Welcome to European Tribune. It's gone a bit quiet around here these days, but it's still going.
This has been the main issue in New York State for a long time, and in the USA, where our taxes are localized to a great degree, we have microcosmic tax regimes under several layers of bureaucracy.

In New York, there has always been the problem of a very rich downstate, and an increasingly post-industrial upstate. The New York City pols complain that too much of  NYC's wealth is spent on maintaining decrepit upstate, while the upstaters complain that, first, we are saddled with NYC-style regulations and tax structure which make development here unwieldy, and secondly, our natural resources are exploited and the profits sent downstate.

The general argument upstate goes like this: let us use our own natural resources, let us create a tax structure that makes sense for us, and then we won't need any help at all from downstate.

Some of the tax provisions which create imbalances: because New York has ultra-rich people living in Manhattan, the government has to provide a very high degree of social services so that blue-collar workers can co-exist among the rich, and thereby service the city. This means the best government health care, the best social safety net, the best subsidized housing, the best wage protection, etc. For instance, for a contracting job above $50,000 non-union bids are not acceptable.

Upstate businesses are saddled with this tax structure which is extremely difficult for any form of development since we don't have the deep pockets of downstate. Even our non-profits, such as charter schools, can't afford to build new classrooms because of the regulations.

Then we have a bounty of natural resources up here, hydroelectric power and the Niagara River which runs into Niagara Falls. My area, Buffalo, is renowned as one of the first adopters of electricity in the 19th century. Today, much of the proceeds of that power are sent downstate to fund the massive public housing system of New York, and to provide cheap energy for NYC. Massive amounts of free electric are then sent to downstate businesses, some of whom have jobs subsidized by free energy to the tune of $1 million per job. Very few credits remain up here because we don't have those sorts of huge businesses, and in addition, we are hurt by the physical structure of the hydroelectric plants themselves. For instance, for 8 months of the year, a gigantic ice boom is lowered into the Niagara River to prevent ice chunks from clogging up the hydroelectric intakes. In the midst of an already cold Buffalo winter, our temperatures are dropped another 10 degrees by this natural air conditioner, thereby contributing to higher heating costs. Odd, but there it is.

None of this analysis takes into account a state regime of very high taxes (highest in the USA) and multiple blankets of local government (country government, city government, school district, all of which charge the highest taxes in the nation, through either property taxes or else through sales taxes).

I short, it seems evident to upstaters that multiple tiers of tax structures, one for upstate and one for downstate, would suit us better. In addition, a policital structure which monopolizes one regions resources and forces upstaters to pay more for energy that exists in our backyards, is also not to our benefit.

I wrote this to show that though poor regions such as my own are often big benefactors of the largesse of richer cousins in the region, there are often structural factors in the tax and political system which create these imbalances in the first place.

Consider this: if you are poor and need assistance for health care and living expenses from the state, your best bet is to come to New York where we fund social services better than any other state. But you're not going to live in New York City where the cost of living is astronomical. You're better off living in cheap upstate. Then the state mandates that 50% of all medical and social service costs will be borne by local communities. In itself, that provision is enough to bankrupt these local communities.

by Upstate NY on Wed Aug 13th, 2008 at 12:19:39 PM EST
Um, as you point out, there are some pretty massive tax transfers. Local government finances upstate are quite shaky. They'd go bankrupt if they were forced to do without the tax money from NYC and the suburbs that is funneled through state government grants. It's a poor region which has better services than it can afford courtesy of the wealth from downstate - what matters is net transfers, not gross ones. You won't be building anything without money from NYC region. Your social services will collapse. Note again, yes, local governments pay 50% (or rather 25 - half is federal) of Medicaid costs, but some of that comes from downstate. Nor is upstate better for the absolutely destitute than NYC - yes, you get cheaper rent, but that doesn't compensate for better NYC social services, easier access for rent regulated housing, and good public transport (cars cost money).

Given that you also seem to be complaining about high taxes and 'anti-business' regulations, it sounds like you think Upstate would be better off as a northern version of Mississippi.

by MarekNYC on Wed Aug 13th, 2008 at 12:52:17 PM EST
[ Parent ]
I question your underlying supposition that upstate would go bankrupt if not for the tax transfer. If you measured the subsidization of cheap energy for downstate (which is in the hundreds of millions) and then also unshackled the onerous mandates from upstate, this region would be a lot better off. For a $250,000 house up here, we pay $10,000 in property taxes, so this isn't a low-tax argument. The comparison to Mississippi is just wrong. They spend $1,150 per student in the schools. We spend $13,000 per student. I wasn't calling for an end to taxes. Rather, I was calling for an end to laws which are designed strictly for downstate conditions, and which present an undue burden on upstate citizens. In addition, the New York Power Authority sits on a lot of cheap energy which they give for free mainly to companies in New York city, though increasingly in Albany as well. Meanwhile, the profits from energy sales subsidize not only cheap electricity for NYC citizens (we pay more for electricity, and heating up here), as well as ALL New York City Public Housing. Look it up: that's subsidized by the power authority. So, we're talking about a city such as Buffalo, that receives tens of millions in downstate taxes, while the Western NY region sends hundreds of millions in energy credits downstate. Meanwhile, mandates on Medicaid and such--which are the most generous in the whole country--place an undue burden on localities up here that can't afford the 50% mandate.

As for social services upstate, why are they better downstate? I don't get that. The number one issue is housing. It's cheaper up here. Then food: it's also cheaper up here. Cars? We're talking about people receiving social services, living in the city, where they take public transport such as the subway or buses.  A 500 square foot apartment in New York City goes for $500k. Up here it goes for $50k, if that.

Between New York City and Mississippi there is a grand canyon of possibilities. Upstate would do much better which a different tax regime (I'm not even calling for lower taxes, just taxes that are distributed differently) and the ability to sell its natural resources locally.

by Upstate NY on Wed Aug 13th, 2008 at 05:16:37 PM EST
[ Parent ]
Yes, the NYCHA receives funding through the power authority, but look at the overall net funding - we're talking billions here. The most recent figures I could find (2001 - PDF), showed a net NYC (by residence) contribution to the state of $7 billion, plus another $5 billion from the suburbs. There was a substantial tax hike soon afterwards, and I read that ninety percent of it fell on the NYC metro region.

 I don't know about energy prices, but I'm paying $0.25 per KwH - that's one of the highest rates in the country - how much more are you paying? Also, housing is far cheaper there, but let's not exaggerate - the poor aren't buying small $500K apartments - they're renting small $1000/mo ones. Transport matters too - even in the best areas upstate, living without a car is far more inconvenient than here, in many places it is virtually impossible. And the reason why social services are better down here is a) we're richer, b) we choose to pay higher taxes to fund them - there's a hefty city income tax.

I can deal with the fact that the NYC metro area subsidizes poorer parts of the state, I can even understand calls for it to do more, but complaining about the City sucking away money from Upstate when it is actually the reverse is really, really annoying. It's a longtime meme of the Republicans, both State and Federal. And on both counts it is the reverse.

by MarekNYC on Wed Aug 13th, 2008 at 06:48:58 PM EST
[ Parent ]
Just one more thing, you mention the health care for the poor requirement whose funding is divided up 50% federal, 25% state, 25% local. Just how badly would it have to be cut Upstate if you got to choose what level to have it while paying the state share as well? Those with decent private sector health care plans might be happy, but what about those without?
by MarekNYC on Wed Aug 13th, 2008 at 07:31:09 PM EST
[ Parent ]
The problem isn't with the percentages per se, it's with the complete demographic imbalance. Buffalo has more people on Medicaid as a percentage than any other city in America. Buffalo is also the poorest city (not in terms of GDP, business and the investment of the community in the city is relatively healthy up here) in terms of people living below the poverty line in the entire state of New York, a state with the most generous gov't health care in the country.

I want a single payer tax system. I want gov't care. But it would be best to do it nationally and have EVERYONE share in the burden. When you do it piecemeal, it doesn't work. When there's such a huge imbalance between the number of poor people and middle class people, then the local burden that you mention of 25% falls heavily on those paying the taxes. New York simply has more rich people as a percentage to poor people, so the medicaid mandate is much less of a burden.

People in Buffalo look at similar cities such as Providence and Pittsburgh and wonder, what's the difference? The answer isn't that we need more downstate funds. The answer is in restructuring gov't so that energy resources are shared equitably and also that the state regulations are more flexible. There are quite a few companies in Buffalo that apply for the energy credits every year, but those decisions are made by those with the political heft (i.e. not people from Western NY).

by Upstate NY on Wed Aug 13th, 2008 at 08:41:52 PM EST
[ Parent ]
Hah! we have an upstate downstate fight on ET.

Just because Republicans have made the same arguments is no reason to dismiss the argument.

We are really annoyed with NYC. What can I say? And my area is entirely Democrat. Dem mayor, Dem council members, Dem state congresspeople, Dem Fed congresspeople. They all have the same consensus on the situation. The GOP is absolutely dead up here in Buffalo. They won't even run anyone against the Democrats. Both our Reps are Democrats.

The billions you're quoting are also spent downstate. The entire state budget for state aid to local government totaled $1.5 billion in 2007, so if New York City is shelling out $7 billion, that money gets sucked up by the state mostly. Of the $1.5 billion, Paterson is about to cut $125 million due to the financial crisis. But New York City got $310 million of that state aid, while all the rest of the upstate cities got $550 million, and the suburbs and towns took the rest. So, the billions collected in New York don't all travel up here. The vast majority of it doesn't, in fact. Look at the Indian Casinos they've opened up here. The state  taxes on the casinos (largely local gamblers) number in the hundreds of millions. The state takes 93% of the tax revenue, and gives 7% to the locality. Why is the state taking 93% when the vast majority of gamblers (90%) are local?

We pay .54 per KwH. As I said, I know NYC's electric is subsidized. Ours is double. Not to mention our heating costs soar in the winter so that the power authority can generate more power by lowering the ice boom.

I live in the inner city. We have a lot of transplants up here who are poor, and undeniably the low costs of upstate with the same social services as downstate create a magnet for the region. We have the same exact social safety net as New York City, so again, why are the social services there better? They should be the same. I already quoted to you my property taxes which are $10,000 for a $250k house. 9% sales tax.

Let me put it to you this way. The Southern New England states pay 1/3rd of the property tax I do. Let's compare Buffalo to Providence, RI. Two postindustrial cities, both of which rely on their university and banking sector to prop up the city (Buffalo also has trade with Canada that props us up). Providence is flourishing with a tax structure that suits it. No one is accusing Providence of being another Mississippi. It's considered a solidly Democratic state, a liberal state, perhaps the most liberal in the entire USA. So, why can't Buffalo be like Providence? That's all I'm saying. It should be like Providence.

If you talk to upstaters, they're not asking for more tax money. That's not the discussion. It's all about energy resources and state mandates. Buffalo is one of the poorest cities in the country not because there are no industries, universities or big companies up here. It's because we have a huge community of people who are on government assisted social services. This is very unlike New York City. When an imbalance is created because of the mandates, then it becomes next to impossible to invest and improve the city.

by Upstate NY on Wed Aug 13th, 2008 at 08:34:07 PM EST
[ Parent ]
[Apologies to Eurotribbers not really a 'Euro' topic, just intrastate regional debate - a very longstanding one]

Actually I'm not just including the grants, but rather all state government spending for example the 25% share of Medicaid, state agency spending etc. But sure, Albany gets a disproportionate amount - it's a capital with the jobs that go with it. As far as the other state revenue collected there - of course folks in upstate pay various taxes and fees, the point is that the state spends more there than it collects, while downstate it does the reverse. The problem with Take a look at that report I linked to.

Providence isn't Buffalo. A much smaller place, so the university matters more (a quarter million people at its peak vs. 600,000), plus it's located within a wealthy metropolitan area - a 45 min drive or an hour by commuter rail from Boston. And it's the state  capital, albeit of a rather small state.

We pay .54 per KwH.

You sure about that? I just looked at the National Grid page and they report significantly lower prices for residential customers than my ConEd bill ($0.045 for delivery charge, about another half cent in related fees, about $0.103 for the supply charge, plus taxes. By contrast my delivery and supply charges are $.077 and $.0138 respectively. About ten percent gets added on in various taxes and surcharges, and there's the fixed monthly service charge)

by MarekNYC on Wed Aug 13th, 2008 at 10:07:25 PM EST
[ Parent ]
I screwed the KwH up. I was taking it from my bill and transposed the period on the delivery. My charges are lower than yours, .047 and .129. 11% surcharge, $17 monthly fee.

Regardless, this is the least of our energy concerns. It's just a quibble (though the ice boom is a very real problem for us, and it costs us big $$$). The main point is that the power authority gives free power away.

Your most important sentence in the previous post was chopped so I couldn't make heads of tails of what you were saying.

I've studied the ins and outs of this pretty thoroughly, and if I had a chance to vote tomorrow to be rid of Albany and downstate influence, I would vote YES. I'm certain that our high taxes and northeastern liberal orientation would remain up here, but the area would be transformed.

You say the state spends more up here than it collects but as I said, it does very little to stoke the economic engines here. In fact, it just hampers it with all sorts of obstacles. The capital region has received over a billion and a half in seeding for business in the last 5 years. Western NY has received less than $50 million. Bruno's area is now contributing to the state coffers.

Businesses here apply for energy grants all the time that would bring a lot of jobs. For instance, Toyota was interested in building a factory here (we were competing with S. Ontario and Alabama). Ultimately, Toyota went with Ontario, and the rejection of their cheap power bid was one of the main reasons why. Meanwhile, companies in the capital region are subsidized well beyond the value of each individual job.

I've talked to university presidents who scratch their heads at the backroom dealing and pork in this state, a state that sends taxpayer money to fund programs at private schools while it starves the state university. It's bizarre how parochial and cutthroat these guys are. If you were in a private room with people from the SUNY system (not SUNY central) you would hear them blasting the state gov't. In NYC, the SUNY system is considered the place for the not-so bright kids, since the private school mentality dominates. In other states, they readily understand that the state university system is the economic engine of the state. That's where the vast majority of the citizenry is educated, and where incubation for business occurs. So the U. Buffalo law school is in dire need of money, and instead the pols vote for taxpayer money to set up a school at St. John's Fischer. Bizarre. And meanwhile, the tuition is 1/3rd of that charged for public Ed in nearby states (Pennsylvania and Massachusetts).

by Upstate NY on Wed Aug 13th, 2008 at 11:14:19 PM EST
[ Parent ]
The capital region is upstate, it's yours - I'll even throw in Shel Silver for free ;)
by MarekNYC on Wed Aug 13th, 2008 at 11:22:43 PM EST
[ Parent ]
LOL, it used to be. It's been Bruno-ized. That train only takes 2 hours, my friend. Nice catnap for a downstater.
by Upstate NY on Thu Aug 14th, 2008 at 09:21:38 AM EST
[ Parent ]
I just noticed you messed up the supply charges as well. Yours should be .138 and not .0138.

Remind me to never talk numbers and taxes and charges when they are measured in decimal points.

by Upstate NY on Wed Aug 13th, 2008 at 11:15:59 PM EST
[ Parent ]
[Apologies to Eurotribbers not really a 'Euro' topic, just intrastate regional debate - a very longstanding one]

I found it interesting. Not sure I'm able to make heads or tails of the details, but interesting none the less. (Also a valuable reminder that The Big Neighbour To The West is not a monolithic entity.)

- Jake

Friends come and go. Enemies accumulate.

by JakeS (JangoSierra 'at' gmail 'dot' com) on Thu Aug 14th, 2008 at 02:58:36 AM EST
[ Parent ]
I am interested by one fact you mentioned:
for a contracting job above $50,000 non-union bids are not acceptable.

could you please elaborate / link to sources?

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Aug 13th, 2008 at 01:52:06 PM EST
[ Parent ]
I was referring to the Wicks' Law. Apparently, they just recently amended it a couple months ago...for the worse for upstate.

I should have written that this is only for public contracts, not private contracts. Sorry about that.

They law mandates that all contractual work for a job is split, which presented a burden to general contractors who could not subcontract out to others. This meant that only larger companies (which are naturally unionized) could do the job.

Here's more explanation: http://buffalonews.typepad.com/strictlybusiness/2008/05/who-benefits-fr.html

The new law lifts the ceiling considerably off of $50,000 by a factor of 10, but then a new additional mandate was put in. Only companies with apprenticeship programs could bid, which is effectively the same obstructive mandate as the prior Wicks law since again--small non-union contractors don't have apprenticeship programs.

I'm all for unions, but the fact is, this law makes sense in New York City where even an ordinary construction job will run into the millions. Upstate, this is too big of a burden.

by Upstate NY on Wed Aug 13th, 2008 at 05:05:24 PM EST
[ Parent ]
Thanks for the info and the link. I had understood it was for public contracts. It's interesting.

"Dieu se rit des hommes qui se plaignent des conséquences alors qu'ils en chérissent les causes" Jacques-Bénigne Bossuet
by Melanchthon on Wed Aug 13th, 2008 at 07:14:44 PM EST
[ Parent ]


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