As we head into a very difficult budget discussion, some Nevadans continue to disagree about whether we have a spending problem or a revenue problem. Before we decide whether tax increases or spending cuts are best for the future of Nevada, we should first settle once and for all the question of whether Nevada's public sector is too big.
State government spending has been growing faster than our overall state economy, some argue, and they call anybody who disagrees with them a tax-eater. We need to take their argument with a grain of salt, for several reasons.
First, state spending varies year by year, and it is easy for a state-hater to make a case by picking low starting and high ending points that do not reflect long-run trends.
Second, growth rates are often high when the base is small; a penny is a bigger share of a dime than of a quarter.
Third, this argument fails to consider what the money was spent on, and whether those things were necessary or beneficial.
Finally, this argument usually ignores the last three rounds of budget cuts that hit the state.
Yes, it is true that budgeted general fund expenditures were a larger share (2.9 percent) of gross state product in the peak of fiscal 2008, compared to 2000 (2.1 percent), or even 1994 (2.4 percent), so expenditures grew faster than the economy. But even the 2008 peak was less than the 1979 share (3.3 percent), which is the base period used by NRS 353.213, the law that limits general fund growth. And even then, our general fund share was still among the smallest in the nation.
Some argue that Nevada is actually average, in terms of its public spending per capita. Horrors! What they don't mention with this trick is that Nevada had, at least through 2008, a cost of living that was closer to California's than Mississippi's, along with a higher total per-capita income and wages for most blue-collar occupations that were substantially higher than average. Put this into real terms, and we were nowhere near average in the size of our public sector.
Consider public employment, the essential measure of government size. The 2011 issue of the Statistical Abstract of the United States has data for state and local employment in 2008. Before budget cuts began, Nevada had the fewest state and local government employees in the nation, relative to population, even though other states with our population and geography tend to have relatively larger governments. We would have had to hire 8,000 workers just to catch up to the second smallest in the nation, and 26,000 to just be average. And that was before budgets were cut, cut again, and cut some more.
Yes, these relatively few public employees were well paid, at least on average. The Statistical Abstract reports that the average wage for Nevada's state employees was about 7 percent higher than the national average in 2008, while city and county employees earned 20 percent more. However, Nevada's cost of living was about 10 percent higher than the national average, so our state employees were really paid about average.
Averages disguise variation. State corrections officers made about 30 percent more in Nevada than they would have elsewhere, while local firefighters, especially in Las Vegas, made pretty high incomes compared to firefighters elsewhere. Salaries for K-12 teachers, however, were at the national average. And while college professors like me were well paid, we earned about the same average salary we would make at other similar universities in other states. One-size-fits-all generalizations aren't helpful, and neither are one-size-fits-all policies.
Add in furloughs, layoffs, and all the other budget cuts doled out over the last few years, and we can be confident that when new comparable data become available, Nevada's public sector will remain among the smallest in the nation, even before we contemplate the cuts Gov. Sandoval has proposed. So can we now move forward with more meaningful arguments?
• Elliott Parker is professor and chair of the UNR Economics Department.