This, the final post a this compilation of the most recent state and local government finances data from the Census Bureau, is about administrative functions I have grouped together as “bureaucracy.” It includes data on the most governmental of government functions: the kind of activities one might expect to find taking place in city and town halls, county seats, county courthouses, and state capitals. Reviewing applications, keeping records and doing inspections, rather than providing services. The functions included are, as delineated by the U.S. Census Bureau, Judicial and Legal, Financial Administration, Protective Inspection & Regulation, Central Staff, General Public Buildings and, at the state level, Social Insurance Administration (state Departments of Labor). I also include Health, because it overlaps with these categories, as it includes not only “provision of services for the conservation and improvement of public health, other than hospital care” but also “health related inspections – inspection of restaurants, water supplies, food handlers, nursing homes, agricultural standards or protection of agricultural products from disease” along with animal control.
The situation and trend for these public functions is the same as most of the others. Expenditures on public services provided today is going down, when measured per $1,000 of area residents’ personal incomes, as pension expenditures are going up. The result is lower pay and benefits for new public employees, falling state and local government employment relative to population, and – unless there are increases in productivity to offset this – falling public services received. With the rise of information technology, productivity gains in bureaucratic categories are certainly possible, but with public employee unions, civil service laws, and politics they are uncertain to unlikely.
A spreadsheet that includes a table with the FY 2014 data in these categories for all states, a leftover table from the 2012 Census of Governments with more detailed local government data by county, and the charts used in this post, is here.
In some states more of the bureaucracy is part of the state government, and in others more of it is part of local governments. State governments generally do more of the work in small states, where the state capital is never that far away.
One reason that I don’t make too much of New York’s bureaucracy is that compared with the national average, it is about average in expenditures per $1,000 of state residents’ personal income, rather than being far above average as one finds for most government functions, or relatively low one finds for some of them. From a New York perspective there isn’t much of a story here.
Excluding public health, which both is and is not part of the bureaucracy, the State of New York and its local governments spent $10.07 per $1,000 of state residents’ personal income in FY 2014, (1.0% of personal income) in these categories, about the same as the U.S. average of $10.13. New York State ranked 27th among the 51 U.S. states and the District of Columbia by that measure. Assuming that the state bureaucracy was evenly distributed between New York City and the Rest of New York State in proportion to personal income, New York City’s bureaucracy expenditures were slightly above average at $10.30 per $1,000 of city residents’ personal income, with the Rest of New York State slightly lower at $9.88.
Including public health in bureaucracy doesn’t change much. New York State’s expenditures are then $16.14 per $1,000 of state residents’ personal income (1.6% of income), with the U.S. average at $16.19. Assuming the division of state expenditures as described above, New York City would have been slightly below average in bureaucracy spending at $15.59 per $1,000 of city residents’ personal income, with the Rest of New York State slightly above. If each were a separate state, New York City would have ranked 33rd in bureaucracy spending, and the Rest of New York State would have ranked 28th.
New Jersey, Connecticut, and Massachusetts were low in state and local government expenditures in bureaucracy categories, per $1,000 of state residents’ personal income, at $11.36, $12.76 and $11.48 per $1,000 of state residents’ personal income, compared with the U.S. average of $16.19. These figures include state legislature spending, which I left out of the chart because it is so small. California’s bureaucracy spending, on the other hand, is high at $20.69 including public health and $12.63 (compared with the U.S. average of $10.13) without it. Pennsylvania’s bureaucracy spending was also high at $18.95 per $1,000 of state residents’ personal income including public health, ranking 15th among states, and $11.14 excluding public health. Even though that state’s state and local tax burden was well below the U.S. average.
New York’s expenditures on the state bureaucracy were somewhat higher than the U.S. average in FY 2014, due primarily to higher than average spending in the judicial and legal function. A large share of the state and local government bureaucracy expenditures in New Jersey, Connecticut and Massachusetts are at the state level. State bureaucracy expenditures are notably low in Texas, a very large state where the state legislature only meets every other year.
One of Governor Cuomo’s repeated concerns is that the large number of local governments in New York State inflates government spending and local taxes. But the evidence on bureaucracy says “not proven.” New York City has three local governments for about 8.5 million people: the City of New York, the Port Authority of New York and New Jersey, and the New York City Waterfront Commission. Excluding public health, its local government bureaucracy expenditures totaled $4.99 per $1,000 of city residents’ personal income, below the U.S. average of $5.41.
The Rest of New York State had 3,540 local governments for 11.3 million people, including counties, townships, municipalities, school districts, and other special districts. It spent $4.57 per $1,000 of its residents’ personal income on bureaucracy, even further below the U.S. average. The Rest of New York State was slightly above average including public health, but the evidence suggests that this is likely additional spending on actual health care, rather than health-related licensing and inspections. Unlike in New York City, local governments elsewhere in the state appear to be providing health services that are not included in New York State’s Medicaid program, perhaps services to those not eligible for Medicaid.
With regard to the tax burden, what dwarfs any efficiencies or inefficiencies related to the size of government is the fact that unionized government employees and contractors are the most powerful interests in New York State, and have used that power to become richer and richer relative to 99 percent of their neighbors – mostly in the number of workers required to do a job, and in years of retirement. This is government as a sinecure and high end welfare system for the connected, a source of patronage, rather than a source of services. That is something that might anger local taxpayers if they were forced to pay for it. And so you don’t find very much of it in functions where all the excess cost is covered exclusively by local taxpayers.
You find it in the very categories for which the federal and state governments provide much of the funding, under formulas that provide more federal and state money the more you spend: public schools and Medicaid. Public school expenditures and employment soared in the Rest of New York State in the 1990s, after Governor Pataki’s STAR program directed a rising share of state school aid to the districts that spent the most. In Upstate New York, after state funding was made available for local fire departments, spending in that category jumped too. Spending is also high on Upstate roads, often maintained in part with state money, although harsh winters may provide an explanation for the high government spending in that category.
Otherwise, local government expenditures are not high in the Rest of New York State when measured per $1,000 of personal income. Neither is local government employment when measured by full time equivalent, because to make up for the small size of some governments, some of their workers are part time. And the Rest of New York State doesn’t have a big bureaucracy, despite the large number of local government.
New York State’s state & local government judicial and legal expenditures totaled $4.79 per $1,000 of state residents’ personal income in FY 2014, above the U.S. average of $4.45. New Jersey, Connecticut, and Massachusetts were relatively low at $3.96, $3.32, and $2.87 respectively, while California was quite high at $6.37.
The category, according to the Census Bureau’s 2006 Classification Manual, includes “expenditures for criminal and civil courts of limited and general jurisdiction; appellate courts; juries, court reporters, witness fees, and law libraries; medical and social service activities of courts (except probation); court activities of sheriff offices (bailiffs or “civil” functions); registers of wills and other probate activities; legal departments, general counsels, solicitors, prosecuting and district attorneys; attorneys providing government-wide services; public defenders; payments for court-appointed lawyers; indigent defense; child support enforcement; and contributions to legal aid societies.”
At the state level, the State of New York spent $2.27 per $1,000 of state residents’ personal income on the judicial and legal function in FY 2014, down 12.3% from FY 2004. The U.S. average was much lower at $1.50 per $1,000 of personal income, and down 2.6%. New Jersey spent $1.77, lower than New York and down 13.2% from FY 2004 to FY 2014. But Connecticut spent $2.96 at the state level, up 6.9%, and Massachusetts spent $2.57, down 7.7%.
New York State’s judicial and legal expenditures had increased from FY2002 to FY 2012, to $2.73 per $1,000 of state residents’ personal income, a review of Census of Governments data had shown. But from FY 2012 to FY 2014, according to this data, the State of New York’s current expenditures in the judicial and legal category fell from around $2.8 million to around $2.4 billion. So it seems that there have been some cutbacks recently. Or perhaps not. It is likely that this data excludes pension contributions, which have been soaring. If such pension costs were distributed by function, one might find that (as for spending in general) the total is not going down, but spending on actual court proceedings today is going down as funding for retired judges and other court workers is going up.
Local government judicial and legal expenditures were below the U.S. average of $1.47 per $1,000 of personal income in much of Northeast in FY 2014, at $1.28 in New York City, $1.25 in the Rest of New York State, and $1.09 in New Jersey. It would appear that nearly all of the judicial and legal expenditures in Connecticut and Massachusetts are at the state level. As was the case at the state level, local government judicial and legal expenditures fell in most locations from FY 2004 to FY 2014, by 15.7% for the U.S. as a whole, 8.5% for New York City, 1.2% for the Rest of New York State, 11.0% for New Jersey – and 29.5% in Florida and 34.5% in California.
When state and local government public health expenditures are added together, one finds that New York State’s FY 2014 expenditures per $1,000 of state residents’ personal income, at $6.07, nearly matched the U.S. average of $6.06. Spending was notably low in most of the rest of the Northeast, at $3.48 for New Jersey, $3.62 for Connecticut, and $3.08 in Massachusetts, all states were virtually all spending is this category was at the state government level. Among the states with high spending levels in the category, relative to state residents’ total income, were North Carolina at $9.21, California at $8.06, and Washington at $8.46. North Carolina also has an extensive public hospital system, relative to the states of the Northeast. In California, virtually all spending on public health is at the local government level.
The Census Bureau data implies there has been a shift in public health spending in New York and some other states from FY 2004 to FY 2014, from the local level to the state level. While U.S. state government public health spending was flat when measured per $1,000 of personal income, State of New York’s public health spending increased by nearly 50.0%. There were also large increases of 127.3% in Pennsylvania, and 82.0% in Texas.
Meanwhile, local government public health expenditures per $1,000 of area residents’ personal income fell by 25.4% in Pennsylvania, 25.0% in Texas, and 35.5% in New York City from FY 2004 to FY 2014. Former NYC Mayor Mike Bloomberg is known for his public health initiatives, but apparently not for local government public health spending, which went down relative city residents’ personal income as New York’s state government public health spending increased. Despite that state spending increase, local government public health expenditures per $1,000 of personal income also increased in the Rest of New York State, by 24.0% from FY 2004 to FY 2014. In the latter year they totaled $4.06 per $1,000 of personal income in the Rest of New York State, and $2.60 per $1,000 of personal income in New York City.
One wonders if this has anything to do with the opioid epidemic that is affecting many declining industrial metros and suburban areas. When the crack epidemic hit New York City in the late 1980s and early 1990s there was also an increase in government spending upstate. In state prisons.
I’ve grouped Central State, Financial Administration and General Public buildings data together for the sake of brevity. According to the Census Bureau’s 2006 Classification Manual:
Financial Administration includes: Expenditures to administer the offices of auditor, comptroller, treasurer, finance director, and other central accounting, budgeting, and purchasing offices; tax administration, assessment, billing, and collection; custody and disbursement of funds; revenue collection activities like delinquent tax sales, tax litigation, and charges of depositories; state supervision of local finances; management of debt and of investments (including that of own utilities); cost of insurance for issuing debt; administration of employee-retirement, workers’ compensation, and federal and state other insurance trust funds; lottery administrative costs; licensing and tax collection activities of motor vehicle departments; distinctive tax collection activities of regulatory agencies; central data processing centers; and other finance activities not recorded elsewhere.
Central Staff includes: Expenditures for the office of the chief executive, mayor, city manager, county administrator; central personnel administration; overall planning and zoning; clerk’s office, recorder, and general public reporting; central staff executive and administrative agencies. For local governments also includes legislative activities such as city or county council, board of supervisors, commissioners, and so forth.
General Public Buildings includes: Construction, equipping, maintenance, and operation of general public buildings not related to specific functions or agencies. Includes: General county offices buildings, city halls, multi-purpose office buildings and annexes; and lighting, janitorial, custodial, and other services furnished for general public buildings. Excludes: School buildings, police stations, firehouses, libraries, institutional buildings, jails, hospitals, courthouses that hold only courts and related judicial agencies, etc.
Small local governments, the kind one finds in New York’s suburban and rural areas, are more likely to have more of their government functions concentrated in a single “general public building,” possibly increasing local government expenditures in this category and reducing them in more specific categories.
Adding state and local government together, one finds that expenditures per $1,000 of state residents’ personal income were below average in these general government categories in much of the Northeast, at $5.20 per $1,000 of personal income in New York State, $3.69 in New Jersey, $4.86 in Connecticut, and $4.59 in Massachusetts. The U.S. average was $5.72.
Illinois was above average at $6.21 and Pennsylvania was notably high at $6.83. What these two states have in common is a huge number of very small local government public employee pension funds. They account for a large share of the public employee pension funds in the country. Most are too small to attract much attention, and in addition to being costly to administrate, most are in deep trouble. With regard to public employee pensions, this is one of the rare instances where those in some other state are worse off than those in New York City. New York has only two big public employee pension systems, one for New York City, one for New York State that also covers local government employees in the rest of the state.
New York’s state government expenditures in the central staff, financial administration and general public buildings categories combined equaled $2.09 per $1,000 of state residents’ personal income in FY 2014, almost exactly matching the U.S. average of $2.11. (New York’s state legislature expenditures were also a tick below average per $1,000 of personal income). Massachusetts was also about average at $2.05, with New Jersey below average at $1.55, and Connecticut and Pennsylvania above average at $2.50 and $3.99. State spending in these categories increased by 1.8%, relative to state residents’ personal income, in Connecticut from FY 2004 to FY 2014, and by 38.7% in Pennsylvania. The general trend, however, was once again down (if pensions are excluded) – by 13.5% for the U.S., 19.9% for New York State, 17.5% for New Jersey, 6.7% for Massachusetts – and 46.2% for California.
The trend was also down for local government expenditures in the central staff, financial administration, and general public buildings categories from FY 2004 to FY 2014. The U.S. decrease was 9.8%, to $3.61 per $1,000 of local residents’ personal income. New York City fell 2.5%, to a below-average 3.18, and the Rest of New York State fell 17.0%, to a below average $3.05. Even lower local government spending levels could be found in New Jersey, down 2.15% to $2.14, Connecticut, down 7.0% to $2.36, Massachusetts, down 9.0% to $2.54, and Pennsylvania, down 8.1% to $2.84.
One of the things that most surprised me about the trend in these categories was the huge decrease in state government expenditures in the “social insurance administration” category, in the U.S. as a whole and in many states. It is basically State Departments of Labor expenditure on the administration of (but not benefits paid under) programs such as unemployment insurance and worker compensation, along with the collection of labor market statistics (notably the monthly Current Employment Survey).
With regard to administering unemployment, the Great Recession saw the highest level of it since the early 1980s. With presumably more people filing unemployment applications, being checked to make sure they were looking for work, etc. The recession was long over in FY 2014, and had been over for two years in FY 2004, but unemployment persisted. And yet from FY 2004 to FY 2014 state government spending on social insurance administration fell 32.1% in the U.S., to $0.29 per $1,000 of personal income, and 46.4% in New York State, to $0.22 per $1,000 of personal income. Most states saw similar reductions, although Florida and New Jersey bucked the trend.
The federal government provides money for states to administer social insurance programs and collect labor market statistics, which are then aggregated by the Bureau of Labor Statistics. It is possible that this funding was reduced by the Republican Congress after 2010, with states choosing not to make it up. As part of the general (and since public employee pension costs have soared suddenly bi-partisan) “what they don’t know won’t hurt us” political approach to social, economic and other statistics. If Donald Trump wants to argue that the employment and unemployment data is bogus, well, you get what you pay for. I use that data every day, and the trend has been for industry detail to go down at the local level to make up for falling sample size.
When most people use the term “bureaucracy” they are probably referring to the function that the Census Bureau refers to as “protective inspection and regulation,” defined as “regulation of private enterprise for the protection of the public and inspection of hazardous activities except for major functions, such as fire prevention, health, natural resources, etc.”
In keeping with the “no local story” theme of bureaucratic state and local government expenditures, one finds that New York State and its local governments spent $0.96 on protective inspection and regulation per $1,000 of state residents’ personal income in FY 2014, exactly matching the U.S. average. The rest of the Northeast was relatively low at $0.83 for New Jersey, $0.47 for Connecticut, $0.71 for Massachusetts, $0.52 for Pennsylvania. California was double the U.S. average at $2.11.
Much of that excess spending in California is at the state government level, where it totaled $1.48 per $1,000 of state residents’ personal income in FY 2014, far above the U.S. average of $0.62. On one hand, California’s spending at least buys a knowledgeable bureaucracy. Back in the 1990s, when I was researching environmental impacts by land use, the only organization that had a defensible estimate of air emissions by type and industry was the California Air Resources Board.
On the other hand, California’s bureaucracy can impose unreasonable costs with unreasonable rules that even the bureaucrats themselves are against. In New York City if you want to build a building that is permitted by zoning, or open a business that is permitted by zoning in an existing building, all that is required is a building permit. But in California, even buildings that follow all the rules are subject to public hearings and environmental reviews. Snobbish NIMBY activists cloaking less altruistic motives in “liberal” language, and businesses seeking to thwart competitors, have used regulatory litigation to try to thwart competitors by tying them up in court for years.
There was even years of “environmental” litigation against bike lanes.
Even Governor Jerry Brown has had a tough fight trying to get rid of some of then nonsense, in order to sole an acute shortage of affordable housing.
In any event, state protective inspection and regulation expenditures fell 18.5% in California from FY 2004 to FY 2014, when measured per $1,000 of personal income, 19.5% in the United States, 14.8% in New York State (to a below average $0.56), 23.8% in New Jersey (to a below average $0.54), and 43.8% in Connecticut (to a below average $0.37).
In the U.S. as a whole local government protective inspection regulation expenditures also fell when measured per $1,000 of personal income, by 10.7% to $0.34 in FY 2014. There were decreases in most states as well. Local government protective inspection expenditures increased 7.7% in the Rest of New York State, but to just $0.28 per $1,000 of area residents’ personal income. The place that really bucked the trend was New York City, with a 16.4% increase to an above average $0.54 per $1,000 of city residents’ personal income.
This was something the Bloomberg Administration probably had to do in an attempt to try to professionalize New York City’s regulatory agencies. The city had (and in many cases still has) many regulations that are as obsolete and unreasonable as California’s, with no political will to update them. But in terms of what people actually did, the city was basically the Wild West, with the rules only serving as a means to collect baksheesh while allowing those with clout and connections to get anyway with basically anything. Just take a look at the city’s F5B zoning regulation and 591 17th Street in Brooklyn, built just a few years after those rules were enacted. Or anything built by Donald Trump.
Which is why, every now and then, half the Department of Buildings ended up arrested.
Of course having simpler, clearer rules that were reasonably enforced would end lots of this, but that would not be in the interest of New York City’s “deep state.” There are plenty of dump rules not even the bureaucrats have a chance to change. But at least we’re not California. (Or, for that matter, the Downstate Suburbs).
I’ll conclude this discussion of comparative state and local government finance with the following thought. In FY 2014, the State of New York spent $1.8 billion on the financial administration function, as delineated by the U.S. Census Bureau. Local governments within the state spent $1 billion. Yet none of the agencies included produced a comprehensive and politically neutral discussion of comparative state and local government finance, here compared with elsewhere. I did, in my spare time, for nothing. It would appear that it is not the job of the State Comptroller, the New York City Comptroller, the city and state Office of Management and Budget, the Independent Budget Office, etc. to make this kind of information available to the public. The politicians pay the people in those agencies to not provide this information to the public.
I have a Census Bureau spreadsheet that shows, based on the American Community Survey, the number of people working in every “place” in the country, the rarely seen data by place of work rather than place of residence. At the most local level I consider this data source to be the most accurate. The problem is by the Bureau’s definition all of New York City is just one place, so it doesn’t get the same level of detailed information as, say, Nassau County, with its many “places.”
The Bureau once provided the same data by Census Tract. I managed, after a good deal of effort, to get through to the right person at the Bureau to ask about this. He said he’d love to produce the tract level “place of work data for me,” but he was too busy and he didn’t have time. It wasn’t that he didn’t have time to produce the data. That, he said, would take him two hours or less. He didn’t have time to go through six months of meetings, memos and approvals to get permission to produce the data.
All I could say was I used to work for the government, with much of that time as part of the bureaucracy, and I know exactly what he was talking about.