Long Live the Drachma

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerGiven a conflict between “good for us” or “good for me,” people generally pick the second. That proposition, obvious as it is, underlies most of economics. Thank goodness, human beings often rise above self-interest in ways that redeem human society.

But politicians shouldn’t push their luck. Consider what the European Union is asking of the Greeks. The austerity imposed as a condition of the bailout goes beyond expecting Greeks to behave like Germans, which would be heroic enough. No, the Greeks are expected to do penance for their past profligacy, the “sackcloth and ashes” Full Monty.

Kidding ourselves

Reluctant to think ourselves selfish, we have a remarkable capacity to convince ourselves that “good for me” is also “good for us.” That capacity for self-delusion is evident in results from the Pew Global Survey: Respondents in Britain, France, Germany, Greece, Spain, Italy, Poland and the Czech Republic were asked to identify the “hardest working” people of Europe. Seven picked the Germans. The Greeks picked themselves. For the title, “least hardworking,” five picked the Greeks, but the Greeks fingered the Italians.

Is it any wonder that the Greeks’ penance is insincere? Or that support for austerity among voters proved to be so tenuous in Sunday’s election? Read more »

Marrying the Princetons: Saying “I Do” was the Easy Part

Posted by & filed under CGR Staff.

Joseph StefkoAnybody who has followed the local government consolidation issue knows the difficulty of enacting significant, large-scale change. Old habits die hard, so it is no surprise that the procedural challenges to municipal restructuring are often daunting. Ever powerful are the inertia of the status quo and the “leap of faith” required on the part of voters to be convinced it’s possible to get to greener pastures.

Such is the case in New Jersey, where history hasn’t been kind to the municipal consolidation movement. In the time between a 1934 New York Times article lamenting the state’s inability to streamline its local government structure and today, just two consolidations occurred. In January, the number grows to three as the Township and Borough of Princeton merge following an affirmative 2011 referendum. Read more »

Should NYS Tell Nonprofits What to Pay Their Execs?

Posted by & filed under CGR Staff.

In 2009, Joel and Phillip Levy pocketed $2 million between them annually as leaders of a Medicaid-funded nonprofit serving the developmentally disabled. The Levys used tax dollars to purchase multiple homes, luxury cars, pay their kids’ college tuition, and support family members’ living arrangements in NYC. The misuse of public dollars violates the public trust. It makes us angry—and it should.

In January 2012, New York Governor Cuomo issued an executive order to limit executive pay and established a commission to investigate excessive nonprofit compensation. Now Cuomo and Attorney General Eric Schneiderman have announced proposals to regulate nonprofit executive compensation.  Schneiderman’s proposal–the “Nonprofit Revitalization Act”—was just introduced by Senators Carl L. Marcellino and Michael H. Ranzenhofer. Many of the elements reflect recommendations from the statewide task force (discussed in an earlier blog here).

Governor Cuomo’s proposal calls for a salary cap to limit the amount of state dollars applied to executive compensation to $200,000. His proposal also includes options for waivers to surpass the cap if an organization can justify the difference (hospital executives, for example, often have salaries well above seven figures and argue that this is required in the competitive health care market). Read more »

What’s the Cost of Fire Safety in Your Community?

Posted by & filed under CGR Staff.

Paul BishopAccording to statistics from the National Fire Protection Association and the United States Fire Administration, from 1995 to 2010:

  • The number of residential building fires fell 15%.
  • The number of deaths and injuries in residential fires fell 31%. [i] [ii]
  • The number of paid firefighters increased by 30% and the number of volunteer firefighters decreased by 8%.[iii]

With the increase in dependence on paid staff, there has been an increase in cost for the fire service. From 1995 to 2008, the cost of Local Fire Protection has increased 65% to an inflation adjusted $39.7 billion.[iv] Read more »

It Takes a Community to Serve a Veteran

Posted by & filed under CGR Staff.

Kirstin PryorThe decade of continuous combat in Iraq and Afghanistan has created a demand for veterans’ services that the US has not experienced since Vietnam. The sheer numbers of veterans (almost 2 million troops deployed since 2001) would be hard enough for the Veterans Administration (VA) to address. But the heavy reliance on National Guard and Reservists has changed the veteran population, subsequent needs and community impact substantially. Read more »

Merci, Jacques et Marie

Posted by & filed under CGR Staff.

Kent GardnerThe French have voted with their hearts and picked Francois Hollande as President. And who can blame them for wanting to be more like Italy and less like Germany? More Roman Holiday and less The Spy Who Came In from the Cold?

We should be grateful to the French. We need exemplars—countries whose policies we embrace and countries whose polices we avoid. France seems determined to set a bad example, if they expect Hollande to follow through on his promises. This is a nation that hasn’t run a budget surplus in 35 years, where labor costs have been rising in the face of blistering global competition, and where the public sector controls more than half of the economy. Hollande promises to hire more public sectors workers, raise the marginal tax rate to 75%, and reverse Nicholas Sarkozy’s feeble encroachment on the entitlement mindset of the French worker. Read more »

Transitions to New Municipal Boundaries

Posted by & filed under CGR Staff.

Over many years, CGR has assessed the full range of local government reorganization—pairings of village/town, town/city, town/county, city/county, or two or more school districts.  Structure change is often contentious, in part because reorganization frequently results in tax increases for some taxpayers and decreases for others.  For instance, when a village dissolves, village residents may see their tax rate fall while town residents see an increase, even if total taxes decline. Unfortunately, this means that a change that improves efficiency and effectiveness can get blocked solely for distributional reasons.

Are there ways to mitigate these tax shifts? As a relative newcomer to New York State, I’m wondering whether or not the approach to structure change through annexation in my former home of British Columbia might resonate in this part of the world. Read more »

Tax Reforms Starts with Simplification

Posted by & filed under CGR Staff, Rochester Business Journal.

Kent GardnerThere is nothing like the IRS Form 1040 and NYS Form 201 to get you in the mood for tax reform.

We need a simpler system. Complexity is expensive by itself—we spend money simply keeping records and paying professionals to figure out what we can and can’t claim. The Taxpayer Advocate’s Service (TAS) of the National Taxpayer Advocate (appointed and funded by Congress) estimated in 2010 that taxpayers spend 6.1 billion hours filling out taxes each year (down from an estimated 7.6 billion hours in 2008, probably courtesy of tax software). 60% of Americans pay someone else to complete their tax forms. In 2008, TAS put the total cost of compliance at $163 billion, about 11% of total tax receipts. Read more »

Great Leaders Don’t Rely on Data Alone

Posted by & filed under CGR Staff.

Scott SittigEvidence-based decision making is best when data are properly used, when good judgment hasn’t been trumped by bad numbers, or good numbers twisted to support an inappropriate conclusion. Just collecting data, tying it to outcomes and using it to make comparisons isn’t enough.  Numbers must be accurate and they need context. Data are essential to great leaders, but numbers don’t tell the whole story.

Let’s say I wanted to invest in a technology company.  Being a devoted iPhone user, I am predisposed to liking Apple products.  With a few clicks of my mouse I find Apple has earnings per share (EPS) of $13.87.  Is this good?  I quickly search for Google and learn its EPS is at $8.75.  Should I be convinced that Apple’s numbers make it a better investment?

As a good consumer I should ask: Are the metrics accurate?  EPS is a well-known measure of corporate profitability and my source was reputable.  Are the metrics comparable?  In this case, yes, but only after I checked that the EPS numbers covered the same time period.   What do the metrics tell me?  They give me insight into Apple’s and Google’s profitability. Read more »