North Country loses its biggest industry: local government
Two big political events this summer bring home the magnitude of the economic change now hurtling at the North Country.
The first of those changes was the debt-ceiling battle in Washington DC. If nothing else, the final “austerity” deal made it abundantly clear that the Federal government won’t be offering any more stimulus money any time soon.
That means no more checks written to prop up state and local governments and the services they provide.
The second landmark was Governor Andrew Cuomo’s signing into law the 2% property tax cap, a measure specifically designed to stifle budget growth in counties, towns, and school districts.
Even before those events, the North Country was already part of a massive wave of government downsizing that has swept the US.
Local government employment across the country peaked in 2008. Since then, nearly half a million local government workers have lost their jobs.
To put that in context, that’s nearly the equivalent of all lay-offs in the automotive industry since the 1980s. And in local government, the blood-letting happened in just a few years, not a few decades.
And the pain continues. In June, another 18,000 local government workers got their pink slips nationwide. Those numbers, by the way, don’t include public school layoffs.
Because rural America relies disproportionately on government jobs to drive small town economies, the cuts have hit places like the North Country particularly hard. And we don’t appear to be anywhere near the bottom.
Despite a couple of years of belt tighthening, Essex County currently faces a $7 million shortfall. St. Lawrence County’s deficit stands at $13 million.
With the tax cap in place, more deep and painful job cuts are all but certain.
So far, the reductions have happened (mostly) in dribs and drabs. A few teachers let go here. A DPW position left unfilled there. But these tend to be the best paying jobs in our communities and it all adds up.
It doesn’t help that this is a time when state and Federal officials are also curtailing the money that they ship our way. Subsidies for rural airports, for farms, and for hospitals are all on the line, in Washington and Albany.
Taken together, it may be time to start thinking about this moment in our region’s history as a similar event to the loss of the timber industry, or the rapid decline of the manufacturing sector.
As government steps back as the prime mover of the North Country’s economy, what’s next? And which communities — Elizabethtown? Malone? — are most vulnerable?
I’d also like to see better long-term plans from local government leaders that outline what their long-term structures will look like.
I know a lot of county executives and town supervisors are still in crisis-mode, trying to keep their heads above water. But we now know that this isn’t a temporary crisis. It’s the new reality.
We need to know what the landscape is likely to look like when the shake-up is over. How many jobs will remain? What services will citizens still be able to rely on? When the dust settles, what will the new ‘normal’ look like?
As always, your thoughts welcome.
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This is one of those “be careful what you wish for” moments.
I vote to get rid of the SED and Regents who are great at creating unfunded mandates.
How much money could we save if we got rid of DOT and let the counties maintain the roads?
Albany and Washington are very good at saying, “Do as I say, not as I do.”
And why not raise the income tax at the state and federal level to pay for what is needed, and just git rid of the property tax?
Pete,
I’ll raise you one. Why not scrap the federal and state income tax all together and go with a national sales tax which is split between the two? It seems to me there’s no time like the present to begin a conversation about a complete redo of the process of taxation. At the federal, state, and local level.
Peter Hahn, maybe if we eliminate all the wasteful local government employees and layered government. We could have a growing private sector, that’s what I wish for.
Jim McCulley – Im not against eliminating wasteful local government, and I don’t think that local governments should exist to employ local people who can’t get jobs otherwise, but don’t kid yourself, eliminating jobs of any kind takes money out of the system. There will be fewer private sector jobs also (at least in the short to medium term) just because there is less money circulating to support them. Those people who lose their local government jobs will have to move somewhere else to get another job. So will the people who lose their private sector jobs.
Correct Pete.
This is not going to cause some sort of flowering of the private sector in Saint Lawrence County.
It is going to be pretty bad if they follow through and right now we don’t really know how bad it will be? But this is the last thing we need locally and as a nation right now. I know I have been critical of government unions and government spending, however in the middle of a recession/depression to cut employment is exactly the wrong thing to do. I don’t care if these guys spend all day counting paper clips, they are paid good salaries they buy homes, they buy groceries they pay property taxes they buy cars and they are good community members.
Also the secondary impacts on agencies will ripple through it won’t just be direct government workers who lose their jobs.
This is where the straight jacket of all of these mandated benefits are just killing all of us.
We have entered a time when everything is measured in $$$$ and profit. If it doesn’t generate profit, it should be privatized or eliminated. So now the people who take care of the roads, who teach our kids, and generally provide service to society are demonized as leaches on society while financiers who trade paper securities that add no real value to society are on the top of the heap. Who was it that commented that “Americans know the price of everything and the value of nothing”? Sadly that is more true today than ever.
Indeed Mervel, one should never under estimate the power of the “multiplier effect.” Anyone who assumes the private sector will flourish with the loss of good paying jobs, whether gov’t funded or not, hasn’t been paying attention to what’s happened here in the North Country the past 20 + years.
I don’t think the villages, towns and counties will be as bad off as they want you to believe. The recent 2% law really does not apply to them. Here’s why.
In order for these agencies to exceed the 2% tax cap they need only to have 60% approval of the governing body. For example my town government is made up of five persons. This body prepares the budget. Only three of the members who prepared the budget have to vote to exceed the 2%. School districts on the other hand must get 60% approval from the voters. I see business as usual who high property taxes!!
Thank you, Gary.
I have mentioned the 60% over-ride a couple times before. The 2% cap is not quite as “cut and dried” as people may think. It may lead to some people getting voted out of office, but each municipality has to budget reasonably according to the services that are expected/demanded.
I am interested in how some of the local contracts will be negotiated now that Gov. Cuomo has set the standard with the agreements w/CSEA and PEF. I believe that pay freezes and increased contributions should be expected at many levels.
I think maybe it is a deeper problem though. A good portion of our local government is funded by Albany, not local taxes alone. I don’t know that percentage.
But in SLC there is a 13 million deficit next year according to our county manager, so even if the property tax cap is overcome with a vote, would it ever be enough? They are talking about eliminating whole divisions not just a job here and there. But once again it would be good to lay out a long term plan based on reality and not just rely on hazy and scary predictions with no real plan.
Part of the problem also may be that in the past I think 10 years, every year the state government seems unreliable and we are warned of impending doom. Then in the last minute all of the money is restored, the nature of the game was this volatility but in the end the basic amounts always got allocated. Given that history I think maybe it is hard for some county leaders and citizens to really get that this is not temporary this is the new reality, as Brian pointed out.
“Given that history I think maybe it is hard for some county leaders and citizens to really get that this is not temporary this is the new reality, as Brian pointed out.” -Mervel
My family has been doing with less for a number of years. Every purchase made is preceded by a decision. If we need something, we save for it. I would like to feel sorry for those that didn’t see this coming years back and did nothing to prepare for it. I work a full time job and a part-time job. We don’t have new vehicles or a yard full of gas-powered toys. Two of children are currently in college and it isn’t easy, but we’ll get by. Always have.
Many of us have gotten “our house” in order. We should be able to expect the same of those we elect.
I think the work ethic and value of local government employees is greatly underrated.
Towns and counties have been cutting back for years.
To the idea of eliminating the income tax and trying to replace it with a sales tax could be a case of wishing for something you might regret. Would most of the items excluded be for the rich or for the middle class and poor. This is where there could be a big food fight and food might be one of the areas you could pay a tax on.
How about a sales tax on houses in addition to the mortgage tax? Do you really want to go down that road? A sales tax on insurance, water, sewer, drugs, doctor bills, fishing licences? The list could be endless.
There was a time when someone chose to either make big money in the private sector 9and take a big risk in trying) or went to the government jobs which were lower paying but offered security. Times have changed to where the big money is in working for the government vs private sector. Now the government worker is fearful that the security aspect is gone. They traded it in for the higher wages and bigger and better benefits. I’m sorry but to have it all risk free is not and never was the American way.
more4les – where do you get the idea that there is big money working for the government?
Tough in the short run, but good in the long run. The high state and local taxes needed to sustain all of these local government jobs increases the cots of living and doing business, and those costs need to be brought down to make NY more business friendly.
Too many tiny towns that each have their own supervisor, town boards, planning boards, zoning boards, assessors, dog warden, highway superintendent, town clerk, planning board clerk, codes enforcement officer, zoning enforcer, zoning board clerk, deputy town clerk, deputy supervisor, highway clerk, justice, assessor’s clerk, tax collector, attorney, records managment officer, grant writer, and a few others im sure i forgot.
In truth, pension and retiree health care costs must also be brough down to a level that taxpayers can afford. The practice of giving local government and school workers free health when they retire at 55 (40 for uniformed personnel) is simply unaffordable and unfair to taxpayers who don’t receive such benefits.
I think though that there are two issues. One is the jobs in the short run that we do need, badly. It is not simply about overpaid government workers or too many workers, right now in SLC government is the single largest employer. What happens to our home values when they all leave? What happens to our tax base then? You think local taxes are high now. You are looking at unemployment increases beyond our normal 10%, plus they are good jobs. All businesses will be impacted and many will fail, this is a big big deal.
Now in the long run, say 30 or 40 years will it be better to have more private sector and less government in our county given how much we are reliant on government now? I would say yes for sure. But as John Keynes said, in the long run we are all dead (or at least most of us).
Here is a place to start. http://nakedlaw.avvo.com/2010/06/government-vs-private-sector-pay/
Personally I know of a few blue collar jobs to compare. one example: A mechanic for a school vs. an auto mechanic for a new car dealership. average of 5+ grand more per year with twice the benefits. We have been so far from self reliance for so long we don’t remember how to do it.
Unfortunitly Brian the “shake-up” will not be over for several years. If we think things are bad now with government having a difficult time paying for social entitlements wait to 2014 when Obama Care kicks in! Government does very little to encourage industries to stay here. Our policies, or lack of, has hurt the economy more than anything. I see our president is finally showing his frustation by saying Congress needs to do more. He actually used the WE word and not the I word.
Mervel: Last year Franklin Co went through a similar problem that SLC seems to be going through now. They made a few token consolidations but we were hit with a 20% property tax increase! My guess is SLC will do something very similar. They will use the media to explain how painful the cuts will be and how they have little if any options but to raise taxes.
Peter, go to see throughny and read the salaries of Lake Placid village employees. they are 2-3 times the per ca pita earnings of the residents. This does not include the add on of 75% for life time benefits.I also think you don’t understand the only way local governments get money is by taking it through property taxes. If this money remained in the individuals/ business, pockets instead of government the money would be spread far more evenly through out the community. Also Peter, where do you work, on every blog you take the government worker side, just wondering. I think you even said on one, that if we didn’t pay them enough they would become corrupt is that still your belief?
I do agree there are some government workers, especially at the state and federal level, who are over compensated for what the do.
But when you get down to the county and town level, not so much. At the town level, not all are being paid for what they do. Some volunteer as is usually the case with planning and zoning boards. Lots of aggravation without compensation.
When you get to town boards, there is some compensation but nothing that rises to the level of a full-time job. Supervisors? Some do okay while others need to be retired or have a job outside government.
I think one of the great mistakes made when it comes to income is to think everyone is a “bottom line” person who does what they do for a living just for the money. Sure, money is important. We all need it to live. But some people do what they do because they like what they do and see themselves providing a needed service.
To me, the biggest fools in the world are those who equate everything with money. It can buy you sex but it can’t buy you love. It can buy a house but it can’t buy a home. It can be a real ball and chain that entraps and takes away all the joy of living.
Why or why do we think nurses and teachers are over paid but have bleeding hearts for CEOs making millions and billions? The poor dears. The poor, poor dears!
It will be interesting gary to see what happens.
The other fly in the ointment is state aid from Albany. Not all county operations and school system operations are funded by property taxes. In the case of schools for example property taxes only cover around 30% of the tab, the rest comes from the state and federal government. I do not know those figures for county government services. I do know for example that a good hunk of the Mental Health services and a good hunk of our county Social Services are not paid for with local property taxes but with State and federal inflows.
I think you are correct if local property taxes funded 100% of this stuff and you simply returned those taxes to the people it would not be totally negative. But what you end up with is a net outflow for the county as local property taxes are not floating this whole boat.
As far as industry goes SLC and a good portion of Northern New York and upstate New York in general has been in decline for generations since the 1950’s or earlier. SLC runs 10% unemployment in the good times. So as far as policy goes yes maybe but it will take generations to turn this around to not rely on government.
Every time we cut a government worker, we cut a taxpayer, a consumer, oftentimes, a community participant/leader, long-term economic stability. For that, you gain an unemployment insurance collector, a medicaid, foodstamps, HEAP, WIC recipient … it’s a double whammy every time it happens. Down the road, they are likely to be a bankruptcy statistic. You cannot cut your way to prosperity. It’s one big downward spiral.
John. If you believe this to be true then doesn’t the same thing need to be said of ANY worker?
More4Less said “Times have changed to where the big money is in working for the government vs private sector.”
A quick FYI: The average NYS pension payment (statewide) in 2010 was $$24263. For a person who worked 37.5 years (what you need to work to get the maximum pension for your salary) that means their final average salary (the last 3 years) was $32360/yr. Compared to working at the counter in McDonalds that may be “big money” but the average private sector wage in the North Lawrence is over $$33956 (I couldn’t find one for the county as a whole. They were all ‘per-capita’ or household median). Yes, there are state and local workers in management including college professors, doctors, lawyers, etc. who make more but bear in mind that the pension figure above is an average of all NYS pensioners. I know for a fact that when I was a supervisor in DOL I made less than managers of local fast food places and many retail establishments and most county workers made less than me. The notion that public workers are the source of our problem and all we have to do is lay off most of them is a persistent myth. How soon and how easily we forget that our economic troubles are the fallout of an inadequately regulated securities market. Yet, hardly any of those folks have suffered. Indeed they are back to making more money than before while the TEA Party protects them from paying any higher taxes which are already lower than most of the rest of us pay.
Jim Bullard,
“A quick FYI: The average NYS pension payment (statewide) in 2010 was $$24263. For a person who worked 37.5 years (what you need to work to get the maximum pension for your salary) that means their final average salary (the last 3 years) was $32360/yr.”
but that average includes people who retired early. And some of those retired a long time ago when wages were lower, relative to inflation. Don’t forget part time local government officials. Also, retiring at 55 (40 for uniformed personnel) with a state income tax exempt pension, contributing nothing to the pension (tier I and II) or nothing after 10 years of service, and, in many cases, health care fully paid for is very good deal. Very few people in the private sector get it.
Jim – I take the government workers side because I am tired of people claiming that government workers – public employees – are paid more than private sector employees (doing the ame thing). It simply isnt true. It is also true that in countries where public employees are grossly underpaid, corruption is rampant. If you want your building permit approved – you pay the building inspector. Traffic violation? you pay the cop who flagged you down. Court case? pay the judge. Drivers license? pay or wait in line for 3 days straight. Etc. And it always costs more than you can afford but if you dont pay, you lose.
These cut backs are long overdue. This is just one example of the painful measures that must be taken in order to get our economic house in order. Our economy must go through some of these event sin order to pay down that debt accumulated by both the public AND private sectors. We as consumers are as much at fault as the irresponsible government leaders who have accumulated so much debt. For decades a false level of demand have been created through consumption using borrowed money. Producers, suppliers and service providers (government included) geared up to meet this demand. Now the credit cards, home equity lines of credit, and public bonding/borrowing are maxed out. Now we must pay the piper. The futures are down nearly 300 points this morning as the reckoning continues.
The one thing no one will mention and please don’t go calling me a Kevorkian but people today are living longer on SS and retirement benefits. When someone works 25 yrs and draws 3/4 pay for 35+ more (Uniform workers for example) it just isn’t sustainable. What’s the answer? I don’t know. For thousands of years people were family based. In the last few generations we have moved away from the family to let the government support us.
maybe we need to turn away from government for our support.
“The one thing no one will mention and please don’t go calling me a Kevorkian but people today are living longer on SS and retirement benefits. When someone works 25 yrs and draws 3/4 pay for 35+ more (Uniform workers for example) it just isn’t sustainable. What’s the answer? I don’t know.”
The answer is simple. Raise the retirement age. The problem is that the democrats will not vote for it. You heard senator Reid, “NO, NO, NO”.
In NYS we have gone from in 2007 where 1 in 6 New Yorkers qualified for Medicare. Now it is 1 in 3. New York needs to start following the Federal standards for these programs. Pay out what the Federal government gives us no more. These programs need to be used for the poor not for people that would have bought their own insurance if they didn’t have a “free” option.
Paul, first, Medicare isn’t free– you pay $115 a month for it, and to get anything like conventional health insurance, you have to have a supplemental policy that will cost you $100-200 additional per month. And buying your own insurance in NY state is ruinously expensive if you don’t qualify for group insurance– my wife is paying $1500 per month! You can get somewhat cheaper policies, but then your coverage is substantially less.
No matter how you slice it, our health “system” sucks! We pay 15-20% extra because we have private health insurance companies, and because they are (almost) all based on fee-for-service, we’re over-treated, overcharged, and the results are poor. We need a single-payer system!
Walker, I am just saying that if NY wants to get competitive with other states they need to start following the federal guidelines.
So were damned if we do and damned if we don’t . If we cut all these goverment and public workers there’s less being paid into the money system as far as earnings, health care, and benefits. So we have these budgets fed, state local. Unless they are cut substantially they’ll have to raise taxes. I don’t think any worker who works part time for 10 years should get a pension and paid health benefits. These rules are rediculous. Layer by layer we have to have a overhaul. If the goverment has excess money pay down the debt. So why have all these workers gone and worked for the governments feds and local state government and public entities over the years? . We have to honest with ourselves. Because our government has made it so hard for business to compete on a level playing field with the rest of the world . We have a huge trade imbalance. We import more than we export. We have to get back around to manufacuturing and exporting our products worldwide. Were a society surrounded by cheaply made goods brought in from other countries. Were’s the American goods ? Some but not enough. Its easier to work for the government or public entitiy then a company in your community if there are any left. We need to elect officials that have been in business and been sucessful. Not someone who has earned a living from the government.
“If we cut all these goverment and public workers there’s less being paid into the money system as far as earnings, health care, and benefits.”
DES, remember every dollar paid to a public sector employee has to first be collected in taxes from other individuals or businesses. Or in the case of things like the last “stimulus” package the money has to be borrowed and paid back with interest in the future.
O.K. we all realize that school taxes are the largest portion of our property taxes, right? No need to cap property taxes if Cuomo capped school taxes.
Where is all my losing lotto tickets’ monies going anyway?
What’s the way to have property taxes and school taxes seperated? or at least put into proper perspective? Should school taxes be paid along the lines of State, or Federal Income Tax?
Side note, does anyone see the similarity that Social security, pensions, etc are all one big Governmental ponzi scheme(scam) gone horribly wrong.
The new players entering the game are paying off the old players leaving.
Talk about unsustainability.
Peter Hahn says:
August 7, 2011 at 10:22 pm
“Jim – I take the government workers side because I am tired of people claiming that government workers – public employees – are paid more than private sector employees (doing the ame thing). It simply isnt true.”
I find it quite interesting that Tea Partiers and government employee advocates, two diametrically opposed groups- make the same exact logical fallacy: they confuse wages and total compensation (ie: wages/salary plus benefits such as health care, retirement, etc.). That is, anti-tax Tea Partiers dont realize that taxes are relatively low because a lot of income is tax exempt (ie: employer provided health insurance and retirement contributions). Similarily, government employee advocates fail to include the cost of benefits when comparing private and public sector incomes.
Peter they don’t do the (same thing) they work less hours have more time off and retire sooner than private sector employees. Their benefits are far more lucrative. Per capita income in past 12 months (2009 dollars) 2005-2009 $30,634 for nys residents.The average compensation for state employees is $66,600,not including benefits.
I see public workers all day long through my business. Business would be bankrupt with their inefficiencies and waste.
Please stop acting if we could not survive by paying all of them 1/3 less with realistic retirement. ( I guess including you) If they are so imoral that they would be corrupted by less pay do we really want them any way. Also your analogy is based on a third world model, here they would just look to find a better job in the private sector. Of course those jobs would be avaialable if government was sucking up all the money and credit.
Jim – we’ve been through these numbers before, and why those numbers you quote are meaningless and very misleading.
Yes my analogy is with third world countries, because those are the ones that do what you seem to want (grossly underpay public employees). You are correct in implying that the honest ones would just go get different jobs. Only the crooks would take the public jobs because they could supplement their incomes working salary plus commission. They would have to pay off the inspectors whose job was to keep them honest.
Scratchy – total compensation (including benefits) for public employees is very similar to private sector ones. Take home is less and benefits are more. Public Blue collar employees get slightly more than private blue collar employees, but public white collar employees get slightly less. Most state public employees are white collar.
Peter, you forget it’s a grossly underpaid private sector in the third world also. There for they have no alternative but government employment. Where are the studies on private sector pay and benefits being comparable to public sector. I found one study produced by a public union but please show me your facts.
When also needs to keep in my mind public sector employees job security. Ever try firing a teacher? The dead weight caused by employment of those who fail to perform increases costs and, arguably leaves less money to increase compensation of the other government employees. And public sector working hours are usually shorter than in the private sector.
Jim I gave you one last time. It was quoted by the public employee unions for obvious reasons. That doesn’t make it wrong. It was full of facts. There are others, and most come to the same conclusion.
Jim – this should get you to the original
http://www.epi.org/page/-/old/briefingpapers/BriefingPaper296.pdf?nocdn=1
Scratchy, don’t kid yourself, there’s plenty of dead wood in large private industries. Ever read anything about General Motors? The dead wood there was why they couldn’t get out of their own way. My impression is that, whether public or private, generally Small = Lean and Big = Fat. And I’ve worked in public sector jobs where 60 and 70 hour work weeks were not uncommon, at least some parts of each year.
I guess it depends on where you get your “facts” on which sector makes more.
The conservative Cato think tank has data showing that public sector employees make more than private sector employee (http://reason.com/blog/2010/01/05/public-sector-vs-private-secto). They like to compare average salaries of public employees with average salaries of private employees to prove their point. Of course, there are many types of jobs in the public sector that are not found in the private sector, but no matter, just ignore that.
Then we have the data published by Jeffrey Keefe for the liberal Economic Policy Institute, cited by Peter, which reports data more scientifically. Keefe comes to the opposite conclusion from the Cato Institute.
What we should be discussing is why middle class salaries have not increased at the same rate as those of the truly rich. The change in share of income of the top 10% has grown by 120% since 1979…. the share of income of the bottom 80% has actually decreased. And here some of us sit making the argument that the middle class guy has to make even less.
The truly wealthy have got to be laughing at us.
Its not just where you get your facts, but how you analyze them, (and exactly what gets compared to what). The liberal academics mostly claim public employees are paid slightly less than private ones (like 5%) whereas the conservative think tanks reanalyze the data to claim that public employees are actually paid a few percentage points higher than private ones.
The bottom line is that public employees are paid about the same as private sector ones (plus or minus a few percent) Thats all compensation included. Again – its a little better to be a blue collar public employee than a white collar public employee.
Walker,
Private companies that have a lot of dead weight either go out of business, restructure or are a monopoly.
“And I’ve worked in public sector jobs where 60 and 70 hour work weeks were not uncommon, at least some parts of each year.”
I assume you were working with a member of Congress?
Scratchy, they may go out of business eventually, but they can hang on for decades, wallowing around on the basis of past earning– GM, is just one of many examples.
And no, it was in higher education: a month before and after the start and end of every semester was super busy, and that adds up to a third of the year flat out.