Big government is a fact of life here in New Mexico. With large military installations, Indian reservations, and federal lands (42 percent of the state is federally-owned), it is perhaps not surprising that the state receives a larger proportion of federal money relative to what its citizens pay in taxes than any other state. Also, not surprisingly, a relatively high proportion of New Mexicans work for the federal government.
While there is debate over whether the tremendous federal presence is a good thing or a bad thing for New Mexico’s economic health, there is little that New Mexicans can do about it one way or another. Our history, our wide-open spaces and our weather are responsible for bringing much of this federal largesse to our state.
According to data from the Census Bureau, New Mexico’s “big government” is not limited to the federal presence here. In fact, New Mexico taxpayers are burdened with the third-largest contingent of state and local employees per capita in the nation. And, unlike their federal counterparts, the expense of New Mexico’s large state and local bureaucracies is borne entirely by New Mexico taxpayers, not federal.
According to the Census data, 6.6 percent of New Mexico’s entire population (not just workforce) is employed by a state or a local government. As a percentage of overall economic activity, New Mexico’s state and local governments are bigger than those of any other state.
The governments of Alaska and Wyoming do employ greater percentages of their populations than we do, but lest one believe that state and local employment is related to land mass, it is worth noting that Nevada governments have the smallest workforce in the nation at 4.2 percent of the state’s population.
Economists going back to at least the days of Adam Smith have noted that governments, by their very nature, are relatively ineffective tools for creating wealth (such activity is best left to entrepreneurs in the private sector). The fact that government employees must be paid by redistributing wealth away from productive uses explains, in part, why New Mexico is one of the poorest states in the country.
Of course, wealth redistribution doesn’t account for all of the negative impacts of big-government. After all, those government employees are not being paid to do nothing; they are busy taxing, regulating, and redistributing wealth. Thus, having large numbers of government employees has been associated with a degree of economic harm beyond the so-called “dead weight” loss of taxation.
With all of the problems associated with having large numbers of government employees, it should be no surprise that Nevada, with its small state and local work force, is the fastest-growing state in the nation in terms of population. Given the choice, Americans usually prefer a small government that leaves them alone to relying on big government.
If big government is a problem, then what is the solution? It is imperative that governments avoid expanding their payrolls and taking on new tasks without looking for cuts elsewhere. This can mean systemic limitations on taxes and spending along the lines of those contained in the Taxpayer Protection Act as introduced by House Minority Leader Tom Taylor, R-Farmington, and Sen. Kent Cravens, R-Albuquerque, that would force government to grow more slowly, thus creating incentives for finding alternatives to expanding government and hiring new bureaucrats.
Barring such systemic changes, government could find private-sector companies that are willing to do the same job, but for less money. Local governments in particular should consider contracting with private-sector providers for garbage and recycling services, the provision of water, public hospitals, and the construction and operation of prisons and jails. These are just a few innovative ideas that have been successfully adopted by hundreds of governments across the country. If taken here in New Mexico, they would save taxpayers or customers millions of dollars.
There are many reasons why New Mexicans continue to suffer from high poverty levels. Having a bigger government than citizens can afford is a big one. Our elected officials need to recognize the problem and start implementing these and other creative ways to cut spending and reduce the size of government.
Paul Gessing is the president of the Rio Grande Foundation, a nonpartisan, tax-exempt research and educational organization dedicated to principles of limited government, economic freedom and individual responsibility.