How much more of state government can be cut?

Elliott Parker

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

Reno — 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.

Discussion: 19 comments so far…

By jfnance32

1/4/09 at 3:16 a.m.

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Raising the wrong taxes or raising taxes too high could cause the downturn to last longer or be deeper. That would reduce the benefit of raising taxes and make it much harder to meet futher state revenue goals.

It does seem that now adays that government workers are more concern about their raises and their benefits then about the thousands of people losing their jobs in the private job sector.
By geezelouise

1/4/09 at 8:17 a.m.

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It still stands that jobs in the private sector do not have the same benefits as those in the government sector.

I get six holidays a year. How many holidays are paid to state employees??????

And teachers can complain all they want about their salaries, but they get more paid holidays and days off than anyone I know.

I say let's stop giving all those paid holidays to state/government employees and we could save a lot of $$$
By bobbeers

1/4/09 at 8:40 a.m.

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Response: http://nevadataxpayer.com/archives/279
By thebs

1/4/09 at 11:20 a.m.

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It is unfortunate that Mr. Beers does not allow comments on his new website. I assume that is due to his frequent mistakes.

"I agree that Nevada's local government compensation ranks higher than state employees', but Table 448, column M represents the combined earnings of both, and they rank very high."

Actually, column J is the average monthly earnings of State employees, while column M is very clearly labeled LOCAL Average monthly earnings. It is not, as you have asserted, the "combined earnings of both."

"The very same authority (the Statistical Abstract of the United States) also says our government employees are paid the fifth highest of all states. Here is the Statistical Abstract of the United States. Table 448 - here is a direct link - column M details average earnings in 2006, the most recent year reported. These wage numbers - in which Nevada ranks the sixth highest state - do not reflect Nevada's exceptionally generous benefits package."

Again, Column M is for Local governments, not State.

Fifth highest of all states? According to that same table, in 2006, there were 15 states earning a higher average State monthly earning. Alaska, California, Colorado, Conneticut, Illinois, Iowa, Maryland, Massachusetts, Michigan, Minnesota, New Jersey, New York, Rhode Island, Washington and Wisconsin all earned higher average monthly earnings than Nevada.

In fact, that same Abstract lists the average monthly earnings for State workers in the United States as $4098. Nevada average monthly earnings are a whopping 2.5% higher than the national average.

It is interesting that Mr. Beers seems to fluidly switch between speaking of the cost of local employees and state employees, even after acknowledging that local employees are paid much more handsomely than their state counterparts.

Next, on a relating postng, Beers writes, in regard to step raisies, "These two pay hike types, as Lawrence notes, are awarded regardless of job performance..." Unfortunately, this is not true. According to NAC 284.194:

"An employee whose last rating of performance was standard or better and who has not attained the top step of his grade must receive an increase in his salary based on merit of one step on his pay progression date and each year thereafter of employment equivalent to full-time service until he reaches the top of the grade unless he receives a subsequent rating of performance which is substandard."

"An employee whose last rating of performance was substandard is not eligible for an increase in his salary based upon merit. Such an employee is only entitled to receive an increase in salary based on merit on the date designated and recorded on a subsequent report on performance as the date on which his overall performance improved to standard or better."

The phrase "regardless of job performance" is therfore untrue and a gross misrepresentation of state law.
By RobertD

1/4/09 at 11:29 a.m.

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In a state with the highest drop out rate in the country, it really was amusing to read that Bob Beers thinks that assorted vocational and on-line "colleges" are equal to state universities. While being able to work in a dentists office or becoming a nursing assistant may get you a job in this woeful economy, it's obvious that these jobs don't require much in the way of undergraduate skills. And the resulting low pay is the proof. Hey, Bob, you and your idol, the Love Guv, should go out in the real world, and see what it takes to succeed, and not just in the world of politics and BS. Oops, that's right, you're out in the real world now. Bet you end up back at the public trough really soon, however, after you realize that the Dreaded Private Sector requires hard work...
By ksand99

1/4/09 at 12:05 p.m.

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Hahaha! It's no wonder Nevada voters decided "Thanks, but no thanks!" to Bob Beers.

He's an accountant who apparently cannot read a simple spreadsheet.

He wrote in his rebuttal:

"Incorrect. Here's the data table, once again (Remember, I show my sources, you do not). It sounds like you're trying to save you reputation by throwing local government employees under the bus, but the table in question is unambiguously titled "State and Local Government Employment and Average Monthly Earnings by State." I agree that Nevada's local government compensation ranks higher than state employees', but Table 448, column M represents the combined earnings of both, and they rank very high."

Here is the data table: http://www.census.gov/compendia/statab/t...

As you can see, the entire table is for State and Local Government Employment and Average Earnings by State.

Is is then broken down into several columns. Columns B-G list the approximate number of employees for the years 2000, 2005 and 2006. Columns B-D are the number of State employees and columns E-G are for Local employees.

They are separate.

Then, columns H-M list average monthly earnings, broken down as State employees (columns H-J) and Local employees (columns K-M).

Column M is NOT a combination of both, it is simply the average monthly earnings of local employees in 2006.

I mean, it is very simple and listed there for anyone to read. Why Bob Beers insists it is something is different is baffling.

I guess I know which accountant won't be doing my taxes this year!!! Join the 21st century and learn how to read a spreasheet, Bob!
By ksand99

1/4/09 at 12:10 p.m.

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Oh yes, I see what thebs means. There are fifteen other states with higher average monthly earnings for State employees. Not four like Beers apparently thinks.

So cannot read a spreadsheet, cannot count, either?

I wonder if anyone has made the connection between having fewer employees than most other states, the corresponding responsibilities that those few employees have to handle (workload increases when the number of employees is small) and the pay of those employees.

I mean, it's not unheard of to pay people more when they have more responsibility or duties.

And since when does "Government does not need to be smaller" equate with "Government must get bigger?" Those are two separate arguments, Bob, and to "infer" that the Professor is calling for more employees is wrong. If he thought the number of employees were too small, I'm fairly confident he would say so.
By jfnance32

1/4/09 at 12:16 p.m.

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RobertD, we are not even close to having the highest drop out rate. California and District of Columbia high school drop out rates are very high compared to Nevada's.

Nevada's drop out rate is very close to the national average.

Nevada is ranked 25th in teacher salary for k-12.
By Davolas

1/4/09 at 12:53 p.m.

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It's alright, if Jimmy gets his way and they cut state workers pay and benefits, then Bobbie will also get his smaller government. I know I won't be sticking around waiting for the better when states who manage themselves as they should don't suffer nearly as bad. Even if I have to go to one of those LOW paying states that the Bobster refers too. I'm not sure Jimbo could find enough of his lackey buddies to fill all of the spots that would be left open. Why would they want low paying, bad benefit jobs whose pay and benefits have been raped by Jimmie anyway? Loyalty means jack squat to these idiots and it should mean nothing to us after they keep spitting in our faces.
By RobertD

1/4/09 at 4:40 p.m.

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Hey, jfnance. Article in today's Sun. See if you can find it-

"Southern Nevada social services have struggled to keep pace with need. The state's suicide rate is twice the national rate. The city leads the country in percentage of teenage high school dropouts. It's among the highest in percentage of uninsured".

OBTW-DC is not a state. Yes, Vegas isn't a state either, so I guess you win the semantics. But either way, education in Beersville is atrocious. Sad....
By jfnance32

1/4/09 at 7:06 p.m.

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RobertD,

There is another Sun that questions that statement and also a LVRJ article. The LVRJ gives a more detailed reason why Clark County School System rejects that statement.

"But Rulffes and Dopf said the Diplomas Count 2008 numbers are skewed by its methodology, which does not account for Nevada's very transient population and does not distinguish between dropouts and those who legitimately leave the School District to attend school elsewhere."

So if a teen's family moves to another state then Diplomas Count says that is a dropout with sounds bogus to me.

The NEA says that the state's droppout rate is near the national average and nowhere near California's rate or Arizona's rate.
By skisailmtb40

1/4/09 at 8:55 p.m.

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We can solve all our problems if we close UNR.
By term2

1/5/09 at 12:47 p.m.

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I am sure that as a member of the bloated education system, the author will maneuver the numbers to make the argument for expanding the university system.

Numbers aside, why do I have to pay for the university that I dont even go to? I am retired and have issues of my own and will never benefit from the "university".

I am pretty sure its bloated, because I see evidence of expenses they incur that dont make sense to me. A simple example is the large houseboat they keep on lake mead for "ecological projects". Of course it has all the amenities like an on board grill for parties. I just have to believe that the state funded university system has the same bloated budgets as big wall street companies.

Let the students pay; after all they benefit.
By redferret

1/5/09 at 1:51 p.m.

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It's sad you feel that way 2term, but maybe the much more sizeable younger generation may opt to no longer fund your senior citizen benefits. We can counter that a) we'll more likely die before we can reap their benefits or b) the benefits will have dried up and be gone. Based on either argument I would say we should excuse ourselves, but I don't. It's a dim view to say you don't benefit from education. Every graduate who stays here, benefits the community and means we don't have to search elsewhere for them.
In any case I wouldn't throw rocks in a glass house.
By tbvegas

1/5/09 at 1:57 p.m.

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Cut until expenses match income. Isn't that what our state constitution says? All the fluff about what dept need more and who cries the loudest is irrelevant.
By Sunvisitor

1/5/09 at 2:13 p.m.

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Exactly redferret, people are often short sighted like term2. As a community we all share the burden of making it a better place to live. Transporation, education, and social programs are important. Everyone wants to have the perks but not pay the costs. Term2 wants me to contribute to his social security and health care but he doesn't want to help educate my daughter who will eventually contribute to other people's social security and health care. I'm betting he takes advantage of senior discounts that I don't get and which raise the cost of my own purchases. And he doesn't want to help educate the doctors and researchers who may extend his life. Sad.

And thank you Elliot Parker for in informative article. I appreciate your perspective.
By redferret

1/5/09 at 2:25 p.m.

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The other issue I realized is that UNLV contributes greatly to Las Vegas. While we may not be churning out Rhoades scholars and the like, we do turn out a lot of lawyers, nurses, dental people, teachers, and of course (thanks to the Harrah's Hospitality College) lots of people who work in the hospitality industry, which last I checked was analogous to Las Vegas' aorta.
By bobbeers

1/5/09 at 2:40 p.m.

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The NevadaTaxpayer.com post has been corrected. Our local government employee wage ranks sixth and state government employee wage ranks sixteenth, both still above the national average and both still belying Professor Parker's contention that we have the smallest state government in America.
By wendel

1/6/09 at 10:15 a.m.

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Bob, the fact that the average wage ranks 16th does not imply anything about the "size" of our state government.

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