Seeing Red

by Gordon Cooper

From Broader View Weekly, July 15, 2010

These days we are seeing a lot more red. We are seeing more red-tinted mercury in our thermometers as we experience the effects of a midsummer heat wave. We are seeing more red ink in our budgets as we experience the effects of a lingering recession; the decreasing income cannot stretch to cover the increasing outgo.

When an institution finds itself in such dire straits, whether it is a family unit or a corporation or a governmental body, the only solutions available to getting out of the red and into the black are to either increase the incoming funds or decrease the outgoing.

When it comes to the governmental bodies, the first impulse is usually to increase the incoming funds, otherwise known as taxes, because it is usually much more difficult to decrease the outgo as more and more people become dependent upon the services or products supplied by their favorite government program.

The practice of increasing taxes within a state can be counterproductive, however, when we live in an era in which migration to another state is not as difficult as staying and paying. As mayor Bloomberg pointed out recently and as statistics bear out, increased taxes benefit other states as people move out.

“I think it’s the best thing that ever happened to Connecticut,” Bloomberg said in an interview. “I can’t imagine why every hedge fund wouldn’t pick up and move…they could go anyplace. We’ve lost a lot of business to Connecticut and this would send more of them.”

This fact is borne out in a recent Research Bulletin published by the Empire Center for New York State Policy. They cite statistics which show an exodus of New Yorkers to other states. Between 2000 and 2008, we have suffered a net loss of 8% of our population, or 1.5 million taxpayers. While we have had some people moving into our state (in search of our social programs, obviously, because we have very little to offer them in manufacturing jobs), the sad fact is that the new residents tend to have average incomes that are much less than those moving out. The same report details that the average difference in income is greater than 13%, meaning that we have lost over $4.3 billion in taxpayer income.

If increased taxes will lead to even more taxpayer migration, we must turn toward cutting the outgo.
One area that Governor Patterson has rightly perceived as bloated and top heavy is in the area of school aid. To justify his proposed 5% reduction in school aid (from $21.6 billion in 2009-2010 to $20.5 billion in 2010-2011), the governor listed some interesting facts and figures.

For example, we are spending over $17,000/student/year in New York State. To put that into perspective, the national average cost/student is slightly over $10,000 – a difference of 70%. Now, I, for one, do not believe our students are 70% more difficult or challenging to educate than the average student in the rest of our nation. Why the disparity? Well, I believe a great hint as to why it costs more here can be found in investigating the salaries and fringe benefits of our district employees. According to the governor, the cost/student for salaries and benefits of district employees in NYS alone (over $7,300 for salaries and another $2,900 for benefits) exceeds the total cost/student in most states.

But wait, there’s more!

If you really want to see red, take a look at the generous pension package some of our “servants” are enjoying at our expense. A common practice among some of our district supervisors and others has been to stack up their sick and vacation days and cash them in during the last three years of their employment, allowing them to retire on a pension that reflects the increased salary for those final years.

An example of this technique of stealing from the taxpayers was reported by Buffalo News in late June. It seems Niagara Falls Superintendent, Carmen Granto, was able to retire with a net increase in his income from $129,000/year as an employee to $147,109 as a retiree! And he isn’t even the biggest carp feeding in the bottom of our education stream. School superintendent James Hunderford retired from one district on Long Island with a pension of over $316,000/year and then went to work for another district with a salary of $225,000 to make sure his golden years were truly golden with a combined income of over $540,000!

Seeing red yet?

We have to realize that increased taxes will not get the red out as long as we have public employees taking such advantages. Now, I admit that this is one small portion of our budget, but with total education costs representing over 36% of state spending it is a significant place to start.

And we don’t have to wait for our not-so-speedy lawmakers to do something about this. We can act on the local level by attending school budget meetings and voting.

Let’s all work together to get the red out!