Cutting Back -- Except for Transit
For the first time in four decades, New York faces the possibility of a wrenching long-term change in how its economy works. In the 1960s, it was the loss of manufacturing jobs and corporate headquarters that transformed Gotham. Today, of course, it’s the end of Wall Street as most of the city’s residents have always known it.
New York still has a bright future without depending on the billions of dollars annually that risk-taking investment banks have been funneling into its coffers since the early 1980s. But this future is assured only if city and state leaders understand that their job is to rethink city fiscal and investment priorities.
By doing so, they can create the foundation for a recovery and future economic growth driven by entrepreneurs, not investment bankers.
At the Whim of Wall Street
For two and half decades, New York has become dangerously dependent on a thin slice of its residents and job-creators for more and more of its taxes. Those taxpayers, in turn, were dependent on their own profits and bonuses in an industry dependent on high risk, huge amounts of cheap debt and a credulous world happy to entrust its money with whatever complicated finance products well-paid investment bankers could conjure up for their high fees.
Consider: Two years ago, Wall Street generated 12 percent of the city’s direct tax revenues and 20 percent of the state’s. And when you consider that Wall Street indirectly drove up taxes based on property values and the like, the industry’s indirect share of tax revenues was much higher.
New York’s reliance on Wall Street had only grown progressively worse in recent years. In 2006, the top 1 percent of taxpayers paid nearly 48 percent of the city’s personal income taxes even after adjusting for a temporarily higher tax rate, up from 34 percent two decades ago, according to economist Michael Jacobs at the city’s Independent Budget Office.
Such growing dependence on a volatile industry was risky for the city even when Wall Street was doing well, as it increasingly did for 25 years starting in 1982 (with a couple of cyclical downturns in between). When financial-industry taxpayers have a bad year, the city’s tax revenues plummet.
But this dependence on one industry for so much of the city’s revenue and economic activity could be catastrophic today, when the city’s wealthiest taxpayers are worried that Wall Street -– and thus their own ability to generate new income and pay ever-higher taxes -– has changed forever.
Elected officials need to understand that the answer to our problems now is not to hike taxes on the wealthy and wait for Wall Street to come roaring back. Wall Street may not come roaring back, and wealthy taxpayers may feel differently about tax hikes now than they did a decade ago, when they felt more secure about their own futures.
As one measure of this possibility, just look at financial-industry pay, which neatly tracked the industry’s fortunes over the past century. As New York University Professor Thomas Philippon and University of Virginia Professor Ariell Reshef have found, financial-industry wages broke away from the rest of the economy starting in the '80s and continued their stratospheric increase relative to the rest of the economy through 2006. Toward the end of the period, financial-industry wages actually reached pre-Depression peaks relative to the rest of the economy. This jump explains New York’s huge and unprecedented increase in tax collections.
If history is any guide, though, financial-sector wages could return to a much lower “normal” level indefinitely, as they did during and after the Depression. And New York (city and state) will have to get used to sharply lower wages in its key industry, and thus sharply lower tax collections.
The Dilemmas ...
That leaves New York with two problems.
First, unprecedented tax revenues from Wall Street masked the fact that the city’s spending has grown at an unsustainable rate. While spending rose just 9 percent during Giuliani’s terms, it’s risen three times as fast under the Bloomberg administration, the highest rate since John Lindsay left office in the midst of our last structural fiscal crisis. In fact, city spending today is 22 percent higher than it was back then, when adjusted for population and inflation.
This increase is largely because pension and benefit costs for city and state workers have risen inexorably, along with spending on Medicaid and education (without commensurate results in outcomes).
Second, because of this high spending, the city has not invested in the subway and other infrastructure that it needs to compete with the rest of the country and the world in the 21st century.
… The Solutions
So New York must do two things to give itself a robust future after Wall Street.
First, the city and state must reform out-of-control labor costs that have driven the growth in their budgets. City and state officials must impress upon labor the need to increase retirement ages and to require higher worker contributions for health and pension benefits, including at authorities like the Metropolitan Transportation Authority.
If the city and state don’t do this, simple math shows that vital spending on things like police, sanitation and library service will be crowded out as these benefit costs continue to rise.
Consider: two years from now, New York City alone with spend $7 billion on pensions -– up from $1 billion annually in the late 1990s.
It’s only by doing this tough political work that New York will have a chance to cut local and state taxes, even by a modest amount, to attract a new generation of non-financial-industry entrepreneurs to the city. Unfortunately, the way our tax structure is set up now, only the Wall Street wealthy can afford to live and work here –- which is of no help to New York now that that industry has vaporized itself.
The second task for New York –- and one just as important -– is for the city and state to make it clear that they won’t skimp on vital investments in mass transit just because times are tough. Right now, the savviest private-sector companies around the world are making it clear that they won’t cut research and development investments to the bone just because revenues are down. Instead, they’re setting the stage to do well when the economy starts to recover.
New York must make the same pledge with its own physical assets so that it doesn’t fall further behind the rest of the world. This work, again, isn’t rocket science; it largely requires better prioritizing of existing spending. For example, with half of California's population, we spend $11 billion a year more than California spends on Medicaid -- and we don't get better results. Cut costs there, and it's easy to carve out more of an existing state tax to give permanently to the transportation authority, rather than levying a new job-killing payroll tax, as Gov. David Paterson has proposed.
New York’s future is simple: Less punitive taxes on individual job-creators, and much better transit infrastructure to entice those job creators here with better quality of life. These changes, along with the astoundingly low crime rates that Mayor Michael Bloomberg has continued to bring down, will create the public-sector foundation where an entrepreneurial private sector will grow and flourish.
Nicole Gelinas is a contributing editor to City Journal.
With Clock Ticking, Senate Plan Does Little to End MTA Impasse
This wasn't supposed to happen. The legislature was not supposed to be rushing to come up with a workable proposal to deal with Metropolitan Transportation Authority's flagging finances just a week before the MTA's self-imposed March 25 deadline for avoiding fare hikes and deep service cuts.
After all, Gov. David Paterson appointed the Ravitch Commission last June to address the MTA's budget gap and the commission came up with a plan that asked for shared sacrifice from different interest groups who would benefit from a healthy MTA. For months, the governor has been sounding the warning bell about what inaction would mean to straphangers who rely on the MTA for transportation. And Assembly Speaker Sheldon Silver offered a compromise plan that would enact lower tolls on East River bridges than proposed in the Ravitch plan.
But then it came time for the Senate to act, and things stalled, thanks to a majority leader who has found himself handcuffed by a fractured majority.
On Monday, word came that the Senate had a "plan" to stave off the horrors of March 25. When the Senate finally unveiled its proposal on Tuesday, not many transit advocates thought Senate Majority Leader Malcolm Smith had saved the day. Instead, they felt that his plan was undermining the work that had been done to get various players to agree to the sacrifices asked for in the Ravitch plan.
What advocates saw on Tuesday was a plan that had no comprehensive strategy to deal with the MTA's long-term fiscal crisis. The MTA has a $1.2 billion operating deficit that is expected to reach $3 billion by 2012. The Senate proposal does not address the MTA's capital budget that goes toward maintenance and expansion. And it does not contain tolls of any amount on the East River bridges.
What was presented was a quick fix: a 4 percent increase in fares (said to amount to $117 million) and a 25 cent on every dollar payroll tax on businesses in all the counties served by the MTA. That feature would raise $1.16 billion to plug the MTA's operating deficit.
Spreading the Pain
After the Ravitch plan was finally completed, it took work to get business groups to accept the idea of a payroll tax and for transit advocates to swallow the idea that there would be significant fare increases. But those groups got on board to support the entire plan, including the bridge tolls. The Senate plan, though, does not ask drivers who use the East River and Harlem bridges to pitch in by paying a toll, making it harder for the other groups to feel they are part of an equitable solution.
Kathryn Wylde, president and CEO of the Partnership for New York told reporters her organization was able to support the payroll tax included in the Ravitch plan because it was a "broad-based plan with everyone contributing on a fair and rational basis."
When asked by a reporter about the business community's concern that not everyone would have to sacrifice Smith responded, "The business community doesn't vote on the plan. We do." He then went on to note that the Senate plan has a smaller payroll tax than the one proposed in the Ravitch plan.
In response to another reporter's question about whether drivers from Brooklyn and Queens were somehow "special" because they did not have to contribute to the MTA bailout plan, Smith stammered and seemed to reveal the uncertainty of his position. "I don't think it's about special," he said. "They moved to part of the city they had a right to move to and the condition of the move provided them the ability to travel across certain bridges that are not tolled. We shouldn't say to them they have to foot that bill, but at the end of the day maybe they will."
The Senate Plan
Smith said he didn't want to "hand the MTA a blank check," nor did he wish to address the MTA's capital plan until later in the year. "We don't want to have an AIG situation with the MTA," he said.
What Smith does want is a forensic audit, a total review of all of the MTA's finances, conducted by an outside source. He said he will address the MTA's capital plan after such an audit takes place. Smith insists he is reluctant to provide the MTA with funding beyond operating expenses because of the authority's history of financial trouble.
Smith introduced a web site (nymtasolutions.org) that presents the Senate's plan and asks for public input on resolving the MTA's funding crisis.
The majority leader also tied his reluctance to act on the MTA's capital budget to its omission of funds for Long Island and upstate transit infrastructure. Smith said the Senate would make sure such funding was included, adding that the Senate represents, "One New York."
Some observers charge that all of this is posturing by Smith in an attempt to hide the fact that he cannot counter the whims of the gang of three, the Democratic senators from New York City who have been a thorn in the leader's side since Election Day.
The Reaction
The proposal attracted quick and largely negative reviews, with critics attacking the Senate's arithmetic and branding its "rescue package" as shortsighted.
MTA chairman Dale Hemmerdinger told reporters the Senate didn't take the time "to do the math" and that its proposal leaves a gap of at least $1 billion over a two-year period. With the Senate plan, he said, the MTA would have to raise fares by 17 percent.
Paterson was quick to counter, "They were probably just oversights. We don't want to make a big deal of it." Paterson said he would meet with Smith and said that perhaps, "we're just misunderstanding each other."
Paterson, who supports the Ravitch plan, called the Senate's suggestion a failure to achieve a "shared sacrifice." said he thought that senators "might not be able to appreciate" the severity of the MTA's funding shortfalls.
Paterson did turn up his rhetoric by saying that a delay in addressing the MTA's capital plan will result in losing a "generation" of service, as he said happened in the 1970s, when the state did not invest in mass transit infrastructure. "Pushing problems off into the future is going to only accomplish what putting problems off into the future did in the '70s -- which is creating all kinds of hardship."
Mayor Michael Bloomberg, who had remained fairly quiet during this process, came out against the Senate recommendation, telling reporters, "We need a plan that solves the problem, not something that's going to get us to next year."
In a statement, Silver also knocked the shortsightedness of the Senate plan, saying, "I continue to believe that we must act now and that any viable solution must address both the immediate threat of a fare hike and service cuts and the long term needs of our mass transit system.
On the other side, opponents of tolls on East River bridges praised the Senate plan. "Any plan that doesn't have tolling is a much better plan," said Assemblymember Jose Peralta. "It is a good first start."
Peralta said that the 4 percent rate increase proposed by the Senate, "seems decent, something that riders can absorb. The payroll tax could have been higher but we understand that the business community doesn't want to absorb the entire burden on this."
Reaching Consensus
As for how a plan can move forward, Peralta said, "We will be talking further later today. The Senate proposal is now on the table, and we will move forward, but the Senate plan is not the end all. Now it is a matter of sitting down and negotiating."
Advocates hope that a plan more like the Ravitch plan might be achievable in the legislature if Republicans are brought on board — thereby eliminating the need to rely on the gang of three and other anti-toll Democrats.
Wylde said the Senate Majority failed to recognize something that advocates of the plan figured out a while ago: "We need bipartisan support for this plan."
Neysa Pranger of the Regional Plan Association said that she and other advocates have been pushing an agreement involving members of both parties for weeks. "We knew two weeks ago that the way out on this was to get bipartisan support in the Senate," she said.
Paterson said he would be willing to meet with "both leaders of the Senate." A leaders meeting took place Tuesday night, but Republican leaders were not invited.
Republicans would almost certainly want something in return for their participation, and Paterson said this week he would not hand out rewards for support of the MTA bailout.
On Wednesday, Senate Minority Leader Dean Skelos said that he and his members are not looking for mere "pocket change" in exchange for votes on the MTA plan. What Skelos wants is a seat at the table and influence over budget decisions.
For his part, Skelos spent the day railing against the fact that he and Assembly Minority Leader Jim Tedisco have been cut out of budget meetings. Skelos told the Daily News that he would welcome the chance to reach a solution on the MTA, even though, he said, none of the Republican Senators support any of the plans on the table. But he urged the Democrats to "bring us into the discussions and maybe we can find something that we could be supportive of."
"No," said Sen. Kevin Parker curtly and flatly, when asked if he thought there would need to be bipartisan support to get an MTA finance bill passed in the Senate. He then added "We don't need Republican votes but we wouldn't mind them."
With the clock ticking, transit advocates and other observers think the legislature must act now. Most hold out little hope that the legislature would take action sometime in the future to enact some of the unpopular measures in the Ravitch report when they won't act on them now is simply absurd.
Richard Ravitch said, "The idea that the legislature will do six months from now that which they won't do now is to test the credulity of all of us who are familiar with what happens in Albany."
Scaling Back Free Parking Privileges
Images from uncivilservants.org
In early January 2008, little more than one year ago, Mayor Michael Bloomberg, Police Commissioner Ray Kelly and Transportation Commissioner Janette Sadik-Khan announced a plan to scale back a program that is a cherished perk for city employees and an infuriating irritant to the rest of us. The three officials said they would "reduce the number and misuse of government parking placards" -- the often misused permits that allow city employees to park their vehicles in designated areas and at metered spaces free of charge for an indefinite period of time.
Citing efforts to "reduce traffic congestion, decrease the city's carbon footprint, encourage the use of public transportation and reduce the demand for curbside parking in connection with city business," the trio held a press conference and pledged to reduce the number of city-issued placards by 20 percent, prosecute individuals using counterfeit placards or misusing valid ones, and conduct a thorough review of citywide parking allocations and regulations.
A year later, city officials point to substantial progress. But community activists, from Parkchester to Chinatown, say that despite tough talk and some decisive city action, the problem has not gone away.
"I still feel like a prisoner in my own apartment and can't, on the best days, park in my own ZIP code, while placard abusers have carte blanche here," said a disgruntled Upper East Side resident, who asked to remain unnamed. "A no parking area is a free parking area for them," he added.
A Brief History of Parking Placards
Parking in New York City has been the subject of a Calvin Trillin novel, the set-up for a memorable Seinfeld episode and the cause of much malfeasance. It's an obsession for most drivers and has significant impacts on pedestrians, cyclists and transit users. It should come as no surprise then that the use of parking placards has long been hotly contested.
For years, local reporters like David Seifman of the New York Post and Pete Donohue at the New York Daily News published hard-hitting stories about the use and abuse of city issued parking permits, and community groups like the Brooklyn Heights Association and Lower Manhattan's Civic Center Resident's Coalition did their best to call attention to the issue. Not until Transportation Alternatives released Uncivil Servants, a snap-shot survey of parking placard abuse in Chinatown, though, did the public have data thorough enough to detail the extent of the parking placard problem.
The Uncivil Servants survey found that between 9 a.m. and 10 a.m. on March 29, 2006 there were 99 cars illegally parked on sidewalks and in front of fire hydrants in a five-block study area, as well as 16 cars illegally parked blocking a pedestrian refuge island. More than 90 percent of the illegally parked cars had parking placards.
That survey was followed by the September 2007 publication of another Transportation Alternatives report, titled "Above the Law," that found "77 percent of permit holders use them illegally" and the launch of uncivilservants.org, a user-driven anti-placard Web site. By the winter of 2007, the parking placard issue had been cemented in the public's consciousness.
The Problem with Placards
In addition to the obvious "it's unfair" argument that surrounds the parking placard debate, advocates maintain that the inappropriate use of parking placards adds tens of thousands of additional vehicles to the city's already overcrowded streets. A 2006 study by Bruce Schaller, now deputy commissioner of planning and sustainability at the Department of Transportation, found that if government workers commuted by auto at the same rate as their private sector counterparts, 19,200 fewer vehicles would enter Manhattan every day. The report concluded that the free and convenient parking that placards allow encourages many civil servants to drive. It also finds that $46 million a year in potential parking meter revenue is lost as a result.
Transportation Alternatives, in its numerous studies, also points to the dangers and inconveniences caused by illegally parked vehicles that go unticketed and untowed. One of the group's earliest press releases on the issue proclaims, "Such egregious illegal parking slows emergency response times, jeopardizes public safety, cripples truck and delivery traffic, impedes pedestrian flow, damages businesses and sends a message to community residents that their neighborhood is less important than the private vehicles of civil servants."
Residents of neighborhoods where illegally parked cars clog the streets have even stronger words. "This crap is a severe quality of life issue for residents like me. If I could come and go as I please and park anywhere at any time I would have a significantly better existence here," said the Upper East Side resident.
But some city employees, particularly teachers, firefighters and police officers insist that being able to park easily is essential to their jobs. The author of NYC Educator, a blog focused on education issues, sarcastically responded to the mayor's placard reduction: "Of course, it behooves a good teacher to spend 20 minutes trying to snag a parking space, or walk to school from Connecticut, if that's what it takes to maintain 'accountability.' You can't effectively implement 'reforms' if you don't thoroughly inconvenience unionized employees on a regular basis for no reason whatsoever."
In response to such concerns, Bronx City Councilmember Maria Baez has introduced legislation requiring that every public school teacher receive a parking permit. Baez's office reportedly received complaints that teachers without placards were abandoning classrooms to go feed parking meters.
Christopher Fenyo, a firefighter, offered another argument in a comment on the New York Times' City Room blog: "We are often detailed midtour to other firehouses when there is a fire somewhere else, and some firemen get hurt," he wrote. "We use our personal vehicle because it is, believe it or not, more efficient to go from Harlem to Astoria, for example, at 2 a.m., than it is to use mass transit (and if the fireman detailed doesn't have a car, one of those who do will often loan them theirs). That fire company is out of service until they are fully staffed." He continued, "So the faster I get there, the better for everyone, civilian and employee alike. It ticks me off when I see permits abused. And it rightly angers the public. But make no mistake, we need to be able to park cars."
The Administration's Actions
In early 2008, when Bloomberg, Kelly and Sadik-Khan announced their plans, the stage was set for unprecedented action on the parking placard issue.
In mid-March, the Transportation Department followed up by releasing a comprehensive study of parking in Lower Manhattan that found fewer than 2,000 parking spots available to drivers without placards and more than 11,000 available to those in possession of them. In April, news came that the police department was aggressively cracking down on illegally parked cars with placards. The New York Post reported that 178 tickets were issued in a four-day Internal Affairs' sweep of streets in Lower Manhattan -- along with the arrest of a retired sergeant for using a fake placard.
Then in May came the meat and potatoes of the administration's plan: a drastic citywide reduction in the number of placards from 80,770 to 54,891, along with a pledge to cut the Department of Education's 63,390 placards by a similar percentage. By July, the Post was reporting that the police had issued more than 3,530 tickets to parking placard abusers over a three-month period.
The most recent numbers are even more striking. "The mayor's efforts have resulted in over 50 percent fewer placards being issued to city workers," according to Jason Post, a spokesman for the mayor. "To encourage compliance, a dedicated unit in NYPD's internal affairs bureau has issued over 6,000 summonses, and over 1,000 cars have been towed for placard violations."
As a result, he continued, "Neighborhood leaders have told city officials that they see a noticeable reduction in the misuse and abuse of placards, and with over 78,000 fewer placards on the street, it's easy to understand why."
Placards Today
Despite these efforts, critics insist that the most flagrant types of parking placard abuse, like parking in front of fire hydrants and employees' using placards after working hours, still go unchecked because many police officers turn a blind eye to benefit other cops, as well as city employees.
"On paper, the city has made enormous cuts [in the number of placards], and we give them credit for it," said Wiley Norvell of Transportation Alternatives, which will soon begin another citywide survey of placard abuse. "But without the day-to-day enforcement from NYPD to back it up, illegal parking and permit abuse are still rampant."
Some neighborhood residents are more explicit: "It has gotten worse," said Oscar Ruiz, who lives in the Parkchester section of the Bronx. "The same people, who I have pictures of from a year ago, have new placards and their committing the same violations. How can you park in front of a hydrant five days a week? I have pictures of that."
"I spoke with parking enforcement and they tell me they would like to give tickets, but they can't," Ruiz continued. "It's NYPD politics. They don't summons their own." For many residents, this is the sticking point: Despite the administration's efforts and the drastic reduction in the number of placards issued, the NYPD still shirks its ticketing duty.
Jan Lee, the owner of a Mott Street business and member of the Civic Center Resident's Coalition, said he has noticed some real change on Mott Street but worries about what will happen in this election year and what could come when a new commanding officer is appointed to head his local precinct.
"The issue is that all of a sudden there will be a huge blitz, but that can change with who's at the helm," he said. "That's why it's premature for City Hall to pat itself on the back."
To avoid such irregular enforcement, Lee and his colleagues want to get rid of the parking placards all together. In place of the permits, they suggest the city develop a 21st century system that would let civil servants who need to park for official business register their vehicle to a given space for a set amount of time using a telephone or computer, the city's 311 helpline and Department of Motor Vehicle information. Any ticket given to the vehicle while it was registered to use a particular space would be void, but a ticket given afterward would be as valid as any other.
"What this would do is discourage government employees from using cars and abusing parking privileges," Lee said. "More importantly, taking away the physical reminder -- the placard itself -- would remove a degree of intimidation for those whose job it is to enforce the law."
According to Lee, the mayor's office was not receptive to the idea. "We mentioned this to (Deputy Mayor) Ed Skyler and he laughed in our face. They don't want to give up a bargaining chip," he said, referring to the value of placards in union negotiations and during an election year.
How all of this -- the elections, appointments of future commanding officers and new technologies -- will affect the placard problem is anybody's guess, but what seems quite certain is that the issue will continue to raise tempers on all sides.
|
Tweet |
