Jobs and State & Local Government Spending Linked
This is Part IV of an ESPC analysis of state tax policies and policy proposals and their potential effect on the Wyoming economy
By Sarah Gorin
State legislators head into the 2010 budget session on February 8 facing what many of them have never experienced: drastically reduced state revenues due to the downturn in mineral prices.
Governor Freudenthal already implemented a 10% across-the-board budget reduction for fiscal year 2010 (which started last July 1), and has proposed a budget for 2011-2012 at about the 2010 level except for less state support to local governments.
Many people have suggested that if revenues are down, state and local governments should simply spend less, just like a household would do. But a household wouldn’t just spend less; it would also look for more income. A more balanced approach is needed.
Further, those who think the government checkbook should be slammed shut are missing an essential economic reality: that the link between the economic activity of state and local governments and the rest of the economy is particularly pronounced in Wyoming. Employment provided directly by state and local governments (including school districts) is an integral part of local economies, as you can see on this chart showing public sector employment by county.
The table, which shows that the share of jobs provided by state and local governments
ranges from 11% of total employment in Teton County to 50% in Niobrara County, tells only part of the story. A significant number of private sector jobs also depend on government spending for highways, water development, school facilities, and so on. This is encouraged by government programs such as the Wyoming Business Council’s “GRO-Biz” program aimed at helping businesses gain government contracts.
Government programs and services always should be provided in the most efficient manner possible. However, Wyoming decisionmakers also should be aware that because of the interconnected nature of our state’s economy, cutbacks in government spending also will hurt non-governmental employers. If five community college teachers are laid off, that’s five fewer people who are going to dine out at a Main Street restaurant.
Wyoming’s budget should make things better, not worse.