By Anthony Ogorek
Buffalo, NY – It is no secret that our region is in a quagmire of epic proportions. Levies at all jurisdictional levels, school, property, sales and income taxes seem to increase inexorably; even though our rates for all of these taxes are among the highest in America. Local politicians, as well as the unions that they are supposed to ride herd over, seem to think that tinkering at the margins will fix what ails the Niagara Frontier. I beg to differ.
The lifeblood of any community is its population, and in this regard the prognosis is grim. M&T Bank CEO Bob Wilmers notes that the area's population has fallen 10 years in a row and for 25 of the past 32 years. For those of you who are mathematically inclined, let us restate these numbers. Over the past 32 years, the population has declined for 80% of those years. Over the past 10 years, population has declined for 100% of those years.
This population drain impacts the economic vitality of every citizen in two ways. The first is in terms of the community's intellectual stock. Over the past decade, we have lost nearly a quarter of our citizens between the ages of 18 and 34. This statistic is disturbing on many fronts. As they enter their prime earning and tax paying years, they will be somewhere else. As we look for new leadership to guide our region in the future, we will be choosing from a diminished pool. With a population weighted increasingly toward the elderly and the poor, there will be fewer young citizens available to share the tax burden, which will continue the downward spiral.
Home ownership is the closest thing to a free ride for most Americans, except for those of us who live in Buffalo. Over the past 10 years, Buffalo real estate values have actually lost money, as the rest of America was enjoying significant appreciation on their homes. That appreciation can translate into a higher standard of living, as well as a more comfortable retirement. The lack of appreciation in our real estate values is a significant cross that all of us, rich and poor, continue to bear.
The ongoing population exodus is a symptom of a more profound malaise; our public sector incentives are applied incorrectly. We are encouraging and paying for longevity, not creativity or excellence. In public education, we reward teachers not for a job well done, but for fogging the mirror for another year. Any talk of accountability or even limited merit pay is met with derision by teacher unions. The educational establishment claims that it is impossible to objectively measure what they do. So the only fair way to compensate a teacher is based on longevity.
As for our politicians, did you ever wonder why they keep running for office when they are clearly out of ideas and in full denial of their incompetence? The answer is the New York State Employee Retirement System, also know as The Pension. Politicians write the laws. They also take care of each other. For every year they are in office, politicians accrue benefits in the retirement system. The longer they remain in elected office, the fatter their pension will be.
As a community, we are getting what we are paying for in spades. In our misguided desire to take care of those who take care of us, we have created a system of self reinforcing mediocrity that is strangling the lifeblood of our community. It is time to break this compromise by converting the public pension system from a defined benefit plan that pays for seniority, to one modeled on the private sector 401(k) plan.
By realigning public sector incentives with community needs and goals, we give the mediocre among us an out - an alternative to a lifetime of second-rate public service. Isn't it time we put concern for the public, back in public sector incentives?
Commentator Anthony Ogorek is operating manager of Ogorek Wealth Management in Williamsville.