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The Jeremiah Rant

Who benefits from the cant of decline?

America is so rich that even a sprawled-out, hollowed-out, shrinking metro like Buffalo-Niagara Falls has been growing in both wealth and income over the past decade. The statistics of income, productivity, and overall economic activity here are profoundly positive notwithstanding our region’s loss of population.

By the way, where do you think our people are going?

Tracking federal tax returns shows that, except for Florida-bound retirees who still flock there despite the nasty surprises that await (fees atop taxes, hellish summers while we enjoy heaven between May and October), the folks who are leaving here are leaving for places where taxes are higher—and living costs, too. Click on a handy link to an interactive map and see for yourself: New York City, Southern California, and Washington, DC are the three top destinations for non-retirees who put Buffalo in the rear-view. New York City, by the way, is growing so fast that it more than offsets Upstate population loss; New York State grew 2.1 percent since 2000.

So it must not be the taxes, otherwise why would people leave here to pay more elsewhere?

Maybe it’s the messaging from our business elites and their echo-chamber local media that scares us into leaving. The Jeremiah-style rant is off-putting: Jeremiah was that grimmest of Old Testament prophets, the loud one who scolded and warned that doom was about to befall everybody, notwithstanding how many times he was proved wrong.

Everybody here knows the Upstate jeremiad by heart. The New York State workforce is down from 210,000 full-time state workers in 1988 to around 160,000 in 2010, and the inflation-adjusted cost of them has been about level for a decade, but public employees are nevertheless blamed for our allegedly impending doom. The Bureau of Economic Analysis says that notwithstanding our allegedly worst-of-the-worst business climate, the Buffalo-Niagara Falls metro economy grew from $36.2 to $38.7 billion inflation-adjusted dollars between 2001 and 2009. Notice that the growth in the economy includes the sharp recessionary years of 2007 to 2009; the latest figures show that New York State’s economy is rebounding steadily, which may be why the Cuomo administration may be able to get the budget crisis solved more quickly than anybody expected as recently as a year ago. Why is the state economy rebounding? Once again, it’s the strength of high-tax, high-cost New York City.

The Jeremiahs also rant about public employee pensions. Local governments in areas with lots of retirees tend to rely on public employee pensions, some of which get recycled into local services, as retirees use their pensions to local property and sales taxes. The flat-rate taxes are, by their nature, broad-based: Most people pay them. But a recent line of ranting has it that states should tax middle-income households more and high-income households less because high-income households have fluctuating incomes—and therefore make government revenues unpredictable—compared to lower-income households. This particular argument, one expects, may be hard for the Jeremiahs to win, given the fact that over the past 30 years, all (i.e., 100 percent) of personal income growth in America has gone to the highest-earning households and none (i.e., zero percent) has gone to the rest, and that the income tax is the only fair and economically rational way to fund public services because nobody else has enough money.

Nevertheless, the ranting about allegedly high public-sector salaries and pensions is loud and will continue to be. But credible analysis by straight-up outfits like Moody’s Investor Services demonstrate that it’s simply not true. Worse, the harsh language about relatively stable employee benefits for public workers masks the fact that fewer and fewer private-sector workers have old-style retirement security.

All the ranting obscures not only Upstate New York’s core strengths but also its true challenges. As the state budget is about to land on us, let’s tune out the shrieking and take a tour of the real landscape on which that budget will work.

Shrinking loudly

The new Census data is in, and it’s a lot like last year’s Census estimates: Upstate New York’s population is shrinking in absolute numbers and relative to the rest of the country, too. That’s no surprise to Artvoice readers.

What should bother us is that our city and our first-ring suburbs are still hollowing out. Erie County’s population dropped by about the number of people who left Buffalo, Cheektowaga, Lackawanna, Tonawanda, and West Seneca. Yet population within the little-box empires of Amherst, Clarence, Grand Island, Lancaster, Orchard Park, and Wheatfield rose, indicating that the combination of job options, housing options, lifestyle amenities, and the perception of preferability favors some neighborhoods in our region over others. The problem with this natural and expectable shifting within the region is this: We are still all stuck with paying for the old stuff, and the price of the new stuff doesn’t reflect its true costs.

Housing is an ongoing crisis here. New housing is still being built, and old housing in the cities of Niagara Falls and Buffalo, and in their close-in suburbs, is being abandoned. Governor Cuomo and his policy team have had precisely nothing to say about this crisis, and here’s why it’s a crisis: If the region’s population continues to sprawl outward as the region’s population continues to shrink over the next two decades, then the cost of maintaining roads, sewer and water lines, schools, policing, fire-suppression, emergency services, and other public infrastructure and services will continue to rise even as the local tax base will continue to shrink. One cannot simply stop paying to manage and maintain sewers just because folks slip over a municipal boundary to another flushing site, yet the absence of any state-sponsored drive to eliminate (or obviate) municipal boundaries dooms the cities and towns to shrinkage. Why? Simple: Within any town boundary, the surest way to increase revenues in the short term is to increase the supply of housing. But doing so in a regional marketplace that has a huge over-supply of housing has demonstrated, over and over again, to have the effect of shrinking the value of existing housing in the cities and in the old suburbs. Rolf Pendall, formerly of Cornell University and now of the Urban Institute, called Upstate New York the worst case of sprawl-without-growth in America. And while the economists praise Upstate for never having seen the housing boom and the follow-on bust that occurred elsewhere in America, don’t be too cheerful: The boom-and-bust didn’t happen simply because the market for housing here is so over-saturated with supply that not even the most determined speculators could succeed in bidding up prices. But what did not rise can and will, unless our governor acts, fall. With a shrinking supply of bodies in an over-expanded supply of buildings already upon us, the question is not who will be left to bid prices up but who will be around to pay anything like a reasonable asking price.

The only sane way to achieve some stability is to stop the low-density development that threatens the value of existing houses. But if we have another county executive who prevents land-use planning on a county-wide basis, and another governor who ignores the impending devaluation of local housing stock, and officials at all levels who refuse to empower genuine metropolitan planning organizations, then Albany will be doomed to picking up an ever-greater bill.

So why won’t the Jeremiahs address the problem of too many buildings? Simple: The people who fund the Buffalo Niagara Partnership and Unshackle Upstate make money from the current sprawl system. They would rather mislead you with their rant about local property taxes than ’fess up that they are the very people causing the problem.

Here’s another crisis that the jeremiad doesn’t address: low-wage work. Last week, we showed you how the top two percent of households in Erie County had more income than the bottom two-thirds of households. We’re not a destitute region—not by any means, not with 40,000 households in Erie County reporting annual incomes of over $100,000. It’s just that 260,000 households, well over 60 percent of our neighbors, reported incomes of less than $40,000. Yes, we have lots of retired people, and retired people typically have modest incomes; it’s a good thing when those modest incomes chug along, as they do for people on VA, state, or teacher’s pensions. But the median family income in Erie County is in the low- to mid-$40,000 range. Working people here make less than working people even in Rochester, where the median household income is about $10,000 lower than in Downstate. We have more people in the workforce making less money; they are sprawled out, which means that the portion of their income that has to pay for transportation costs is higher than it should be and that their taxes have to pay for maintaining and servicing more miles of the grid of utilities than they should have to. And nobody who shapes the public discourse says a thing about it—not even the big local foundations that are allegedly in the business of helping lead the community.

Expect the jeremiad to continue in Upstate New York, which was once famous for its fire-and-brimstone preachers whose rhetoric was so hot that Upstate got known as the “burned-over district.” But before we empty further, a calmer voice should prevail. One would hope that that voice will come from Albany, or from New York City, which, after all, is the source of the funds that the Jeremiah crew screams for.

Bruce Fisher is visiting professor of economics and finance at Buffalo State College, where he directs the Center for Economic and Policy Studies.

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