Mayor de Blasio and Gov. Cuomo spent the first few weeks of de Blasio’s mayoralty bickering over how to pay for universal pre-kindergarten. The mayor wants to raise taxes on people making more than a half-mil a year. The governor wants to give de Blasio extra Albany cash instead. Who’s right?
Actually, they’re both wrong.
De Blasio’s argument is this: Relying on Albany is a sucker’s game; it could take the money away at any time, leaving the city with the cost. “We intend to . . . create a stable, consistent, reliable funding mechanism for the next five years,” the mayor said last week. “We have a revenue source available that is reliable.”
Maybe de Blasio needs to go back to pre-K to learn budget basics. Making Gotham even more dependent on the top 1 percent makes city revenues more unpredictable, not more “stable and consistent.”
Consider: These 35,000 taxpayers already pay more than 40 percent of the city’s personal income taxes.
But their “income” doesn’t come in the form of a boring paycheck, as most workers’ does. It comes from sales of stocks and other assets, plus bonuses.
Sometimes the stock and bond markets do very well; sometimes they don’t. So taxes on stock-market profits and other asset sales “show extreme volatility,” warn city budget forecasters.
Recent history proves this. The city’s Independent Budget Office notes that the top 1 percent’s share of income taxes plunged from 58 percent in 2007 to 43 percent in 2009 as the markets crashed.
After personal-income taxes plummeted by $2.1 billion the year after 2008, every public service in the city budget was up for cuts — including school spending.
And it could have been worse. Then-Mayor Michael Bloomberg, while no fiscal miser, had stashed away some of the tax windfall from the rich folks’ boom years for a rainy day.
De Blasio, by contrast, proposes to make the city even more dangerously dependent on a few at the top — and spend it all now.
OK, so what’s Cuomo’s idea?
Well . . . it’s hard to tell. In his budget speech last week, he made much of a new “$1.5 billion commitment over five years” for statewide pre-kindergarten.
But $1.5 billion divided by five years is $300 million a year — with vote-rich districts on Long Island and elsewhere in the state eyeing at least half of it.
And where’s the governor going to get this money?
Practically speaking, he’s getting it from the same people de Blasio wants to target: the downstate rich, whose higher-than-expected investment profits have been flooding city and state coffers in recent months.
But sooner or later the investment bubble engineered by the Federal Reserve over the past half-decade to bail out Wall Street will finally burst — and then both Cuomo and de Blasio will be broke.
It won’t matter which of them offered to pay.
Meanwhile, neither the governor nor the mayor is asking: How much do we spend on pre-K now — and how could we save on existing taxpayer outlays?
The city spends about $240 million a year (mostly state money) on the 55,000 children who now take pre-K — about 38,000 who go a half-day, and 17,000 a full day.
Where does this money go? The city sends tens of millions of dollars to private providers (not including a billion dollars for special-ed pre-K).
But it also keeps at least $192 million in the public schools.
So, it goes to teachers.
A full-day class of 18 kids costs at least $152,000, including $103,000 in salary and benefits for the average teacher and $46,000 for an aide. A half-day for 18 kids costs $76,000. Converting 38,000 half-time slots, then, and adding 10,000 new slots should cost about $250 million.
So the first question the governor (or someone) should be asking is: Why does de Blasio want $342 million in new funds?
Well, if de Blasio awards teachers retroactive raises or even future raises without demanding big givebacks on benefits, pre-K (current and future) could cost another $64 million a year — right away.
There are logistical questions, too, outside the classroom.
Nobody knows what the real demand for pre-K is — or how it’s dispersed around the city. If teachers in some neighborhoods end up with only a few kids, the per-classroom cost will be much higher.
And busing toddlers far from their homes to fill half-empty classrooms costs money, too. The city already spends $100 million a year busing 4-year-olds in a special-education program around.
Is de Blasio figuring that we’ll have to spend another $50 million on general-ed 4-year-olds?
The most important question to ask, though, is: Do 4-year-olds really need a teacher whose pay — including completely free health benefits — tops out above six figures?
Why not have two aides teach together — with room to move up as they gain experience?
That brings the in-class cost closer to $90,000 — which means “just” $150 million a year in extra spending for universal pre-K. But the teachers’ union wouldn’t like that.
Nicole Gelinas is a contributing editor to the Manhattan Institute’s City Journal.