With 29 states expected to face budget deficits next year, many governors are realizing their state payrolls have swelled well beyond their means. At least 10 states have begun freezing and/or cutting payrolls. Massachusetts Gov. Deval Patrick, however, has taken the opposite approach.
With at least a $1 billion budget deficit looming for 2009, Gov. Patrick has nevertheless increased the government payroll by almost 2,000 workers in the past year. By contrast, New York Gov. David Patterson, facing a multi-billion dollar deficit next year, has been showing great fiscal discipline by ordering a hard hiring freeze along with agency cuts.
The budget pressures caused by larger government workforces are not limited to writing more paychecks. When combined with the generous fringe benefits these workers receive, the long-term financial strain is palpable. Massachusetts already has more than $13 billion in unfunded state employee health care liabilities on the books, and that figure increases with each additional hire.
So while public-sector workforce reform efforts are gaining steam across the nation, reform and transparency are lagging in Massachusetts. Reducing the size of government payrolls and health care liabilities is vital to any state serious about reining in deficits and having a more responsible budget.
The research and commentary cited below provides more perspective on this issue.
State’s Payroll Burgeons as Nation’s Belts Tighten
This article explains that while most states are reducing the size of workforces, Massachusetts continues to hire more government workers, even in the face of a $1 billion budget deficit.
Government Workers Very Well-Paid: Report
Write in the November 2006 issue of Budget & Tax News, David Denholm of the Public Service Research Foundation compares the compensation of employees in the public and private sectors.
What a Difference a Year Makes: More States Are Facing Budget Woes
This article from the National Conference of State Legislatures offers a good overview of how states are dealing with nearly $40 billion worth of budget deficits. Some of the strategies include hiring freezes and workforce reductions.
Payroll Belies Problems
The Boston Herald editorializes about how the continued growth of government payrolls is putting the state’s budget and taxpayers at risk.
State and Local Governments: Growing Fiscal Challenges Will Emerge during the Next 10 Years
David Walker, former comptroller general of the United States, warns in this report to congressional committees about the necessity to reform unfunded health care liabilities, noting, “continuing on this unsustainable path will gradually erode, and ultimately damage, our economy, our standard of living, and potentially our domestic tranquility and national security.”
States Face Tough Choices as Budget Crisis Deepens
This Associated Press article outlines how budget deficits are deepening and how states across the country are dealing with them. Don Boyd, a public policy researcher with the Rockefeller Institute of Government in New York, said, “You should expect significant proposals from governors, certainly for spending cuts, probably for more tax increases and certainly for more gimmicks.” He predicted, “And I’m sure you’ll see hiring freezes and layoffs.”
The Elephant in the Room: Unfunded Public Employee Health Care Benefits and GASB 45
Research done by the Pioneer Institute outlines how the growing cost of health care benefits and pensions represent a fiscal crisis that legislators are avoiding. Suggestions are offered on how to reform the pension and employee health care benefits systems.
State, Local Government Workers See Pay Gains
The gap between government and private-sector compensation has grown by $2.45 over the past three years, in favor of public-sector jobs.
For further information on the subject, you can visit The Heartland Institute’s Web site at www.heartland.org, where you will find articles on the issue available through PolicyBot, Heartland’s free research database.
Nothing in this message is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. If you have any questions about this issue or the Heartland Web site, you may contact Legislative Specialist John Nothdurft at 312/377-4000 or [email protected].