From Photo Op to Performance Based State Government

Mark Bitz
January 2, 2005
 

          Although New Yorkers may enjoy the fruits of democracy at the federal and local levels, at the state level we face the rule of three.  This concentration of power, as with almost all concentration of power, over time yields arrogance, corruption, sloth, and ineptness.  Upstate NY voters are disgusted with their state government, but are puzzled what to do about it.  Meaningful data on Upstate New York’s performance relative to other states is not regularly reported.  The impression that our government representatives are such nice, helpful people may cause us to believe they are doing the best they can.

After some thought and research, I was able to construct, what might be called the State After-Tax Income Index.  Using state per capita income data, Upstate NY per capita income data, and federal, state, and local tax information, I was constructed an excellent measure to see how Upstate NY is performing relative to other states.

The State After-Tax Income Index is simply what people of a state earn on a per capita basis after they pay federal, state, and local taxes relative to the US average.  An index below 100 means people in a state have less to spend than the national average and a reading over 100 means they have more to spend.  The State After-Tax Income Index is a great predictor of which states will grow and which will decline.  It is also an excellent measure to evaluate the effectiveness of state governments.  The following table shows the index for 5 states and Upstate NY for the years 1990, 2000, and 2002.  The table also lists the state’s 1990–2000 change in population.

State After-Tax Income Index

Data Sources include www.infoplease.com, www.taxfoundation.org, and www.brookings.edu.

The table shows Delaware’s After-Tax Per Capita Income to be 108% of the national average in 1990 and 109% in 2002.  Delaware is a well-led state.  It is no surprise its population grew 18% in the 1990’s.  Massachusetts, with an index of 120 in 1990 and 124 in 2000, has high and improving After-Tax incomes.  Minnesota with an index of 99 in 1990 and 109 in 2002, and New Hampshire with an index of 110 in 1990 and 113 in 2002, improved their After-Tax incomes and experienced significant population growth in the 1990’s.  Both Minnesota and New Hampshire accomplished this growth despite having cold northern climates.  West Virginia’s index is 79, which is one of the lowest of all of the 50 states.  Its per capita After-Tax income is 21% below the national average. 

After-Tax incomes in Upstate NY were 90% of the national average in 1990, 86% in 2000, and 84% of the national average in 2002.  Upstate NY is a sinking ship.  Incomes that were once only 10% below the national average are now 16% below it.  Given the great educational resources, excellent workforce, tremendous infrastructure, and New York’s economic base of the 1960’s, Upstate NY’s After-Tax incomes should be well above the national average.  In the last 30 years, our state government has completely squandered one of the greatest economies in the country, as well as all of our livelihoods.

In a country where there are no barriers to moving, talent and capital tend to move to where they earn the highest return.  As talent and capital move into an area, people’s standards of living increase.  As the talent and capital leave an area, people’s standard of living and the economic base on which taxes are assessed declines.  Until the leadership in NYS turns the upstate ship around and dramatically improves our After-Tax incomes, voters might want to use the following guideline to decide for whom to vote.

Recessions do not affect this voting rule of thumb as the index measures how Upstate NY incomes are doing relative to the national average.  All incomes decline in a recession.  The index only changes as Upstate NY does better or worse relative to the nation as a whole.

            So why is the State After-Tax Income Index a good basis to determine how one votes?  Because, if After-Tax per capita income is high or increasing:

1) There will be fewer unemployed people,

2) Our homes and property will appreciate more,

3) Schools districts will have greater tax revenues,

4) Health insurance will be affordable to more people, 

5) College will be affordable to more people,

6) There will be more money available for the arts from thriving businesses,

7) Businesses will have more money available for charities,

8) There will be additional funds invested in research and development,

9) Government will take proportionally less from people and better fund its agencies,

10) Our friends will be less likely to move away,

11) Our children will be able to find high paying jobs locally,

12) Our grandchildren will be more apt to live near us,

13) A smaller proportion of the population will be retired, and

14) There will be greater state and local tax revenue to pay for Medicare.

The State After-Tax Income Index is also a good way to determine how to vote as representatives will spend less time raising money for reelection and subject us to fewer campaign ads.  Winning office will be less about image and more about raising people’s After-Tax incomes. 

            To understand the effects of the State’s policies that have caused Upstate NY After-Tax income to fall to 84% of the national average rather than grow to 100% of the national average, consider the following.  According to the IRS tax tables and the Tax Foundation, an Upstate NY family earning $80,000 per year pays $9,500 in federal taxes and $10,300 in state and local taxes.  After paying these taxes, the family has $60,200 to spend and/or save.  Because of Upstate NY’s high state and local taxes and the exodus of so many employers from the state, a similar family doing the same work earns $90,000 per year in most other states.  This family pays $12,000 in federal taxes and $9,000 in state and local taxes, and has $69,000 to spend after paying their taxes.  The Upstate NY family has $8,800 less to spend each year than a comparable family in other states.  Over a forty-year career, this amounts to $350,000.  Were the out-of-state family to invest its additional $8,800 each year, and earn 5% a year on the savings, the difference in After-Tax income would grow to over a million dollars in forty years. 

The concentration of power and lack of democracy matter in New York because they have led to a series of laws and policies that lower all of our standards of living.  The NY State Legislature’s policies have made Workers’ Compensation, Health Insurance, Energy, and Sales, Income and Property Taxes so much higher than any other state that we have the poorest business climate in the country.  In the nineties, the US added 37% more high skilled manufacturing jobs, while New York lost 14% of the ones it had.  In the last 14 years, Upstate New York lost 530,000 high paying manufacturing jobs.  Upstate NY After-Tax incomes are now 16% below the national average. 

In the last seven years, the Governor, Majority Leader, and Speaker skirted the NYS Constitution, had state public authorities borrow over $1 billion dollars, and provided representatives supportive of their agendas hundreds of thousands of dollars to distribute to projects in the representatives’ districts.  The majority in the senate and assembly has not changed in 30 years. Calculating statisticians draw voting districts to optimize a majority’s hold on power.  The Majority Leader and Speaker appoint committee chairs, hire their staffs, set committee and member staff budgets, distribute lulus, and decide which bills are brought to vote.  They distribute hundreds of thousands of dollars of state campaign dollars to majority members who face competition.  In this manner, the leadership coerces a majority of our representatives to support their personal agendas and a few special interests. 

            Each year in office, incumbents raise and accumulate thousands of dollars to deter challengers.  One out of three incumbents runs unopposed.  Incumbents win their races 99% of the time.  It is no surprise that the Center for Democracy ranked the New York State government the least democratic of all 50 states.

            Democracy at its best follows a written constitution and set of written rules, divides and checks power, fosters competition for representation, and creates a transparent forum for the competition of ideas, formulation of laws, and conduct of business.  The competition inherent with democracy fosters excellence.  The genius of a well working democracy is that all interests are represented and no interest is over-represented.  In short, democracy, more than any other form of government, delivers the greatest good for the greatest number.  Almost without exception, democracy delivers throughout the world the highest standards of living and quality of life.

            For Upstate NY incomes to improve, all upstate citizens must stand together and encourage the NYS Senate and Assembly members to do the right thing.  In late December, prior to the legislature’s first session in January when each house votes on the rules under which it will operate, we need to send Senate Majority Leader Bruno, Assembly Speaker Silver, and each of our NYS Senate and Assembly representatives the following message.  (See FreeNYS.org to download the letter and for senators’ and assembly members’ emails, phone numbers, and addresses.)

          Dear 

All New Yorkers know the NYS Senate and Assembly has been the most dysfunctional legislature in the country.  The New York Brennan Center for Justice studied the problem and developed 17 common sense rule reforms for each house to pass during their opening session.  Several of my friends and I request that you help enact all 17 rule reforms, not 3 of them, not 12 of them, but all 17 of them.

                        My friends and I will be watching the Upstate NY After-Tax Income Index.  We know that Upstate NY After-Tax Incomes are now 16% below the national average.  For candidates in the majority party of each house to earn our votes, Upstate NY After-Tax Income relative to the US average must gain at least 1% per year.  If this is not the case, we will not vote for candidates of the majority party in their respective houses.

                        Also, we request that you pass Voter Initiative.  The NYS Senate has already passed a bill that would enact Voter Initiative and Governor Pataki has indicated he would sign the bill.

  We recognize that in some states the bar to place an initiative before the voters is too low and in some states a little high.  We would ask for Voter Initiative with a moderate level of difficulty for groups to put policies before the voters.  The very able Brennan Center for Justice could research and recommend a Voter Initiative Law.

Please avoid the condescending thought that voters of New York will approve initiatives counterproductive to their interests.  We remind you that the NYS Senate’s and Assembly’s record of looking out for the average citizen is atrocious, as evidenced by the low Upstate NY After-Tax income, as well as the loss of 530,000 excellent paying jobs the last 14 years.  Democracy works the world over; and direct democracy, which is what Voter Initiative is, works the best of all types of democracy.

                                                                                                Sincerely,                     

          P.S.  New York State leadership’s poor handling of the funding of inner city schools is the latest of a thousand examples of the need for change in Albany.

            Voting by the State After-Tax Income Index will force lawmakers to serve honestly the interests of all New York citizens.  The state leadership cannot insidiously raise registration fees, levy hidden taxes on energy and other business inputs, or pass mandates that local governments must fund, as the State After-Tax Income Index will capture their every move.  The state leaders cannot act like warring bullies on an elementary playground and remain in office long.  The state leaders will have to create an environment that attracts and retains all businesses rather than rescue a politically supportive few.  Voting by the index will force lawmakers to serve honestly the interests of all New York citizens or face removal from office.

Of Interest:

10/05 Electrical Costs Testimony

5/05 Lord of the Rings

(Link | PDF)

1/05 From Photo Op to Performance Based Government

(Link | PDF)

9/04 Why I am Considering Selling Plainville Farms

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