If you care about New York City, reading the 2012 Budget Summary, which was released on Friday, is an important responsibility.
Although its 65 pages may seem daunting, the quality of the writing and the clarity of the prose makes it as easy to read, or easier, than the typical startup pitch or Board deck.
This graph is the most distressing in the entire budget deck — with declining headcount, pensions are now almost equal to what we pay current employees:
You should read the whole thing, but here’s my twelve bullet summary:
1. The State government and the guys in DC are really cutting the amount of dough they send our way.
2. New York City has 16,000 fewer employees than 2001…
3. …but spending on salaries and wages has increased from $3.8 bn to $10.8 bn; and spending on pensions has increased from $1.3 bn to $8.3 bn over that same period.
4. If the State is giving us less money, we think they shouldn’t put so many rules on us.
5. We got lucky: City tax revenue is projected to be up $1 bn in 2011 and $1.1 bn in 2012.
6. We’ve stopped building in New York City.
7. Education expense has increase at three times the rate of inflation despite the same number of teachers (113K teachers in ’02 vs. 109k now).
8. New York City’s Pension Costs have grown 5x since 2002.
9. Revenues are up big since 2009. We have $46.5 bn in revenue in 2012 vs. $41.0 bn in revenue in 2009.
10. Its expenses that are killing us: over the past decade, New York City hasn’t really grown its population but has increased expenses from $28.8 bn t $49.7 bn.
11. The vast majority of that $20.9 bn increase has been in the form of more dollars to fewer employees. Pension costs are killing us most: this has grown from $1.3 bn in 2002 to $8.3 bn in 2012.
12. “New York City needs a new pension plan for new employees.”
And number thirteen, for good luck: tourism is way up!
A trio of observations for the good of Gotham:
I. We decreased the number of employees we have, but almost doubled our costs, over the past decade. This way lay bankruptcy, now or in the future.
II. Construction is way down. If you’re not growing, you’re dying.The building boom in China isn’t just making us an architectural backwater. Young people like young cities. It may not have hurt our yesterday, it may not hurt us today, but it will surely hurt our future.
III. A budget deck should focus on “what we’re providing and how well”, not just expenditures and revenues, which are lagging indicators of your success. What are the important metrics that drive how we govern New York City?
Overall, this budget document gets great marks for being readable, understandable, and presenting very clearly the present situation in our city (even if I think the budget outcome is not leading New York City in the right direction). The people who worked on it should be proud of their work, which is very well done.