Larry Littlefield's blog
The Bureau of Economic Analysis has released 2005 Local Area Personal Income data, and while I will discuss it in detail when I have time, I can say that one thing continued to be true: excluding the Health and Social Service industries, which are primarily government-financed, Manhattan accounted for half (in this case 49.8%) of all the private-sector earnings in New York State. Not the city or metro region -- the entire state. Given that just about everyone from Montauk to Buffalo is living off the economic engine of the Manhattan Central Business District directly or indirectly, it is no surprise that PLANYC2030 is focused on the transportation system that supports it. And with the cost of maintaining the existing rail and road transportation systems, let alone new transportation facilities, so great that one wonders if even Manhattan can afford it, it is no surprise that the plan merely restates many major projects and initiatives already agreed to, such as the Second Avenue Subway, East Side Access, and a new tunnel to New Jersey. The plan has, in reality, two new major proposals. First, it suggests using zoning to move new development to places with existing rail transit, rather than extending rail lines to new areas, since new rail transit lines are for the most part not affordable. Second, it includes a financing proposal to relieve CBD traffic congestion while also preventing the transportation system from going bankrupt and taking the Manhattan CBD, and thus the city and state, down with it.
I was glad to see parks and recreation get some additional attention in PLANYC2030, and in a subsequent additional announcement by the Parks Department. We are at the end of a third era for this public amenity, or trying to recover from that third era. In the first era there were few public parks, but the public streets, lacking motorized traffic and parked cars, were available for children to play and adults to socialize. In many parts of the city there were private and informal recreation facilities, like private pools, sandlots on vacant lots in the still-developing city, and beach and rowing clubs, the latter taking advantage of the city’s extensive waterfront. In the second era pollution forced people out of the water and traffic and parking pushed them off the street, but Robert Moses built hundreds of small parks. These, however, were too small for the city to afford on-site staff, and thus expensive to maintain. So when money ran short we reached the third era, with the streets and waterways still mostly off limits, small parks often and vandalized or in disrepair, school playgrounds off limits after school and sometimes used for parking during it, and larger parks maintained much better in places where private contributions are available. Will a fourth era now arrive?
Let’s say we have a public benefit, service, facility or square footage of space that theoretically belongs equally to everyone, cannot be increased at a reasonable cost, and for which the demand far exceeds the supply. How do you decide who gets it? Do you have everyone grab what they can as fast as they can, hoarding and wasting, while those with greater needs are left out in the cold -- and disaster is risked if the public benefit, service, facility or space is overwhelmed? Do you use a political process where insiders with power get permits that are then passed on to other insiders, while everyone else, rich and poor, is left to do without? Or should those who have use of the scarce resource have to pay, with the funds used to compensate those who do without it, so that demand equals the supply? New York City has, in fact, has a scarcity of traffic capacity in the Manhattan CBD -- and many other areas -- on weekdays, and a shortage of electrical generating capacity at peak times on hot days. Today it uses a combination of a grab by those who feel entitled or are willing to sit in traffic (by driving over free bridges or cranking the air conditioning during power shortages) and political power (on-street parking permits) to decide who gets to drive to Manhattan and use electricity on 90 degree afternoons. PLANYC2030 has a different suggestion, and I agree with it.
Given that I’m not only a certified city planner but also was paid at one point to write parts of similar documents (no, you didn’t read them, no one did), I thought I ought to do Room 8 readers the favor of actually reading through PlanNYC2030, a document whose public discussion has thus far been limited to congestion pricing. This plan follows the similar 1969 Plan for New York City and the 1987 New York Ascendant, each of which was issued at the peak of an economic boom, each of which promised extensive public and publicly-subsidized improvements for city residents, and each of which was immediately followed by a fiscal crisis. I therefore have strong doubts about the value of grand plans, especially those identified for “further study,” and PlanNYC has many of those – often those with a particular group of planning ideologues in favor (I recognize their footprints from the past) who received a tip of the hat here. And then there is the unsaid – which I will try to fill in. The plan, however, also has many real proposals, many good proposals, which I will discuss in other posts. In the end, however, New York in 2030 will come down to something I have come to think about more and more over the years. Money.
The contract just reached between the city and the principal's union contains some new ideas that are relatively fair to the rest of us. First, it includes higher pay for those with tougher jobs -- running failing schools. Second, it ends the guarantee of an assistant principal job for assistant principals in schools that are closed down due to failure. Such employees, if no other principal wanted to take them on, would be given the option of a buyout or teaching half a day. It also added merit pay, something I am less keen on given my lack of confidence in the ability of public sector managers to fairly identify merit, although the success of an entire school may be easier to judge than that of an individual employee. These, however, are half-measures, adopted after years of standoff with the City using the minimal leverage it has -- deferring a contract and allowing wages to lag behind inflation, falling in real dollars. It was a limited gain from a very protracted fight.
Some of you may recall my post on the high bids in the MTA Capital Plan here. I recommended waiting until the housing bubble deflates, and lower prices were available, before accepting any bids. The price of wood and copper has already fallen. Today Bloomberg (the company, not the Mayor) reported “Cemex SA, the world's third-largest cement producer, may report profit fell for the first time in three quarters as a slump in U.S. housing hurt sales.” Cement must be produced locally, but the inputs to cement will be falling in price. If construction continues to boom in New York, and falls elsewhere, new producers may also be tempted to enter the New York market. Notes Bloomberg “The slump in the U.S. housing market, which accounted for 23 percent of Cemex's revenue last year, hasn't kept the company from seeking to expand there.” Lots of cement will be used in the Croton Water Filtering Plant. So why, from what I read in the newspaper, is the federal government pressuring the city to hurry up and award a contract to the only remaining bidder at a price way above the estimates before the price goes down?
Assemblyman Richard Brodsky is beginning to get on my nerves. Not only has he demanded that NYC's share of state education funding be cut more than I suspect it already has been (still waiting for ALL the data, and where did you think his extra share would come from)? But he is also objecting to an attempt to use a congestion charge as a means of limiting overuse of our public streets. In fact, people from elsewhere in the state would be welcome to use our public streets -- on foot -- just as they are now welcome to use our public parks. Is that true for NYC residents in all the parks out in the suburbs?
I hear there are lots of people around the country who aren’t that worried about the fate of the earth and humanity. Judgment Day is coming and both are doomed, in their view, but that’s OK because righteous people like themselves will be going to a better place and leaving the losers behind. It is kind of like the hippie vision in the Crosby, Stills, Nash and Young song Wooden Ships. While I’m not a theologian, however, I’m not sure Judgment Day will turn out like those waiting for the Rapture have planned. Perhaps God has placed humanity in a circumstance that will force all of us to cast judgment, collectively, on ourselves -- by placing us on a planet with the resources, and giving us both the ability and the will, to create either heaven or hell right here on earth. And He is sitting back and waiting to see what our choice will be.
Current Employment Survey data is out for March, and local government employment is down 2,700 from 12 months earlier in New York City and up 8,400 in the rest of the state, continuing a trend that has gone on forever. Clearly something must be done about this. Such as taxing NYC residents to send more "tax relief" to the rest of the state, so it can continue hiring, while cutting the city's general revenue sharing. State government employment was up by 100 in NYC, and 1,600 in the rest of the state, as well. At least the city's private sector is growing. Because if it wasn't, and state revenues dropped, the city would be first in line for reductions in state funding, based on what has happened in the past.
I’ve downloaded 2005 financial data on mass transit from the National Transit Database, and crunched it down to the most relevant information, with the intention of providing and discussing it on Room Eight. I’m still going to do that, but something I saw there makes me uneasy. The only heavy rail (subway) system in the U.S. with lower operating costs per revenue vehicle hour is the Chicago Transit Authority. This could be because the CTA has already installed a more advanced signal system (cab signaling) and gone to one-person train operation, efforts underway in New York, but there may be another factor. New York City Transit spent nearly 70 cents on fringe benefits for every dollar spent on wages, and while some of those benefits go to those working today, much of the money is for pensions and retiree health benefits. In Chicago, according to the NTD data, fringe benefit spending actually exceeded wages and salaries. But I read that the CTA is drawing to down its pension fund to pay oppressive retiree costs rather than building it up. In that case, the CTA’s costs may appear lower because retiree costs are being deferred to a future financial catastrophe. Given varying levels of pension and retiree health care under-funding, what does this comparative cost data really mean?
The Fiscal Policy Institute has released school aid data based on the adopted budget. Their data shows the city's share of state school aid was cut. But from what I can see, this data only includes school aid that is called school aid. From a practical perspective, it doesn't matter if you send money to schools for them to spend without collecting local taxes, send money to schools to offset the local taxes they do not then collect because they spend it instead (STAR), or send money to taxpayers to offset what they do collect (the new checks). Education funding, therefore, in reality includes STAR and the new "tax relief" checks. I want to see it all.
Based on what I read in the newspaper, I'll give credit to the Freelancers Union and Councilmember David Yassky for sticking up for one of New York's losers: self-employed freelancers and owners of their own small businesses. Many of the former are employees in all but name, but designated independent contractors so their employers do not have to pay social security and unemployment taxes, and can provide tax-free health insurance to the higher ups and those with seniority but not to new hires. Most of the victims of this shift in practice are the young, yet another two-tier contract with a worse-off following generation. And the City of New York adds injury to injury by taxing the income of freelancers twice, once through the local income tax and once through the unincorporated business tax.
The discussion of the New York State Budget appears to be just about over in the mainstream media. Tidbits have come out, given to favorable newspapers, and accusations have come out in unfavorable ones. I could talk about the budget based on what I have read, but I will defer doing so until the information I want comes out. Including STAR, the Son-of-STAR checks, and school aid that is called school aid (that is including all funds expended THIS YEAR in CASH (not permission to borrow) to pay for, or offset local taxes raised for, public elementary and secondary education), what is NYC's share, and what is the share for the rest of the state, this year, and what will they be next year?
Thanks to the deep mid-1970s recession, and its effect on my father’s employment situation, I spent my last two years of high school in the Southwest, where oil was booming and jobs were plentiful. That sojourn gave me the opportunity to experience Red State America first hand, and to evaluate its differences from the Tri-State area. At the time the Southwest couldn’t match the tolerance and diversity of the New York, where people from all kinds of cultural backgrounds live together in proximity. On the other hand, class differences were much smaller there, with people with different levels of education and in different occupations sharing membership in the same church, following the same sports teams, and living in the same general area. The New York area, in fact the whole Northeast, is far more segregated by class than most of America, with people from different economic strata living, for the most part, in different worlds. And frankly, the attitude of many with college degrees toward those without, and those working in occupations that do not require them, is less than respectful, a disrespect that is often returned. This has consequences.
With Long Island and Westchester trading charges over who is more overtaxed, and reports blaming duplicative and inefficient government on Long Island for its loss of competitive advantage compared with places such as Fairfax County, Virginia, I thought I’d compile some public employment and payroll data to see how these places compare with Fairfax, similarly affluent suburban counties around the country, a few other affluent suburban counties in the region, and U.S. average. Based on this data, we find that though the counties differ from each other to some extent, Nassau, Suffolk and Westchester counties all have high taxes in large part due to an unusually large number of unusually well-paid public school and police employees. Public employment is also relatively high in amenities such as parks and recreation and libraries. It is also likely, however, that these counties suffer from the effects of being fully developed and aging communities, with current residents paying rising bills for Medicaid-financed senior services, and for debts, pensions and retiree health benefits inherited from the past. In other words, they are facing the same difficult transition that New York City did in the 1960s and 1970s.