Asheville – A special issue of the Manhattan Institute’s City Journal, published earlier this year, had the title, New York City: Reborn. It inspires readers to believe they’ll actually find inside recipes for making COVID-ade (because life handed us a COVID). There were a couple stories of “silver-lining” entrepreneurs with a zest for “pivoting.” But most of the content was a rehash of COVID, crime, protests, and regretted political decisions.
In a roundabout way, an article by Steven Malanga did provide that silver lining. “The Bill Comes Due,” subtitled, “New York’s next mayor will have to contend with a fiscal nightmare,” made Asheville’s and Buncombe County’s progressive leadership look mild. Unfortunately, there are reasons to believe at least some local leaders are trekking in the footsteps of Bill de Blasio.
Malanga reports de Blasio inherited a healthy, growing economy from Mayor Mike Bloomberg, “and immediately started spending money liberally.” This already triggers memories of local governments spending with reckless abandon over the last decades as if knowing the federal government would bail them out. As government communications became more playful and less numeric, citizens inquiring about inflation, interest, and the possibility of eating the goose that lays the golden eggs, sort of got the brush-off.
In what follows, it is acknowledged that much can be said about the impracticability of comparing local government budgets; for example, responsibilities are distributed differently between municipalities and counties in different states. Even departmental functions can vary across jurisdictions, as was evidenced in how both NYC and Asheville “defunded” their police by transferring activities and personnel to other departments.
For general impressions, though, Malanga stated that, during the eight years of de Blasio’s tenure, NYC’s budget increased $25 billion to $97.8 billion. By way of comparison, the City of Asheville’s buBget, including enterprise funds but not fund balance, went from $141,298,619 to $199,800,907. In other words, Asheville’s budget “only” went up 41% over the same period NYC’s astronomically skyrocketed 34%. Malanga notes the rate of inflation could account for only 9% of those calculations.
Malanga didn’t discuss increases in the tax base, the point being that governments are taking on more roles and being more generous with OPM (other peoples’ money). Incidentally, Asheville’s adopted budget for FY2021-22 is $215,372,768; after budget amendments, it is not inconceivable that the actual year-over-year increase will be 10%. Over the same period, Buncombe County’s general fund increased from a “restated” $258,481,150 to $318,793,026.
De Blasio was faulted for giving the teachers’ union everything they requested, adding 30,000 fulltime employees to a workforce of 270,000, and negotiating retroactive pay raises for unionized employees that cost $5 billion in just the first year of payouts. The balance of the payouts will, of course, be the problem of de Blasio’s successor.
In NYC, where some pension plans still take the form of defined-benefits plans, unfunded liabilities for pensioners grew $25 billion under de Blasio to $100 billion. During the same period, NYC expenditures on healthcare, for which employee contributions are practically zero, increased annually $2.5 billion for retirees and $5 billion for working employees. Nearly half the police department’s budget now goes toward healthcare and pensions.
Fortunately, local governments in North Carolina don’t have to worry about extenuating circumstances like these; the state requires local governments to set aside funds to pay pensioners. As an added bonus, Buncombe County’s former interim manager George Wood guided the commissioners to the realization that their “rich” benefits program was out-of-alignment, not sustainable, and in need of remediation.
Cooperating with the teachers’ union, De Blasio “fattened the schools’ budget 50% to $30 billion annually.” In Asheville-Buncombe, this might not be objectionable to vocal citizens siding with teachers. There have, however, been longstanding concerns that too much school funding is being spent on administrators and not children. A particular boondoggle highlighted by Malanga is de Blasio’s expansion of pre-K for four-year-olds of indigent families to universal pre-K for three- and four-year-olds.
For the current fiscal year, Buncombe County has budgeted $3,745,440 for pre-K. The funding should provide pre-K for 480 students, but this is only about 10% of the number that would be served under mandatory, universal pre-K for three- and four-year-olds, which is the ambition of the commissioners spearheading pre-K expansion.
Another recipient of windfalls under de Blasio was “health and mental hygiene,” a department which he grew 29% without a dazzling, commensurate increase in outcomes. ThriveNYC, a program led by de Blasio’s wife, “has been criticized for concentrating on nebulous mental-health problems of the general population instead of services for the seriously ill.”
Malanga reported that NYC’s total debt increased more than $17 billion under de Blasio. As a result, debt service is projected to increase 32% to $9.2 billion annually, which is just slightly more than the current budget’s overrun. The pandemic and an increasing number of pensioners, whose fund is often dipped into to patch budget shortfalls, have not helped. NYC’s budget balancing strategies, which most Asheville-Buncombe representatives would only approve as a last resort, include using one-time funds instead of making structural changes and appropriating reserve funds. New York’s Financial Control Board, in fact, “identified significant risks,” in NYC’s budget, including, “unspecified savings” that will have to be negotiated with labor unions and reductions in overtime with no changes to drivers thereof.
Back to the bright side, many productive New Yorkers, disgusted with the way the city has been run, are leaving. Perhaps many will move to Asheville and vote.