How much more of state government can be cut?

Elliott Parker

Sunday, Jan. 4, 2009 | 2 a.m.

Two weeks ago I contributed a column to the Las Vegas Sun regarding the relative size of Nevada’s state government. Former state Sen. Bob Beers responded in a column that was published last Sunday in the Las Vegas Review-Journal. I want to thank Mr. Beers for his response, even if he mistakenly thinks I was wrong or reporting selectively.

I insist, emphatically, that I was telling it like it is. There is a lot of misleading information out there about the size of government in Nevada and the state’s tax system, and I appreciate the chance to educate a wider audience than I have in my economics classes at UNR.

Mr. Beers says I did not give details on my sources, but newspapers appreciate brevity. Had he asked me, I would have gladly shared my sources and calculations, and like any professor I appreciate people checking my facts. I am easy to find online for anyone with access to a search engine, especially if you spell my name correctly, and I have made the data available on my Web site (www.business.unr.edu/faculty/parker).

Mr. Beers reports that state revenue was higher than the number I reported for expenditures. Nevadans might remember that we were near the peak of the housing bubble a few years ago, and revenues were unusually high. Rather than saving the surplus for a rainy day, Gov. Kenny Guinn and the Legislature chose to give many of us a pretty significant tax rebate. So I said I was reporting expenditures, which were more representative of the actual state budget than revenues.

Additionally, Mr. Beers reports that the data he found did not exactly match what I reported. In the month between when I downloaded the data and my column was published, it seems a new edition of the Statistical Abstract came out.

I have checked these new data, and include them, with updated calculations, on my Web site. Nothing really changed. As in prior years, Nevada still ranked 50th in the nation in the relative number of state employees, total state and local government employees, and employees in higher education, as well as 49th in the nation in employees in K-12 education.

Skeptical readers might think these outcomes depend on which years we choose, as budgets can vary from year to year, so let us compare five-year averages instead.

From 1977-81 to 2003-07, dates I chose for no other reason than because they are the start and the end of the data I have been able to collect so far, the results are surprising.

As a share of Nevada’s total output, on every measure I have collected — state and local output, total state expenditures, general fund revenues and expenditures, and even tax burden — Nevada’s government became smaller.

Even if we adjust only for population growth and consumer price inflation, and not rising real incomes as we should, Nevada’s general fund expenditures fell over time. Real general fund revenues per capita were a little higher, but as I said above, revenues were unusually high during the housing bubble.

Although Mr. Beers admitted I might be right about the relative number of employees in state government and the higher education system, he argues that we are overpaid. He reports that government employees make significantly more in Nevada than the national average, but the data he cites — Table 448, column M — include earnings only of local government employees, which are three-quarters of the total.

I think that is relevant for county commissions and city councils, but not for the Legislature. For the quarter of employees working for the state, average earnings are equal to the national average even though Nevada’s cost of living is higher than average.

Regarding how our state and university benefits compare with those of other states, I don’t yet have a good quantitative set of cross-state data on this, but I will keep looking. What I have found so far suggests state employee benefits are neither better nor worse than in other states.

If Mr. Beers has the data I seek, I would appreciate him sharing it with me. We compete in a national marketplace, and our benefits are reasonably competitive but not more than that. You should not compare our benefits against those in casinos, but against those of other states and other universities.

On his own original Web posting, Mr. Beers said that I think we should “further expand government” (as well as a few other things I don’t need to repeat that seem to push the bounds of professional dialogue). I don’t know how he reads that in what I wrote. I certainly doubt that my former economics students — there must be several thousand working in Nevada by now — would say that I advocate big government, and I am quite critical of its inefficiencies.

Instead, I wrote that we should not make the smallest state government in the country even smaller, for it would damage the future of the universities and the state. These are not equivalent statements.

I know this will be a difficult year for the Legislature and the state, and hardship cannot be avoided. You would be surprised how many faculty members at my university supported forgoing our cost-of-living increase in July, but the Legislature decided that they could not do that. My university has already cut roughly 10 percent from its budget, and valued programs and employees have been axed, but the numbers the governor has asked for in the next budget are simply catastrophic.

A cut of 20 percent, 30 percent or more is not shared hardship; it is the size of the Great Depression. It only makes sense if you truly think that the state should not fund higher education, or much else for that matter.

Finally, it was not my intent to offend any Nevadans who earned their degrees online or at small private colleges when I wrote that Nevada had only two universities. I certainly support the desire of anyone to improve himself through education, but I also assume anyone who has graduated from UNR or UNLV knows that a university is not comparable with these other institutions. The fact that Mr. Beers suggests they are equivalent causes me some concern. Is that his objective for our state universities?

Elliott Parker is professor of economics at the University of Nevada, Reno, and chairman-elect of the Faculty Senate.