Tonight: PBS on Transit, States, and the Stimulus

Streetsbloggers will want to tune in to PBS tonight for the latest installment in the Blueprint America series. At 8:30 (in New York), NOW will look at where all that stimulus cash is headed. Here’s the teaser:


President Barack Obama’s stimulus money is nearly out the door and on its way to the states, but will it be spent in the way it is intended?

One alarming example: Mass transit. Cities and states, strapped for money, are cutting back on mass transit even as it becomes more popular with Americans. Meanwhile, President Obama is calling for increased mass transit as a necessary step toward energy independence. Will the government’s investment dramatically revitalize our national travel infrastructure, or will states spend the money according to ‘business as usual’?

This week NOW on PBS — with Blueprint America — travels to North Carolina to see what the future holds for mass transit in these troubling financial times.

The previous NOW episode in the series was 30 minutes well spent.

Speaking of states’ priorities, California legislators and Governor Schwarzenegger announced a "compromise" budget plan yesterday that abolishes state funding for transit operations. Transit advocates are referring to the loss of $536 million in state assistance as the "Armageddon Scenario". Damien Newton at Streetsblog LA has the story.

  • Larry Littlefield

    That’s California, not Alabama, wrecking its transit system.

    Basically, the state is being wrecked by promises, privileges and pandering in the past, by pensions and (especially) debt. That is going to be true of every state and local government in the long run, particularly NY and NJ.

    The result is an institutional collapse, with the only question what collapses first and the answer based on the relative clout of different public service producer interests, since consumers of public services/taxpayers don’t matter. I guess the transit unions and contractors matter less than some others.

    Recall that our state has already cut off capital funding for the MTA. It cut capital funding rather than operating funding because the consequences of doing so were deferred. But they cannot be deferred indefinately.

    We don’t have a super-majority blocking tax increases, but we do have the highest taxes in the country, and they will be raised until people and businesses leave. At that point there will be a revenue meltdown.

    I’ll say it again, it would be a good thing if the subway could pay for itself, and a bad thing if it had no revenues at all.

  • GRR

    Larry: I’ve followed your views on taxation and public finance for a bit now, and am interested in hearing a bit more on the dichotomy between NY and CA on the issue.

    From a the perspective of a relatively casual observer, the bottom line budget challenges are similar – huge holes. But they come, it seems, from very different places, politically and policy-wise. You’ve written a great deal about the upper middles in NY getting off without paying their fair share, or maybe, taking more of it. But how do we compare that in a constructive way to things here in CA, where the long-time homeowner class (taxed based on property values from the 80’s) pays essentially nothing for public services? Which of these sets is really getting the better deal?

    Here in CA we have seemingly impossible hurdles to revenue. In NY the common complaint is really the opposite – too many taxes, and on the wrong people. Yet both systems engender the same problems.

    It seems like there needs to be a middle ground between these extremes, but i wonder if it would soften the blows at all come budget-time.

  • Larry Littlefield

    On NY vs. CA, if you look back on my posts on public employment from the 2007 Census of Governments, I believe I included a spreadsheet with several of the big California counties (prepared for a friend who lives there). I’ll have more to say when the 2007 Census of Governments finance phase comes out this summer.

    Off the top of my head based on past data:

    California local goverments are less overstaffed relative to the national average than certain aspects of NY local goverments — police in NYC, schools in the rest of the state. But the pay of local government workers is much higher in CA, relative to private pay (school pay is also high in the portion of NY State outside NYC).

    California’s Medicaid spending is vastly lower than NY.

    Calfornia’s school spending is far more equitable than NY (like virtually all states), because Prop 13 cut the cord from property taxes and limited increases.

    In the past California’s state and local taxes were about average as a share of personal income, while New York’s were and are off the charts.

    When I first started compiling data, California’s school spending was very low compared with the income of its residents, among the lowest in the country. Califoria increased its school spending in the late 1990s early 2000s as a share of income, but did not increase its taxes as a share of income. I guess it borrowed and cashed in the mega-revenues of the dot-com bubble instead. Prior to the recent period, California did not have a debt problem like NY did. Now it does.

    Growing areas with relatively few retired public employees can under-fund their pensions, expecting to stick a larger number of future residents with the bill. Soaring pension costs wrecked NYC in the 1970s. California’s population growth slowed after 1990. Pensions are wrecking it now, especially since (like NY) it handed out all kinds of sweeteners in the last decade or so.

    San Francisco requires a public referendum for pension changes, handed out fewer sweeteners, and has solvent pensions. But otherwise its local government looks bad. Its schools have more non-instructional workers than instructional workers.

    With San Diego’s pension disaster, public services are sinking fast there.

    If I were there, I’d be too worried about water and earthquakes to worry about public finance.

  • Larry Littlefield

    Speaking of transit disaster, I strongly recommend everyone read this article about the financial disaster of the MBTA up in Boston.

    It combines all the elements — rich, undeserved pensions. Massive debts run up by Republican Governors. Pandering to ridres with cheap fares — leading to massive increases later. And money drained off to the automobile, in this case for the massive over-runs on the Big Dig (not mentioned in the article but very important).

    Generation Greed. Makes me sick.

    “The agency’s total debt is $5.2 billion, or higher with interest included.”

    For a metro area half the size of the MTA service area in population.

    “The T grants full pensions to all retirees after 23 years of service, regardless of age.”

    Why work when slavery has been re-legalized through the back door?

    “A Senate bill under consideration would keep that benefit for current employees, but force new hires to wait until they are at least 55 to get a full pension, as do other state employees.”

    Sure, after all the total compensation of younger generations of employees is much lower in the private sector too. Can’t take anything away from Generation Greed.

    “MBTA fares have gone up four times since 1991.”

    Four times in 18 years. What you really want to do is hand out favors when the economy is up, and then really nail people with massive increases in a recession when it turns the most.

    Is everyone else a greed driven lemming? Does anyone out there have free will?

  • Does anyone in these agencies or the governments allegedly overseeing them ever look at an actuarial table? Paying full pension to someone after 23 years mean you begin paying out for zero work when that person is 43, give or take. With current life expectancy, that means you’re funding roughly three workers (20-43, 43-66, 66-89) for every one actually working. It doesn’t take a MENSA cardholder to see that that’s not sustainable.

  • Larry Littlefield

    “Does anyone in these agencies or the governments allegedly overseeing them ever look at an actuarial table?”

    The actuaries always say pensions can be enhanced at a cost of zero. That’s what they are paid to say, or they don’t get hired.

    Kind of like the executive pay consulatnts, who say that paying top executives ever more money increases shareholder value. The ones who say so are the ones who get hired.

    And the bond rating agencies, which say the exploding debts that yield huge bonuses are AAA. If they didn’t rate them triple A, the bond issuers would hire someone who would.

    Our institutions are being plundered by theives whose sense of entitlement not only demands the plunder, but also sychophants telling them deserve every dime. Want to make money? That’s how you do it.


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