New York is running out of cash, Comptroller Thomas DiNapoli reported today.  The situation would be worse if Governor Paterson had not ordered delays in portions of some local aid payments, prompting the New York State United Teachers union to file a lawsuit against him.

But don’t worry–these guys will soon be bailing us out.

Or maybe not.

In 2000, state and local governments collectively owed $1.5 trillion (adjusted for inflation to 2009 dollars). Today, they owe $2.3 trillion, a 53 percent increase.

Over the same time period, American consumers and homeowners hiked their own debt by 55 percent, and pretty much bankrupted the world’s economy doing it. (OK, it wasn’t all their fault.)

Data source: Federal Reserve.

Eurostar is this week’s most-hated transit provider, leaving 100,000 passengers stranded in London, Paris, or somewhere in between because “fluffy snow” mucked up the high-speed trains that carry people in the undersea tunnel between Britain and France. (more…)

Are New York’s public authorities fixed? Little more than a week ago, Gov. Paterson signed a bill to “rein in” New York’s “free-spending public authorities.”

But State Senator Bill Perkins of Harlem thinks that the convolutions New York’s Empire State Development Corporation (ESDC) put itself through to get the Atlantic Yards basketball arena funded “vitiate the longstanding efforts of the Legislature to reform public authorities and make them more accountable and transparent.”

Moreover, Atlantic Yards may not even pass muster under the law, Perkins says.

How could that happen? (more…)

The NYT hosted an online forum on how to fix the MTA today.

Here are some deeper #s:

In 2004, MTA labor spending was $5 billion. Today, it’s nearly $7 billion. (Look for yourself here and here.) If it had kept up with inflation between ‘04 and ‘09, it would be $5.8 billion. And the MTA would not face its big deficits today.

Pension costs have more than doubled, from $480 million to $1 billion, and are likely to worsen.

What about healthcare? (more…)

Mayor Bloomberg, enlightenedly governing from Copenhagen via the World Wide Web this week, had the following to say about the dim-bulb, smaller-carbon-footprinted folks back home to CNBC:

 ”I don’t think that congestion pricing and those kinds of things are dead; more and more cities are doing it. … Come March, [Albany is] going to have to balance a budget, and I think that any kind of revenue source is going to be on the table. … You see all of the cutbacks in the MTA budget. The MTA has got to find another source. If we had done congestion pricing two years ago, perhaps they wouldn’t be in this situation. [Fiscalwatch sourced this quote from the Daily Politics' Liz Benjamin]

Bloomberg conveniently left something out: maybe he prefers congestion pricing to the bailout that the MTA actually got, but the MTA isn’t in trouble now because it didn’t get any new money from Albany. It got $2.1 billion in new money annually from Albany in May (give or take a couple of hundred million a year).

If “we had done congestion pricing two years ago,” the MTA would be in exactly the same situation today — because it still managed to rise the same amount of money it wanted, through other means. (In fact, if you really want to quibble, the MTA would be worse off, in the short term, since contractors would have to build all of the congestion-pricing infrastructure before it would start to pay off.)

If Albany eventually passes congestion pricing, does anyone think that it will repeal the MTA’s new payroll tax, which hits downstate employers?

The U.K.’s Labour Party surprised the world and maybe itself by taking a tough line on City bank bonuses on Wednesday, according to the press, announcing a 50 percent surtax on banks’ bonus payrolls through next April.

The tax, which the banks themselves would pay, would come in addition to the national and other taxes paid by the workers themselves, already set to rise to 51 percent next year.

Headlines took the bonus sin tax as a bold fait accompli. If so, the tax would be great for New York, at least in the short term.

Banks wanting to cut their payroll could encourage American expats — already annoyed that their kids have developed funny accents, anyway — to move home. British banks like Barclays could move more top people to Lehman Brothers, whose U.S. investment bank assets its purchased last year.

Not so fast, though. Britain still knows that a unilateral punitive tax would be premeditated murder for its financial industry. This may be a staged drama, rather than the real thing.  (more…)

The state bailed out the MTA with a $1.5 billion payroll tax earlier this year. But it turns out revenues from the payroll tax will come in $200 million less than expected. If only the state and the MTA had had someone back then to tell them that the payroll tax would be a dangerously volatile source of revenue.

Oh.

Anyway. What with Albany having stolen another $146 million from the MTA recently to close its own budget gap, the authority now has a $346 million hole to fill.  (more…)

The health care bill now moving through Congress could heap significant added costs on New York State.  But the Heritage Foundation is offering a provocative idea on how New York could turn the tables on the feds and save at least $47 billion on Medicaid over a six-year period.

The idea, in brief, is to end New York’s voluntary participation in Medicaid, retaining a state-financed long-term care program and leaving the rest of the state Medicaid caseload to the new federally subsidized health insurance plan.  Money grafs from the Heritage Web Memo:

Congress clearly fears that with the creation of the new entitlement, states would respond by lowering Medicaid eligibility. Hence, both the House and Senate attempt to prevent such state action by imposing “maintenance of effort” (MOE) requirements on the states.

If all states withdraw from Medicaid, their collective savings would be $725 billion over the 2013-2019 period, but they would exceed $1 trillion over 10 years. This assumes that states will continue to spend at least 90 percent of what they spend now on Medicaid long-term care services with state-only dollars. On a state-by-state basis, every state except North Dakota would come out ahead financially by leaving Medicaid but continuing long-term care spending with state-only dollars. Of course, if North Dakota reduced its long-term care spending, it too would come out ahead.

The cost to the federal government to replace the state share of Medicaid, however, would be greater than $1 trillion as the entire Medicaid population would become eligible for the new, more expensive federal subsidies for premiums and cost-sharing. Moreover, the states would no longer pay for Medicare cost-sharing or the state “clawback” for Medicare prescription drugs.

A state-by-state rundown of savings from federal fixcal year 2013 through 2019 is here; note that New York’s savings would climb to $59.7 billion if it also reduced its long-term care costs by 10 percent during the period.

The lead author of this idea is Dennis G. Smith, a Heritage senior fellow and former director of the federal Center for Medicaid and State Operations.

New York City’s independent budget office (IBO) thinks that Gotham will take in $1.3 billion more than the mayor is projecting over the rest of this fiscal year and next. The extra cash will alleviate some pressure on the city’s projected $4.1 billion deficit (itself already revised downward once from $4.9 billion by the mayor’s own budget office). (more…)