A modest proposal for fixing New York's budget
New York state faces the proverbial perfect storm: Tax revenues from Wall Street have imploded; income taxes statewide are down; sales tax receipts have plummeted.
The next shoe to drop will be property tax revenues, as new assessments reveal the dramatic decline in home values.
Despite the woeful trends, this is the wrong time for state and local governments to lay off workers:
In a recession, declining employment means a downward economic spiral, especially in small North Country towns where government jobs are often the only jobs.
At a time when government should be priming the economic pump, job cuts create the opposite effect.
So what's the solution? Here are the four important steps needed now:
-State and local government workers earning more than $35,000 a year should take a mandatory 7% pay cut effective immediately.
-All state and local government workers should begin paying for a larger part of their insurance.
The amount of this contribution should be tied to the average amount paid by private-sector workers in New York for their health coverage.
-The retirement age for workers eligible for a public pension in New York should be reset to 65. Taxpayers can no longer foot the bill for thousands of middle-aged retirees.
-School districts with fewer than 1,000 students must consolidate administrations or lose state funding. This doesn't mean closing schools necessarily; but it does mean sharing administrative staff and services.
Changes this sweeping would require the support of New York's public employee unions.
The trade-off for these sacrifices should be a firm commitment from Governor David Paterson that for the next two years a) no state workers will be furloughed, b) no state facilities will be closed and c) support for local governments will be maintained.
This guarantee would give communities and workers a sense of security in uncertain times.
Sure, everyone's wallets will be a little thinner, but we would avoid catastrophic changes: the closure of a state prison, say, or mass lay-offs at the local school, or spiking property taxes.
Without painful but manageable cuts on this scale, we will likely find ourselves on the road to chaos that California is now traveling.
posted by Brian Mann @ 6/22/2009 09:03:00 AM
12 Comments
12 Comments:
Brian,
See if you can find an adult in Albany to e-mail your ideas to.
Mike
This doesn't mesh with the "everybody needs to sacrifice except me" attitude on state and local employees. You'll hear the whining about them being undercompensated now.
I could only wish that your comment regarding property taxes rang true in the North Country. The local assessors, lead by their Albany office, are continuing to jack up assessments in the holy nmae of re-evaluations.
Unfortunately, at least in St. Lawrence County, the property taxes will continue to rise. This will cause further stress on those who are unemployed or under-employed in this already-depressed area.
As you have mentioned before, the key is to ask local gov't for LESS and NOT MORE. That will be a difficult ideal for people to buy onto when so many are on the dole now.
Your suggestions show a lack of understanding on how state retirement works. Retirees are not paid out of tax funds. Their pension comes from a fund that is invested. If you raise the minimum retirement age to 65, you will keep on the payroll the more expensive long term state workers and delay job openings for younger and less expensive workers. At the same time you are continuing to contribute (out of tax dollars) to the retirement fund which will grow because fewer people are retiring. Good for the security of the existing retirees but no relief to the taxpayer.
As for the 7% pay cut, while state jobs pay well by North Country standards, on a statewide basis they pay significantly less than equivalent private sector jobs. The state already has trouble attracting quality workers downstate. Your proposal would just make that worse.
Jim is partly right. Local governments do have to pay into the pension fund (out of tax dollars) if returns from the investments are not enough to fund pension payments. Jim, local governments are sent an annual bill by the NYS pension system.
Brian, many state and local workers do pay significant amounts for health insurance. I pay over $200 per month. Benefits are being tightened and copays are going up in the NYS Health Insurance Program. Teachers seem to be a special case. The rest of us compare more closely to the private sector.
Where'd the $35000 come from? How did you arrive at that number. It might be relative I just don't know.
Hi folks -
Good discussion. A couple of thoughts.
Full disclosure: I picked $35k out of a hat. Seemed like a good, healthy number to me. Open to fair debate.
Regarding health insurance: Government workers should pay, on average, as much as private sector workers. It's a fair, easily calculable benchmark.
State and local taxpayers pay an increasing amount for pension funds out of taxes, as investment returns plummet.
For all kinds of reasons, I categorically reject the idea that we should put people on retirement at age forty or forty-five.
No society can underwrite retirements that last half a century...
Finally, regarding pay levels for state workers. My guess is that if you cut wages 7% very few of those employees would quit.
If they do choose to leave, I'm guessing there are a fair number of highly qualified New Yorkers willing to replace them.
But none of this is meant as hard-liner/ideological stuff.
My broader point is that current spending levels are simply unsustainable.
The situation in California could very well be a harbinger for New York, unless we make balanced, sane cuts now.
-Brian
Brian,
I'm very interested in ths concept of fair and applying private sector rates to public employment. Are you also implying that private companies who the make the vast majority of their profits from public works projects also take a 7% cut.(road construction paving companies come to mind How many private jobs exist here in the NC only because of public projects.
Anonymous - I think this question of private sector companies relying on taxpayer spending is interesting and worth a debate. It's obviously a huge chunk of the economy.
-Brian
The public works projects are bid, aren't they? These jobs are bid because the DPW crews don't have sufficient manpower and/or equipment, right?
I guess you could put a ceiling on the jobs. You might be successful in excluding some local private sector companies; and possibly encourage companies from outside the area to come in and bid these jobs.
If you are talking about "permanent" positions that are filled by contractors or consultants, then you have a good idea.
Some are bid, all are contractual in nature and subject to negotiations. Are all state(public) bid or otherwise contracts, let to private companies going to have the wage requirements for the workers on these projects done with public funds reduced by the 7% for private employees? There seems to be some insinuation that public employees don't earn their keep, but private employees working on a job for a public entity do.
They are publiclly funded and so wages should be reduced by 7% on those jobs.
I don't know Brian where you get the idea that State workers can retire at 40 or 45. The earliest they can retire is 55. An exception might be the state police. I think they have a plan that lets them retire after 25 years. Most state employees don't retire at 55. At 55 you wouldn't have a large enough pension to live on. Full retirement is at 37½ years service, earlier than that and you take a reduced benefit. I generally respect your reporting Brian, but your research on this is sadly lacking.
Post a Comment
<< Home