Is Government Too Large?

Few issues have captured the attention of Congress in the past year as much as the national debt; and with the debt now exceeding $14 trillion, who could blame them. In the long run an unsustainable national debt will wreak havoc; not only putting the U.S. in an economically and politically fragile position, but it will draw government resources away from providing important public services to simply servicing this burgeoning debt. At the same time an obsession with the national debt can at times paralyze a government; as we saw when even a simple, noncontroversial appropriation to fund FEMA for routine disaster relief became a battle over debt reduction. With a belief that government has simply grown too large, some are trying to turn every political decision into a referendum on the growth of government.

Here in Minnesota the issue is not exactly debt reduction, as the state is required to have a balanced budget; but in many ways the sentiment is the same. Policymakers are concerned about the growth in state government and last session some even sported penny lapel pins, symbolizing their opposition to spending “one penny more.”

Writing this post near the doorway where we have a growth chart that has tracked the height of our four kids, makes me think about how we actually measure growth. Clearly for many in St. Paul, the simplest way to measure growth in government is by examining the amount of money the government spends. And using that measure, there is no doubt that our state government has significantly grown. For example, in 2000 Minnesota’s annual general fund expenditures was approximately $12 billion and by 2010 it had increased by approximately 40 percent to $17 billion. But is simply looking at expenditures really the best way to measure growth in government? After all, we all know it takes more to build and maintain a mile of road today than it did in the year 2000. So should those added costs be considered growth in government?

Another growth measure tracked by our state is called the overall price of government. This measure views how much our government spends as a percentage of our collective personal incomes. The argument here is that while government expenditures rise, so do our personal wages and incomes. So the real concern should be whether government expenditures grow faster than our personal incomes. Using this measure a different story emerges. According to the Minnesota Department of Management and Budget, in FY 2002 the cost of all state and local governments combined was equal to 15.5 percent. Or put another way, for every dollar of our personal income, 15.5 cents was paid to our state, county, municipal, township and school districts for their services. Comparatively for FY 2012 that amount is now 15.8 cents out of every dollar; far from the 40% growth seen when simply looking at gross expenditures.

Still others suggest that the best measure of growth in any organization is by examining the number of workers it employs. Organizations that continually increase the size of their workforce are clearly growing, right? In fact, a bill submitted this past legislative session was designed to reduce the number of state employees by 15 percent. So I again went to the Minnesota Department of Management and Budget to find out just how large the state’s largest employer actually is. There I learned that at the beginning of the decade in 2001 the State of Minnesota employed 32,608 (full-time equivalent) employees and at the end of the decade in 2010 the employee FTE count was 32,786. This change actually represents less than one percent growth in state employees throughout the decade. Further, it should be recognized that during the decade Minnesota’s population grew from 4,919,479 in 2000 to 5,303,925 in 2010. Looking at it another way, in 2001 Minnesota employed 1 state worker to provide services for every 150.8 Minnesotans and in 2010 one state worker serviced 161.8 Minnesotans. Using this measure, not only has the Minnesota workforce barely grown, but it has increased its efficiency as well.

So how exactly should we measure the growth in government; and is the size Minnesota’s government growing out of control or isn’t it? Well, the simply answer is that you have to use your common sense. For example, it’s important to remember that not only do things cost more today, but a significant percentage of the revenue our government spends gets returned to the private sector through the procurement of contracts to build roads, bridges and buildings. Should these contracts with the private sector employers also be considered growth in government?

After all, politicians, lobbyists and other public officials love to toss numbers and statistics around in an effort to convince you that their interpretation represents the “truth”. But in the end I can’t help remembering the words of my college statistics professor many years ago when he noted, “If you torture the statistics long enough, they will confess to anything!”