Wednesday, April 19, 2017

The Big Cost of Local Governments

Wyoming is increasingly building a reputation for a big-government state. In fact, already in 2004 we were known to be right up there with Alaska (and the District of Columbia). Since then, we have kicked the Frontier State down from the throne, and we did it in good part thanks to the surge in local government employment: in Governor Freudenthal's second term alone, local governments expanded their employment by more than 14 percent.

This is a big problem for our state's future: it is not just the state government that must downsize itself permanently, but our local governments will have to do the same.

A good start of that process is to ask what our local governments should really be doing - in other words what functions governments can fill that cannot really be done better by the private sector. As a step toward answering that question, let us review some data on local government employment in Wyoming, courtesy of the Census Bureau.

First, here are the local government functions that have more than 100 full time employees, total for Wyoming, as of 2015:

TABLE 1 Full time emp
Total - All Government Employment Functions 31,582
Education Total  16,814
Hospitals 6,067
Police Protection Total 1,632
Highways 745
All other and unallocable 709
Financial Administration 702
Corrections 654
Other Government Administration 632
Parks and Recreation 530
Fire Protection Total  428
Judicial and Legal 414
Solid Waste Management 397
Health 333
Natural Resources 318
Water Supply 310
Libraries                           250
Sewerage 189
Air Transportation 178
Public Welfare 117
In other words, two thirds of all local government employees provide entitlements - education and health care - while law enforcement (a core government function) account for about one tenth as many employees.

Next, let us look at the cost of payroll by the same categories:

TABLE 2 Payroll cost
Total - All Government Employment Functions  1,765,432,404
Education Total   890,326,116
Hospitals  427,666,188
Police Protection Total  90,546,960
Highways  36,752,808
All other and unallocable  34,567,140
Financial Administration  33,660,348
Corrections  33,557,988
Other Government Administration  31,362,936
Fire Protection Total   28,319,664
Parks and Recreation  25,015,776
Judicial and Legal  23,458,032
Solid Waste Management  17,797,284
Water Supply  16,795,908
Health  16,479,000
Police Protection - Other   15,819,960
Natural Resources  13,941,348
Libraries                            10,832,712
Sewerage  10,263,588
Air Transportation  9,123,000
Public Welfare  5,592,756
Electric Power  4,779,168
Housing and Community Development  3,174,516
Transit  1,419,168

Employees in health care and education consume 76 percent of local-government payrolls. By comparison, law enforcement only earns seven percent of that same payroll. 

The inescapable conclusion from this is, of course, that the path to slimmer local government runs through structural, permanent reforms to government education and government-provided health care. 

Lastly, so far we have not accounted for part-time employees on local government payroll. 

Part-Time Employment
Total - All Government Employment Functions 13,606
Education Total  8,417
Hospitals 1,430
Parks and Recreation 1,094
Fire Protection Total  549
Other Government Administration 415
All other and unallocable 274
Libraries                           257
Health 235
Natural Resources 161
Water Supply 106
Police Protection Total 94
Transit 88
Solid Waste Management 83
Financial Administration 82
Judicial and Legal 81
Public Welfare 73
Corrections 54
Highways 37
Sewerage 29
Air Transportation 26
Housing and Community Development 21

Again, education dominates. 

It is worth keeping in mind that our state and local governments are fiscally integrated to a point where it is getting difficult to tell who is responsible for what functions. Our cities, towns, counties and school districts receive approximately 35 percent of their revenue from the state, with a heavy bias toward education. This means that any reforms to reduce local government must begin at the state level. 

Let us keep this in mind as we closely follow all our legislative committee meetings, from today up until the 2018 legislative session. An active citizenry could help our elected officials consider the right kind of reforms - and avoid falling for the temptation to propose higher taxes (or an income tax...).

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