15.6%. The Consumer Price Index increased 4.3% during those years. Under the budget proposal for FY 2012, the overall Sanitation budget would be unchanged but spending on Personal Services – public employees – would rise 0.7%. So is it fair to assume that because the Department of Sanitation failed to clear the snow after three years with spending increases at three times the rate of inflation, then next year despite no reduction in the budget it will stop picking up the garbage?
The pattern identified for Education, Police, Fire, and Corrections also holds for Sanitation. Taxpayer pension funding increased 20.3% from FY 2008 to FY 2011 and is proposed to increase 19.2% in FY 2012. The increases in fringe benefit funding, a substantial share of which goes to retirees as well, are 17.2% in the recent past and 5.6% as proposed next year. Despite more and more money going to the retired and the health care industry, spending on Sanitation wages and salaries increased 13.8% from FY 2008 to FY 2011, mostly due to raises far in excess of inflation. But now, with even more money going to the retired, Sanitation wages and salaries are proposed to decrease 6.2% in FY 2012.
With taxpayer pension contributions soaring and payroll being cut, the taxpayer pension contribution as a percentage of payroll is proposed to soar to 33.4% in FY 2012. When those sanitation workers now approaching retirement were hired, they had been promised a pension that paid out at age 55 after 25 years of work, based on an average of the last three year’s salary, without an inflation adjustment, and after the employees themselves had contributed 3.0% of their own pay to the pensions throughout their careers. The early retirement age was because sanitation workers fall into the “physically demanding” category and are thus not expected to do their main career job after that year (although they could do other jobs). Sanitation workers clearly deserve to be in the physically demanding category, but the state legislature has repeatedly expanded the list of titles in the category to provide more city workers with a much earlier retirement.
I had calculated that the 25/55 pension sanitation workers were originally promised should have required the taxpayer to contribute 13.2% of their pay throughout their careers. If less was put in, perhaps using the 1990s stock market bubble as an excuse (stocks remain overpriced to this day), then a cost was shifted to the future and younger generations were robbed by older generations, again. But in addition, pension costs have been inflated by retroactive enhancements. Notably the 2000 deal that both reintroduced overtime-based pension spiking by basing pension payouts on the last year’s pay rather than the last three years, eliminated employee pension contributions after ten years, and added an inflation adjustment – retroactively for workers already long retired.
All of this, aside from the elimination of the employee contribution (a Giuliani deal), was done over objection of the City of New York by a unanimous vote of the state legislature. None of it was paid for, despite the immediate hole it opened up in the pension funds, which are now deeply underfunded. So the soaring cost of pensions, and cuts in sanitation workers actually on the job, may be just beginning. Even though (unlike the teachers) the retirement age of sanitation workers was not changed in the (ongoing) retroactive pension enhancement binge in Albany.
Now remember the pension theory the unions are now touting. The rich and retroactively enhanced pensions are part of a package of compensation that allows the city to attract and motivate workers at lower cash wages. So since the total cost of that compensation is going up, in theory the services New Yorkers receive should also go up or perhaps stay the same. Perhaps because the unionized public employees will be so motivated by how much better off they have become than most New Yorkers (aside from the similarly minded deal cutters on Wall Street) that they will work that much harder to make up for any reduction in staff due to money shifted to the retired.
My theory is that public employees, at most, provide public services in proportion to their cash pay. They feel no obligation to the people who pay their salaries in exchange for their retirement benefits, because those were the gift of the politicians they cut political deals with. Their only obligation is to help keep incumbents in office. And the only role most people pay in these deals is to be forced pay for them, after not even being told they had taken place, let alone have a say in them.
We’ll see whose theory is correct over the next few years. But every time a union leader claims that the quality of public services would go down due to cuts, even if total spending goes up, they are implying they know (though they won’t admit) I’m right. And we’ve been robbed.
Sanitation debt service has also increased, as the city borrows to build the infrastructure to replace the Fresh Kills landfill, with a 21.3% increase from FY 2008 to FY 2011 and a 16.3% increase from FY 2011 to FY 2012. Unlike most of the “capital spending” in the New York area, which is little more than ongoing normal replacement and should have been funded by current revenues rather than debt, this really is a large, one-time only expense that will eventually cease. Sanitation OTPS (other than personal service spending, on things such as contracts and purchases of supplies), increased at about the inflation rate from FY 2008 to FY 2011 and is proposed to fall 9.6% next year. Much of this is payments to transport and dispose of our garbage, a cost that will hopefully go down as the new sanitation infrastructure becomes active.
So we will be getting less despite paying more, as more and more of what we pay goes to those not working rather than those working. Which is exactly what all the unions want, so they can say they have fewer obligations to the rest of us while forcing us to pay more money. But where did New York’s sanitation workers stand at the start of this analysis, in FY 2008.
Comparisons for this category are difficult to make using Census Bureau data, because not everyone has garbage collection by municipal employees. Sometimes such collection is paid for by local governments but is contracted out to private carters, and sometimes individual property owners are responsible for hiring private carters on their own. What we can say, based on March 2008 local government employment data from the Census Bureau, is that New York City had 121 full time equivalent sanitation workers per 100,000 residents, compared with a national average of 37, a difference of 84. And New York’s private carters, according to Employment and Wages (ES202) data for 2008, had 24 workers in NYC per 100,000 residents compared with a national average of 39, a difference of just minus 15. So it does not seem as if the smaller number of private carter workers in New York City offsets the higher number of municipal sanitation workers here. Unless it takes 5.6 municipal sanitation employees to do the work of one private sanitation employee.
Moreover, in March 2008 the average payroll per employee in NYC’s sanitation department was 51.0% higher than the U.S. average for municipal sanitation departments, while in 2008 the average private sector worker in Downstate New York (excluding finance) earned 31.0% more than the average private sector worker in the U.S. So while they are perhaps not well off compared with other NYC public employees, New York’s sanitation workers are well off compared with sanitation workers elsewhere in the U.S. So well off, they can move to the suburbs, under legislation passed by the New York State legislature over New York City’s objections just a few years ago, in exchange for political support at election time.
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