When Is Big Government Too Big?

Subscribers to Connecticut Economy are rejoicing as that quarterly publication from UCONN economists hits mailboxes this week to stimulate a whole summer of thinking (get your subscriptions here). 

Among other pieces, the magazine includes a very interesting article by Dennis Heffley and MaryJane Lenon entitled “Sizing Up Connecticut’s Public Sector” (PDF), which compares Connecticut’s state and local government size to that of other states around the country – with some surprising results.

It turns out that Connecticut compares favorably to other states in terms of size of government measured two ways – by the percentage of non-federal spending share to state GDP and by the non-federal full time equivalent employment per 10,000 persons.  The Constitution State ranks 47th out of 50 states in terms of size per GDP and 33rd in employees per 10,000 persons.

In terms of state spending compared to state GDP, the presence of Fairfield County would seem logically to distort the state GDP figure – generating significant revenue while requiring relatively fewer social services than would be expected from an average population.

The second measurement, non-federal FTE employment per 10,000 persons – is fascinating because it raises as many questions about how OTHER states do business as much as it does answer questions about Connecticut. 

Our governing architecture features the absence of an entire level of governing structure present in other places – county government. One might suspect that individual towns duplicating services that a single county government might provide – like snowplow drivers, for example – would actually push Connecticut higher per 10,000 residents.  That the reverse seems to be true would appear to be a counter-argument to regionalization.

In terms of the dynamics of the ongoing political debate between larger and smaller government, though, the conclusions drawn in the piece should be considered most instructive:

“First, non-federal government in Connecticut, based on relative spending or relative employment measures, is not disproportionately large. At the same time, by either measure non-federal government in Connecticut has grown in relative size over the last ten years.”

But the size of government question is a normative rather than a positive one.  The judgment about whether Connecticut’s government is too big or too small isn’t made on the basis of our size relative to other states, it should be based on our size relative to our needs – a far more difficult measurement to calculate. 

It should be also be noted that our government size, whether it be compared to state GDP or per 10,000 persons, isn’t the happy result of careful planning by our elected officials.  Democratic legislative leaders, and the Governor for that matter, have tried at one time or another to spend more money – in some cases, dramatically more money.  Only doughty efforts by mainstream Democrats and Legislative Republicans have held those spending hikes at bay. 

Those old stumbling blocks – the moderate Democrat and the Republican in general – are gradually disappearing from the Legislature, leaving a far more radical element in charge with a very different agenda for our state.

Source: Heffley, Dennis J. and MaryJane Lenon.  “Sizing Up Connecticut’s Public Sector” (PDF).  The Connecticut Economy, Summer 2009.

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7 responses to “When Is Big Government Too Big?

  1. Thomas Hooker

    This is the same conclusion reached in the Sunday posting here two weeks ago.

    The question now is how Jodi Rell could tell us that state government is “bloated”, when the facts are exactly the opposite. And how could state senator Scott Franz tell us that there are “multiple sources” for the contention that Connecticut has the highest state employees as a percentage of population of any state in the country.

    Someone give Senator Franz a towel to wipe that egg off his face.

  2. “The question now is how Jodi Rell could tell us that state government is “bloated”, when the facts are exactly the opposite.”

    Ok then, CT state government must not be bloated, it’s just that in order to afford what we now have we would need about 8 billion dollars more in taxes the next two years to pay for it.

    Oh yah and when do we get around to start to properly fund those pensions? But at least it is not bloated, just totally unaffordable.

  3. What’s missing from this discussion is the matter of cost. In the context of a budget, cost is more relevant than headcount. It would interesting to have an analysis based on total cost per employee vs. other states. And by cost, I mean the total cost including retirement benefits even if they’re not provided for in the budget. It would also be interesting to have the cost per retiree as compared with other states.

  4. Thomas Hooker

    What’s missing from this discussion is the matter of cost. In the context of a budget, cost is more relevant than headcount. It would interesting to have an analysis based on total cost per employee vs. other states. And by cost, I mean the total cost including retirement benefits even if they’re not provided for in the budget. It would also be interesting to have the cost per retiree as compared with other states.

    Actually, that was the central theme of the study. The study noted that total state and local government spending as a percentage of gross state product ranked Connecticut 47th lowest of all the 50 states. In other words, at least before the financial meltdown, government spending in Connecticut ranked us among the most affordable in the country.

  5. The second measurement, non-federal FTE employment per 10,000 persons – is fascinating because it raises as many questions about how OTHER states do business as much as it does answer questions about Connecticut. 

    One issue that comes up when measuring by # of employees is if certain states use state employees for some functions while other states contract those services out. For instance, if state A paid 100 bus drivers $50,000 per year and state B paid a company $6 million per year to provide 100 bus drivers, then state A would have 100 government employees, while state B would have 0 government employees. Now, I don’t know if there’s a big difference between states in this type of thing (some states contract out prison services, for instance), but I’d imagine that it could lead to statistical anomolies.

    Perhaps many of Connecticut’s towns contract out services like landscaping or snowplowing? So snowplow drivers aren’t on their payrolls.

    (In the corporate world, 10 years ago, revenue / employee was a decent metric to rate companies in the same industry against each other. Today, in certain industries, this metric is almost useless because of outsourcing to India. In some companies, the Indian employees are included in their head counts, at other companies, the company just contracts with an Indian firm, but then has no Indians, or maybe only a manager or two, in its headcount).

    Wyoming and Alaska are the top two states, but far, but they also have the smallest populations, and are very large geographically, so there’s not a lot of people per square mile. If you have a high school of 200 students, you need a lot more than 10% of the staff needed for a 2,000 student high school.

    I wonder where Connecticut comes out in non federal government spending per resident. Wouldn’t that be a fairly appropriate metric? Yeah, there are differences in expenses in various regions, but still, that’s what I’d like to see I think.

  6. Perhaps many of Connecticut’s towns contract out services like landscaping or snowplowing? So snowplow drivers aren’t on their payrolls.

    Excellent point, gmr.

    I thought of this point as well in reference to resource recovery. Connecticut has a quasi-public Connecticut Resource Recovery Authority (CRRA), which presumably would not count toward public employees (other than guys like Sen. Gaffey who is on both payrolls, but that’s a whole other story). Some other states – many states – do this same function as a public agency, whose employees would count.

  7. Actually, that was the central theme of the study. The study noted that total state and local government spending as a percentage of gross state product ranked Connecticut 47th lowest of all the 50 states. In other words, at least before the financial meltdown, government spending in Connecticut ranked us among the most affordable in the country.

    What does this have to do with personnel costs?

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