NCPA - National Center for Policy Analysis


January 6, 2010

Any expectation that state and local governments would use the worst fiscal crisis since the Great Depression to reduce their biggest expenditures is proving to be wishful thinking, says Bloomberg.

For instance:

  • Private companies have cut 7.3 million jobs, 6.29 percent, since business employment peaked at 115.8 million in December 2007.
  • State and local governments kept adding jobs through August 2008 to 19.8 million and have since cut 132,000 positions -- 0.66 percent, according to the U.S. Labor Department.

In New Jersey, for instance:

  • The state is looking at an $8 billion budget deficit in fiscal 2011 (which begins July 1, 2010), or 28 percent of its budget.
  • During the year, the state eliminated 3,300 jobs, just over 2 percent of the record 154,200 it employed at the beginning of Governor Jon Corzine's first term.
  • Local governments in the state added 3,300 jobs during the year, and now employ 447,100, more than ever.

The numbers across the nation break down this way:

  • States have dismissed 15,000, or 0.28 percent, of the 5.2 million they employed at the peak and local governments have cut 117,000, or 0.8 percent, of the 14.6 million workers they employed.
  • States (their total general fund spending in fiscal 2009 totaled $663 billion) had to address budget gaps of $145.9 billion for fiscal year 2010 (which began in 46 states in July 2009).
  • For fiscal 2011, 35 states and Puerto Rico project $55.5 billion in red ink.
  • State and local government pensions nationwide are underfunded by about $1 trillion, Orin S. Kramer, chairman of the New Jersey Investment Council, which oversees the state's pension fund, estimated in November.
  • That doesn't include other retirement benefits, such as health care, which Standard & Poor's earlier this year pegged at about $500 billion for the states alone.

Businesses fire workers in hard times.  They call that becoming leaner and more efficient and running smarter.  It's also called a common sense strategy for survival.  Politicians everywhere are talking about layoffs, of course.  They have been talking about eliminating jobs, often in threatening tones, since at least January.  Mostly though, it's just talk, says Bloomberg.

Source: Joe Mysak, "Nobody Gets Fired Except Governors in Recessions," Bloomberg, December 30, 2009.

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