Restructure Government Workforce, Don’t Up Taxes

When Gov. Bill Richardson and the Legislature convene in special session, their goal will be to close the current $650 million budget deficit. The situation shows little sign of improving without difficult cuts being made.

As such, the budget cuts should fundamentally restructure the way government does business. One such area of spending that they should look closely at is the state and local government workforce.

For too long the government workforce has grown out-of-control with few, if any, constraints. For example, since the current recession began in January 2008 to August 2009, the private sector has lost 33,200 jobs, a decline of 5.2 percent. For these workers their lives have been turned upside-down. State and local governments, on the other hand, have added 1,300 jobs, an increase of 1.2 percent.

Overall, state and local governments employed 167,000 people in August. This is more people than are employed in each of the top three biggest private sector industries including trade, transportation and utilities (135,300), education and health services (119,700), and retail and wholesale trade (112,200). Government, it seems, is New Mexico’s largest industry.

Based on data from the U.S. Department of Commerce’s Bureau of Economic Analysis, New Mexico’s state and local government employed 24.54 workers for every 100 private sector workers in 2007 — or 51 percent above the national average of 16.22. Lowering New Mexico’s state and local workforce to the national average would have saved taxpayers up to $2.3 billion in 2007 alone.

Where are all of these excess employees? Additional data from the U.S. Department of Commerce’s Census Bureau reveals that almost 60 percent of the employment problem resides in our elementary, secondary and higher education system. The evidence points to far too many administrators and bureaucrats and too few front-line personnel such as teachers, librarians, etc.

Unfortunately, Richardson was recently quoted as saying: “I will not cut schools or education….”

Is he serious? State and local education spending is the single largest expenditure at $5.2 billion out of $16.4 billion total (32 percent) FY 2006 spending according to the Census Bureau. If you can’t find budget savings in education, then where else are you going to find budget savings?

Of course the challenge will be culling real budget savings from reducing the administrative and bureaucratic overhead in education. Higher education is under the most direct control by the state government, and institutional reforms can and must be made there.

In the short-term, a simple hiring freeze would save millions pending a more thorough review of employment practices. A quick search at the University of New Mexico’s Web site shows 192 staff openings and an additional 198 faculty openings. In addition, numerous other positions will become vacant throughout the rest of the fiscal year.

In the long-term, efforts to reduce the employment in higher education needs to focus on non-instructional employment which includes administrative, clerical, custodial, cafeteria, health personnel, law enforcement personnel and paid student employees. This category especially stands out because its deviation under the employment ratio is the highest in the country standing at 256 percent above the national average — employing 3.4 people per 100 private sector workers versus 1.59 nationally.

Elementary and secondary education is a bit trickier since money flows from the state to localities in the form of state aid payments. However, these payments could be made conditional on finding employment efficiencies through administrative reforms and the consolidation and/or privatization of non-curriculum related functions.

Finally, now is the time to enact a fundamental restructuring of New Mexico’s state and local workforce. Over the next five to 10 years, many government employees will retire simply as a reflection of the overall retirement of the baby boom generation. If we start putting valuations on government positions today, as workers retire the government will have a roadmap as to which positions get re-filled and which positions are to be scaled back or eliminated.

This special session is going to cost taxpayers $50,000 a day, so taxpayers need to see a significant return on their money. Richardson and the Legislature should seize the moment and begin a comprehensive restructuring of the government workforce. The only other option is to raise taxes on a private sector that is already hemorrhaging jobs. It is simply unfair to ask a recently laid-off worker to pay more in taxes to fund the continued expansion of government bureaucracy.

J. Scott Moody and Wendy P. Warcholik are adjunct scholars with New Mexico’s Rio Grande Foundation. The Rio Grande Foundation is an independent, non-partisan, tax-exempt research and educational organization dedicated to promoting prosperity for New Mexico based on principles of limited government, economic freedom and individual responsibility.