Larry Littlefield's blog
If anyone who finds they agree with me is wondering how I'll be voting, it pretty much conforms to those rules:
I've voted for some politicians over the years, but it's been rare. I'll vote for Spitzer, though I would have preferred Suozzi. I voted for Hevesi in the past, but will likely revert to rule. The local candidate for State Senate, an open seat, has potential. I voted for Moynihan. In general, however, these rules have applied ever since I came to know about what I know now.
After several months of posting data and complaints, I have spent the last month detailing what I would do at the state level if it were up to me. Now that I’m on record, the reader will have some appreciation of my perspective as I attempt to judge the policies of the next administration in Albany. I really won’t know what they have done until the data comes in some years later, since you cannot go by what they say, but I’ll try my best. My point of view, however, isn’t just a collection of initiatives, or even root-and-branch overhauls, such as I have written about thus far. It is a set of policies and priorities the spring directly from fundamental principles. Do expect any of my specific suggestions to be enacted next year? No. But I am hoping that state government will move closer to the operating principles I would like to see, and farther from those that have been in effect in recent decades. As a summary, I’ll plagiarize what I wrote when I was a candidate for (or rather against) state --legislature as to what those principles theirs and mine -- are.
Given that all energy sources have environmental impacts and risks, people have to accept that while none is perfect some are better than others. Natural gas, solar power, wind and (waste disposal aside) nuclear are less damaging and less risky than coal, with its massive environmental impact, and oil, with its significant impact and politically uncertain sources of supply. And with hostility to the United States in the world, hostility to the Northeast in the United States, and hostility to New York City (and, by connection, the rest of Long Island) in the Northeast, Downstate would be wise to meet its own energy needs to the extent possible, and to diversify sources of supply otherwise, even at a somewhat higher cost (which would also encourage conservation) and despite some impact and risk. For New York City, relying on Upstate New York for additional electric power is a bit like relying on countries where Osama Bin Laden is popular for oil.
In prior posts, I covered the energy situation for transportation. The good news is that New York City is an inherently energy efficient place, thanks to its high transit use and many pedestrian trips. The bad news is there is no political leadership to improve things further, by organizing a large-scale carpooling system for places not readily accessible by transit, for example. This post is about the energy required for other purposes, for heating, cooling, and use in buildings. Here again, the good news is that New York City is inherently efficient, since attached houses, apartment buildings, large office buildings, and other commercial space in multistory mixed-use buildings have less exterior surface area per square foot, and thus require less energy to heat and cool. And, the New York City lifestyle is energy efficient, because New Yorkers have less (because there is nowhere to put it) but do more. Making, moving and disposing of goods takes more energy than services, which rely on the human energy New York has in abundance. The bad news is that Downstate New York faces a local shortage of both electricity and fuel for heating, cooling and cooking -- above and beyond the overall energy problem in the Untied States and the world -- based on access to supply. And NIMBY’s gone wild, both outside the Downstate area and inside it, are blocking any and all possible solutions to that shortage, stoked by puffery from pandering local pols.
Charles Brecher of the Citizens Budget Commission, in a New York Times essay, called on the MTA to enact productivity initiatives equal to the 2.5 percent average annual productivity gains achieved in the private sector, in order to reduce expenditures over time. As someone who has thought about this a great deal I agree with the concept, and not just for the MTA, but not with the number, for reasons discussed below. In political debates, however, the term “productivity” has been used for policies that have nothing to do with its economic definition. Economic productivity is an increase in output given the same amount of work, or a decrease in work for the same amount of output. Political “productivity” can be a reduction in total compensation for workers (generally non-wage benefits), an increase in hours or days worked given the same pay, or a decrease in the quality of services. Any and all of these may or may not be justifiable, but they have nothing to do with productivity. In general, a real productivity gain does not produce losers. By stretching the term where it does not belong, conservative policy advocates have created opposition where none should exist.
Would-be Governors Eliot Spitzer and John Faso are saying the right things about transportation finance. That is the good news. They want to see major mass transit projects built to support the Manhattan-based economy that is the tax base of the entire state. Spitzer called the finances of the MTA the “greatest transportation concern” and said fare and toll increases, increased local funding, and other tax increases, as well as efficiencies, would be required – reversing 12 years of policy. Faso agreed. They both called for weaning the MTA off debt by going to pay-as-you-go financing; hopefully they have the same idea about financing road construction elsewhere in the state. The candidates even mentioned making tough decisions, a big change after the something-for-nothing-now, then move-to-Florida-later policies of the recent past. All good.
It came in today's mail. It is for $57.82.
Gee, perhaps despite just about the highest state and local tax burden in the United States (including a virtually unique local income tax), schools I for the most part couldn't send my kids to, libraries open a few hours four days per week, and an infrastructure future threatened by soaring debts, perhaps the State of New York isn't so bad after all. WRONG! And the "bastard child of STAR" proposals by the candidates for Governor to expand the system don't thrill me either.
The day after I posted a proposed solution to over-development issues in the portions of Upstate New York closest to New York City, both the New York Times and the Poughkeepsie Journal had articles on the subject. They are worth a read if you are interested in what people are concerned about elsewhere in the state. From the Journal:
"Increasingly I see it. You look up on a hill or a mountain and all of a sudden there are houses there that weren't there before. It feels like New Jersey. It's worrisome," said Carolyn Torella, a lifelong Dutchess County resident who lives in LaGrange. "I appreciate the landscape and the beauty of the area. It's a shame to see it go so quickly. My hope is there can be some middle ground between open space and development."
My previous posts on Upstate concerned the portion of the region that is too far away to receive any economic benefit from proximity to Manhattan, the area roughly north and west of State Route 10 and, in the mid to northern Adirondacks, Route 30. South and west of there, in the eastern Adirondacks, the Catskills, and the Hudson Valley, the economic conditions are different, and so is the issue. The issue is over-development, and the loss of the natural and rural attributes that draw people to the area to begin with. When I was a child, my parents took me to northern Westchester County to pick apples. We brought our children to Northern Dutchess County to do the same. Projecting current trends forward, our grandchildren will have to head for Washington County to find the first pick-your-own orchard.
I exited college during the severe recession of the early 1980s, making graduate school seem attractive, and then exited graduate school during the housing bubble of the late 1980s. Having had a housing markets class in graduate school, realizing the bubble (like this one) would burst, but unsure how long it would take, my wife and I had a plan. We would live as cheaply as possible, save our money, and then move to a metro area in reasonably-priced Upstate New York, where we had attended college and actually liked the cool summers, lovely falls, and snowy winters (we won’t talk about March, April, and May). For a variety of reasons – our increasing ties to the city and the end of the bubble here included – it never happened. But one factor was we found that none of the Upstate metro areas had a large and diverse enough labor market to allow us to have careers. Perhaps we could get a job, but it might be the job, and it would be very difficult to get another one without moving. In other words we didn’t move to Upstate New York, in part, because none of the Upstate Metro areas, by itself, is a significant place anymore. That is a problem Upstate will have to overcome.
How does this sound for an economic development slogan: “Upstate New York, we’re just like everyplace else, except we’re older, we’re colder, we have lots of toxic contamination left over from the industrial era, we have high taxes not for services but to pay for the debts and pensions of the past, and we are highly unionized and expect higher pay and more restrictive work rules than other parts of the country.” Well, that’s the truth isn’t it? It isn’t the whole truth, not by a long shot. But if Upstate New York continues position itself in the economy based on being “just like everyplace else,” it is the only truth that matters.
What would the change in fiscal structures and priorities I have outlined thus far mean for the economy of the one part of the state whose economy people talk about: Upstate New York? It would mean the ability to have a much lower cost structure, provided Upstate was willing to live with lower public expenditures, by localizing decisions about revenues and expenditures on the margin. Upstate could choose to go on spending more if it wanted, but without draining Downstate to pay for it.
Consider the school aid formula I suggested. It would allow Upstate New York – everyone in every part of it – to have a national average level of public school expenditures per student with little or no local tax burden. Zip. Nothing. And, since incomes and spending are higher Downstate (whether that buys a higher quality of life is an open question), a substantial share of the state income and sales taxes used to fund that education Upstate would be collected outside the region, in Downstate New York. Meaning an average level of spending would cost Upstate a below-average level of state and local taxes. Even if spending were increased to 25% more than the national average, state taxes would still cover 80% the total, keeping local property taxes low.
The September Current Employment Survey data from the New York State Department of Labor is out, and with the kids back in school and the schools staffed up we can now look back on the Pataki era in public employment in full. And here is something you won’t read in the New York Post or the New York Sun, that won’t be analyzed by the Manhattan Institute, and that won’t be brought up by Republican candidate for Governor John Faso. Nor will it be mentioned by the New York Times, analyzed by the Fiscal Policy Institute, or pointed to by Democratic candidate for Governor Eliot Spitzer. From September 1994 to September 2006, local government employment in the portion of New York State outside New York City rose by 93,600. This in the face of a much-discussed stagnation in population and private employment there. This includes a below-average gain of 2,300 from September 2005 to September 2006.
Economically efficient taxation includes a low tax rate spread over a wide tax base. In New York State, on the other hand, politically efficient taxation includes high tax rates spread over a tax base narrowed by exemptions, privileges, deductions, and tolerated tax evasion. Preferential treatment, tax and otherwise, was clearly on the minds of New York State leaders at a more enlightened point in our state’s history. Consider Article 3, Section 17 of the New York State Constitution, which prohibits "granting to any person, association, firm or corporation an exemption of real or personal property." It also forbids "granting any person, association or individual any exclusive privilege, immunity, or franchise whatever." Then there is Article 16, Section 4 which states "there shall be no discrimination in the rates and method of taxation between such corporations and other corporations exercising substantially similar functions and engaged in substantially similar businesses within the state." But it doesn’t matter. Whenever the economy is good, more special tax deals are enacted as added revenues come in. And whenever the economy is bad, rates are raised. Sometimes they are rolled back, and sometimes not.
If you have been paying attention, you have read that I recommend changes to New York State’s Medicaid program to create incentives to reduce spending. I propose similar changes in incentives to reduce spending in the state’s public schools outside New York City, partially balanced by increased spending in districts where spending is low, particularly New York City – but a smaller increase than proposed by the plaintiffs in the Campaign for Fiscal Equity case. The tax surcharge-based disclosure of the cost of retiree health benefits, pensions, and debts I have suggested are intended to limit, in the long term, the hidden growth of employee compensation and the interest burden of excess debt. One might conclude that my proposals would lead to lower taxes. And in the long run, when state and local taxes are combined, that could be the case. But not in the short run for state taxes alone.