In yesterday's post I noted parts of Wanda Berry's note on NextDoor; I should also have mentioned a very important point she brings up in that note:
Gap Elimination Adjustment: An Explanation from Cap Region BOCES on Vimeo.
Wanda and many others are hoping that if we all get together and say "No!" then the state legislators will say "Okay" and the schools won't be short of money any more. I sympathize very strongly, but I think we need to consider the context. What are we actually asking the state legislators to do? They want to please their voters; they already want to restore school funding. If they restore school funding, they must either reduce funding for something else, or else they can raise taxes. (Of course they can probably borrow money now, but that means that at some future time they'll be either reducing funding for something else, or raising taxes. Borrowing money now to fix it later is part of how we got in this mess.) This, of course, brings us to the Report of the State Budget Crisis Task Force (PDF,page 7)
Exactly how high are our taxes, comparatively speaking? That's complicated, because it involves income taxes and sales taxes and property taxes; for Alaska it also involves some weird taxes which don't actually get collected from the individual, they're based on oil movement, but apart from that we can sort of say that NY has the highest tax burden outside Washington DC in the state tax-burden chart. That's a statement that needs lots of qualifiers about what you're including and excluding; some are noted at the bottom of the chart. Some charts will put NY as low as #5 in state tax burden, but we can definitely say that a lot of New York residents and New York businesses notice, now and then, that they could be paying a lot less by moving to another state. And what happens then? Sometimes nothing. Some of us pay, and stay to pay again. For others... Income Migration: What Does It Really Mean For States? - Forbes
Of course some of the migration goes to neighboring states, which do have lower state taxes; Florida has no income tax at all. But as our taxes rise, it becomes increasingly attractive for high-income Manhattan residents to start thinking: how much of this could I do on the Web, or by teleconference? As the New York Times put it a year ago Midlevel Finance Jobs Leave Wall Street as Firms Cut Costs
They might, or they might not. State aid cuts may go away, but they might expand. They might expand a lot. Ask for state aid, hope for state aid, but don't count on it.
(My inclination is to agitate for mandate relief more than increases in aid. NYS education costs twice as much per pupil per year as the national average. We should work on that.)
Whether or not the merger goes through, it is time for us to believe in democracy enough to mobilize a citizens’ effort to get the state legislature to get rid of the Gap Elimination Adjustment, which is the real threat, along with our declining school age population.Indeed, while the proposed merger is all about promised state aid; one irony is that it is also all about previous promises of state aid being broken. More concretely:
- as often discussed, we wouldn't be discussing a merger that doesn't actually save money, if there weren't state incentives offering an average 5.3%-of-budget aid for fourteen years, plus permanent (?) reclassification of Hamilton as part of a "high needs district". But also,
- we wouldn't be discussing a merger at all if it weren't for a fiscal squeeze resulting from the "Gap Elimination Adjustment", a formula by which the state has refrained from paying millions that had been promised.
Gap Elimination Adjustment: An Explanation from Cap Region BOCES on Vimeo.
Wanda and many others are hoping that if we all get together and say "No!" then the state legislators will say "Okay" and the schools won't be short of money any more. I sympathize very strongly, but I think we need to consider the context. What are we actually asking the state legislators to do? They want to please their voters; they already want to restore school funding. If they restore school funding, they must either reduce funding for something else, or else they can raise taxes. (Of course they can probably borrow money now, but that means that at some future time they'll be either reducing funding for something else, or raising taxes. Borrowing money now to fix it later is part of how we got in this mess.) This, of course, brings us to the Report of the State Budget Crisis Task Force (PDF,page 7)
The conclusion of the Task Force is unambiguous. The existing trajectory of state spending, taxation, and administrative practices cannot be sustained. The basic problem is not cyclical. It is structural. The time to act is now.From their point of view, the elimination of the Gap Elimination Adjustment would be a big step -- in the wrong direction. If they remove the GEA, then the painful decisions to be made get worse -- do we cut our already-underfunded pension plans, do we cut our massive health care payments, do we just let the infrastructure rust? Or -- the most obvious answer -- do we raise taxes? Hmmm... raising taxes sounds very good, doesn't it? Or does it?
Exactly how high are our taxes, comparatively speaking? That's complicated, because it involves income taxes and sales taxes and property taxes; for Alaska it also involves some weird taxes which don't actually get collected from the individual, they're based on oil movement, but apart from that we can sort of say that NY has the highest tax burden outside Washington DC in the state tax-burden chart. That's a statement that needs lots of qualifiers about what you're including and excluding; some are noted at the bottom of the chart. Some charts will put NY as low as #5 in state tax burden, but we can definitely say that a lot of New York residents and New York businesses notice, now and then, that they could be paying a lot less by moving to another state. And what happens then? Sometimes nothing. Some of us pay, and stay to pay again. For others... Income Migration: What Does It Really Mean For States? - Forbes
New Yorkers are subject to some of the highest state tax rates in the country, so it is not surprising that commentators have suggested residents will leave the state in droves. And it appears to be true. As reported by the Tax Foundation, between 2000 and 2010, New York lost $45.6 billion in income to other states. That’s far more than any other state. The next closest is California, which lost $29.4 billion over the same period.Or as the NYT put it two years back, At 102%, His Tax Rate Takes the Cake - Common Sense - NYTimes.com
This is a significant amount of income migration. But where did it all go? The answer, not surprisingly, is that much of the income went down south. Florida reportedly had a net gain of $67.3 billion. ...
Mr. Ross said he asked his accountant what he could do. “He said, ‘Fire everyone here and move to Florida,’ ” according to Mr. Ross. He employs 10 people in his New York office.
Of course some of the migration goes to neighboring states, which do have lower state taxes; Florida has no income tax at all. But as our taxes rise, it becomes increasingly attractive for high-income Manhattan residents to start thinking: how much of this could I do on the Web, or by teleconference? As the New York Times put it a year ago Midlevel Finance Jobs Leave Wall Street as Firms Cut Costs
New York’s biggest investment houses are shifting jobs out of the area and expanding in cheaper locales in the United States, threatening the vast middle tier of positions that form the backbone of employment on Wall Street.When you ask the legislator to raise taxes again, you're not just being generous with your own money. You're asking that legislator to bet the state's fiscal stability on your hope that these people, people whose lives revolve around the way they care about money, will decide that they don't really care about money all that much: they'll stay, and pay again.
The shift comes even as banks consider deeper staff cuts here, which could undermine the state and city tax base long term.
“Places like New York or London will remain financial centers, but most of the players are taking a much harder look and asking whether they can move large numbers of jobs...”
They might, or they might not. State aid cuts may go away, but they might expand. They might expand a lot. Ask for state aid, hope for state aid, but don't count on it.
(My inclination is to agitate for mandate relief more than increases in aid. NYS education costs twice as much per pupil per year as the national average. We should work on that.)
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