Archive for October 23, 2010

To fix NY’s finances, start with gov’t workers – By George J. Marlin

October 23, 2010

The following appears in the October 22-28  issue of the Long Island Business News:

Economic and demographic reports released in recent weeks reveal that New York and its municipalities remain in deep financial trouble despite claims the recession is over and the economy is growing again.

Overall, New York’s picture remains bleak: the state poverty rate stands at 14.2 percent; households earning less than $10,000, 5.1 percent; households receiving food stamps, 12.4 percent; and civilians dependent on public health insurance, a staggering 31.8 percent.

The latest U.S. Census Bureau data places Buffalo as the nation’s third poorest city behind Detroit and Cleveland. The 16th Congressional District, which encompasses the South Bronx, maintains its rank as the poorest in the nation. Buffalo’s median household income is $30,000; the South Bronx’s is $26,700 versus the state’s median of $50,000. Buffalo and the South Bronx, like so many other municipalities in the state, are suffering from the steep decline in blue-collar manufacturing jobs and failed urban development and social policies.

The National League of Cities Report, released in early October, states that 90 percent of America’s city finance officers say their fiscal conditions continue to weaken and will be less able to meet their financial needs and obligations in 2011.

Cities throughout the Empire State are not exempt from these trends. Buffalo, Rochester, Syracuse, Binghamton, Elmira, Jamestown, Schenectady, Troy and Ithaca – one-time centers of commerce, industry and technology – are facing financial and economic doom. They are haunted by declining residential and commercial real estate values, restrained consumer spending, high unemployment, increasing public employee health care costs and pension contributions, and unfunded state mandates. Surprisingly, upstate property taxpayers pay effective rates nearly as high as those in the suburbs.

With no end to their fiscal woes in sight, these cities will have to make additional personnel and service cuts and perhaps even raise taxes. And if such measures are implemented, more economically distressed, overtaxed citizens will join the 1.2 million people who have left New York since 2000 to seek jobs in the low-tax South and Southwest regions.

Another depressing report released on Oct. 5 by New York Comptroller Thomas DiNapoli confirms there will be slow recovery from the recession. Here are some of his gruesome findings:

  • The rate of job growth is slowing and is expected to remain weak;
  • Consumer confidence in New York has fallen to its lowest level since the spring of 2009;
  • The rate of tax revenue growth alone will be insufficient to solve New York’s budget problems;
  • The securities industry continues to shed jobs. Wall Street lost 4,200 jobs this year, bringing the loss since January 2008 to 31,300 jobs.

Most disturbing: Personal income in 2009 for New York private sector workers dropped $42 billion, a 6.8 percent decline, while the personal income of public sector employees increased $240 million, an increase of 2.5 percent.

Also, the DiNapoli report states, “New York lost jobs in every sector except educational and health services, which added nearly 60,000 jobs.” In other words, while private sector employees have endured serious hardships, state and municipal employees have prospered.

Reviewing these numbers, E.J. McMahon, of the Manhattan Institute, asked: “What is wrong with this picture? If you’re in the private sector, we’re paying more in part so [government] workers can keep getting pay increases. That’s the part that really stings.”

Private sector workers can no longer afford to bear the brunt of the cost of New York’s state and municipal leviathans. If the next governor is serious about restoring fiscal integrity, right-sizing government and not raising taxes, he must use the vast powers of his office to make sure that public sector employees share the sacrifices necessary to achieve that end.

The Empire State can no longer afford the government we have and its costs must be reduced.