National Taxpayers: Here Are A Few Things You Will Be Paying For If You Bail Out New York
/Here in the midst of the coronavirus crisis, the “Phase Three” stimulus, aka the CARES Act, passed Congress at the end of March. Immediately we moved on to Phase Four, which however is still making its way through the legislative sausage factory. All the talk is of another trillion or more. What will that include?
If you put that question to the National Governors Association, the item at the top of the list will be big bucks for direct unrestricted support for the budgets of state governments. Here is a report from NPR about the NGA meeting on April 11, where the governors put some of their demands on the table:
National Governors Association Chair Larry Hogan, R-Md., and Gov. Andrew Cuomo, D-N.Y., the group's top Democrat, are issuing a joint call for Congress to approve $500 billion in direct aid to states, signaling a deepening budget crisis caused by the coronavirus as Congress battles over the next round of funding. "In the absence of unrestricted fiscal support of at least $500 billion from the Federal government, states will have to confront the prospect of significant reductions to critically important services all across this country," the governors said in a statement. "Hampering public health, the economic recovery, and — in turn — our collective effort to get people back to work."
Now, you wouldn’t want to “hamper public health and the economic recovery,” would you? Of course, that’s what they want you to focus on. But money is fungible, and if the Congress should decide to bail out, say, New York, with unrestricted funds, that state will get to use the money for whatever its existing spending commitments might be.
Since you people out there in the hinterlands may not have been following the local news here in New York, I thought I should give you some information on where your money will be going should Congress decide to bail out New York. As you may know, the state budget of New York is about twice that of Florida, even though Florida has the bigger population. How could that possibly be? It’s easy!:
Per figures from the Empire Center (based on Census data for 2017), New York spent $23,091 per student on K-12 education, versus a national average of about $12,000. But don’t worry, New York City spends way more still, at about $28,000 per student annually. The premium spending basically goes to higher salaries, fatter pensions, and lots more administrators than they have in other jurisdictions. Nobody in New York would ever suggest bringing our school spending in line before asking the rest of the country to pay for it.
New York also has a notoriously expensive Medicaid program, again way out of line by comparison to other states. Long before there was a coronavirus crisis, New York’s Medicaid overspending was digging it into a deeper and deeper fiscal hole every year. Since first getting elected in 2010, Governor Cuomo has publicly said that he would keep the growth of Medicaid spending to about 3 - 4% per year, and for several years he seemed to be accomplishing that. But in the last couple of years it has emerged that Cuomo had managed to keep spending down by the clever device of postponing the last month or so of each year’s bills into the next fiscal year, expecting of course to make up the shortfall with better results in the later years. And of course, as always happens, the results in each succeeding year have turned out worse, so that the rolled-over deficit gets bigger and bigger each year. From the Empire Center, November 2019: “In July [2019], Empire Center’s Bill Hammond first called attention to the fact that Cuomo rolled over $1.7 billion in Medicaid payments from the end of 2019 to the start of fiscal 2020. And as today’s update confirms, this has compounded into a $4 billion problem in the current fiscal year.” Thankfully, you good folks in the rest of the country are now going to bail us out of this incompetence.
Of course New York provides Medicaid, welfare, and other public benefits to immigrants, both legal and illegal. Indeed, New York is currently aggressively suing the federal government over President Trump’s efforts to enforce “public charge” statutory language by restricting eligibility for “change of immigration status” (i.e., green cards) for people who live off the taxpayers by claiming these benefits. Should we cut back on that generosity during the current crisis? Actually, we think it would be much more convenient for the federal government to pick up the full tab.
Although New York has not been as irresponsible as, say, Illinois or New Jersey in funding its pension commitments, it is right at the top of all the states in terms of overly generous and unsustainable promises. Take a look at this description of pension benefits for police officers. Many can retire after as few as twenty working years, and collect the pension starting in their forties for fifty years or more. Add military service for additional pension credit. The pension is based on pay in the final year, with unlimited overtime spiking allowed. Or, claim a premium tax-exempt “disability” pension, as some 75% of New York City firefighters seem to have done. We really will need to thank you flyover people when you bail us out of this mess.
We currently have a hugely cost-effective, zero-carbon-emissions nuclear power plant called Indian Point, about 40 miles North of New York City, supplying about 25 - 30% of the City’s power. At the urging of environmental activists, one unit of the plant is now set to close down on April 30, 2020 (tomorrow!), and the second unit a year from now on April 30, 2021. The plant pays millions of dollars of annual property taxes to the localities where it is located. There is a $56 million fund in the state budget to cover the localities for this prospective loss of revenue. Thanks for taking care of that one for us, flyover people!
The neighboring state of Pennsylvania makes big bucks from taxes on the business of “fracking” for oil and gas from the so-called Marcellus Shale that underlies Northern Pennsylvania and Western New York. New York has completely banned fracking, and therefore takes a pass on all those taxes. Will New York agree to rescind the fracking ban in return for a big federal bailout? Don’t be ridiculous.
I could go on with this, but you get the picture. Never let a crisis go to waste, as they say.