This, the final analytical post based on a tabulation of state and local finances data from the 2017 Census of Governments, is about the most governmental of activities. 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, adjudicating cases and doing inspections, rather than providing services. The functions included are, as delineated by the U.S. Census Bureau, Judicial and Legal; Financial Administration; Central Staff, General Public Buildings and Other Administration; Protective Inspection & Regulation; and, at the state level, Social Insurance Administration (state Departments of Labor) and “Other Education,” which includes state public school oversight agencies. I have grouped them under the title “Bureaucracy.”
The budgets of these functions are small individually, but they add up. In FY 2017, also including public Health, state and local governments collectively spent $18.54 per $1,000 of U.S. residents’ personal income, or 1.85% of the income of everyone in the United States, on these functions. And 1.6% of the personal income of residents of New York State, which ranked 38thin the country in Bureaucracy spending.
The relative level of spending on Bureaucracy in different states, when adjusted for the total personal income of residents of those states, doesn’t come close to matching what people might believe, based on what they read in the media. Yes California is 11that $23.63 spent per $1,000 of personal income, and Texas is last at $13.31. But Massachusetts, 45that $15.15, New Jersey 49that $14.00, and Illinois, 44that $15.41 ranked near the bottom. Whereas Wyoming was first at $43.78 spent per $1,000 of personal income, albeit with a good chunk spent on Health. And South Carolina made the top ten at $23.73.
The figures above include public Health. In the past I’ve discussed public Health in this grouping, because according to the Census Bureau the category not only includes expenditures for general health activities, community health care programs and ambulance services, but also health-related inspections, regulation of air and water quality, rabies and animal control. This time around, with an epidemic raging, Health was discussed in detail in an earlier post, here.
Bureaucracy data will be charted with and without this function.
The first post in this series, which describes where the data comes from and how it was tabulated, and includes spreadsheets with data on all functions, is once again here.
The spreadsheet with tables and charts used in this post is here.
And a table with state and local government Bureaucracy expenditures, by category, per $1,000 of personal income for all the states is here.
The discussion begins with an overview for state and local government combined.
For the U.S. as a whole $0.23 was spent on the state Social Insurance Administration function, which includes the agencies that oversee unemployment insurance and related programs, per $1,000 of personal income in FY 2017. There was $2.82 per $1,000 of personal income spent on the Judicial and Legal function, including the state and local courts, state attorneys general and local district attorneys, and the legal departments that handle other legal matters. Financial Administration, including budget offices, comptrollers and agencies that assess and collect taxes at the state and local government level, had $2.58 spent, with $0.86 spent per $1,000 on Protective Inspection and Regulation. All over government administration agencies, general public buildings, and elected officials totaled $2.96 spent per $1,000 of personal income.
State Government “Other Education,” which includes state oversight agencies (it is “other” than Elementary and Secondary Education and Higher Education), had $3.16 spent per $1,000. That is based on updated data from the Census Bureau. The initially-released data, which is comparable with previous years, had just $1.04 per $1,000 of personal income spent on this function – just $0.09 in New York State. Looking at the budget of the New York State Department of Education in state budget documents, it appears that the revised figure comes closest to the truth.
That comes to a total of $12.62 spent per $1,000 of personal income on state and local government Bureaucracy, on average, in the United States, not including public health. New York State and its local governments spent $10.65 on average per $1,000 of state residents’ personal income, below average, with New Jersey at $10.91, Connecticut at $11.61, and Massachusetts at $11.79 below average as well.
Vermont, at $20.07 spent per $1,000 of personal income, was highest in the Northeast if public Health is excluded. With Health included it ranked third nationwide with $31.63 spent per $1,000 of state residents’ personal income. Oregon also stands out for relatively high spending, at $22.04 per $1,000 of state residents’ income not including public Health, ranking 4th, and $30.33 per $1,000 of personal income including Health, ranking fifth.
Assuming Bureaucracy expenditures by the State of New York were distributed between New York City and the rest of the state in proportion to personal income, New York City’s state and local government Bureaucracy expenditures would total $10.69 per $1,000 of city residents’ personal income, and the rest of the state would average $10.61. Among the large states charted only Texas, at $8.90 spent on Bureaucracy per $1,000 of personal income, was lower than New York.
Excluding public Health, state government Bureaucracy expenditures averaged $7.37 per $1,000 of personal income, with local government Bureaucracy at $5.25. That is 58.4% of total Bureaucracy expenditures at the state government level nationwide, compared with 59.0% in New York State. State government expenditures are low, and a low share of the total, in Illinois (45.5%) and Texas (44.4%), and a high share of the total in Connecticut (77.4%) and Massachusetts (72.9%). Connecticut has eliminated county governments, and Massachusetts is in the process of doing so.
Taking “Other Education” out of it, because of the compatibility problems with past years mentioned previously, and also excluding public Health, one generally finds a strong downward trend in Bureaucracy expenditures per $1,000 of personal income. The FY 2007 to FY 2017 decrease was 17.5% for the United States, 24.3% for New York City, including an even allocation of state government Bureaucracy spending, 22.7% for the Rest of New York State, 22.6% for New Jersey, 9.9% for Pennsylvania, 15.9% for Michigan 31.7% for California, 14.3% for Oklahoma, and 17.6% for Colorado. There was a small decrease in Connecticut, North Carolina and Illinois, and a slight increase in Massachusetts, but these states were still well below the U.S. average in FY 2017.
On its face this could be good news. Most Bureaucracy functions involve the processing of information, and the advance of information technology has led to big increases in productivity in the private sector. With some up-front investments in such technology, it is possible that the government Bureaucracy is providing far more services for less money, as a share of personal income, than in the past.
That, however, is not the way to bet. Union influence, inertia, short term thinking and political sloth generally prevent state and local government Bureaucracy from investing in the short run to get more work done with fewer workers in the long run. The additional work would take place at a time when current elected officials might not be around to take credit. The fewer workers in the Bureaucracy might lead to more public workers in other categories producing more services, but those new workers may not pay dues to the same union. So public unions block change.
Even improvements that wouldn’t cost much or reduce the workforce generally don’t take place. Someone benefits from things as they are, and for everyone else the possible benefits of change are not appreciated or understood. Even a whisper of opposition is enough to get politicians to prevent bureaucrats from improving the functioning of their agencies. No one is making campaign contributions in favor of better government, so why bother?
Generally, therefore, less spending means less in services. In the Bureaucracy, this can lead to delays – inspections, approvals, cases heard and decided – a hidden cost shifted to business, the general public, or even to other agencies as those awaiting trial remain in jail. The audit of our society presented by the coronavirus has provided evidence that this is what has in fact happened.
In FY 2017, the State of New York spent just $0.16 per $1,000 of state residents’ personal income on Social Insurance Administration, well below the U.S. average of $0.23. It would be nice if that were because a highly automated computer-driven process, the product of prior high investment levels, allowed lower spending today, as is the case with New York City’s water system. Instead, the New York State Department of Labor was unable to process many of the unemployment claims over the first three months of the coronavirus pandemic.
On the other hand, Maine spent an unusually high $1.08 per $1,000 of personal income on Social Insurance Administration, and still has faced delays.
Maine lawmakers are holding an “emergency meeting” to delve into delays in the processing of unemployment claims. Labor Commissioner Laura Fortman plans to brief the Maine Legislature’s Labor and Housing Committee on Wednesday.
More than $200 million has been distributed to more than 70,000 Mainers since the global pandemic forced the governor to declare an emergency and impose a stay-at-home order, according to the labor department. Since March 15, more than 100,000 claims have been filed, compared with 35,000 for all of last year.
According to prior Censuses of Governments, New York State’s spending on Social Insurance Administration was well above the U.S. average in FY 1997, at $0.72 per $1,000 of state residents’ personal income, and at the U.S. average in FY 2007, at $0.33. A further decrease to well below average at $0.16 in FY 2017 means that New York’s spending on this function, per $1,000 of personal income, fell 77.6% over 20 years. The U.S. decrease was 58.5%, with decreases of 14.7% in New Jersey, 56.5% in Connecticut, 78.0% in Pennsylvania, 42.2% in Michigan, 85.2% in Illinois, 70.9% in California, 39.7% in Oklahoma, 53.2% in Colorado and 66.5% in North Carolina.
Back in New York, Governor Cuomo has asked Google to look into ways to improve the information technology behind New York State’s unemployment insurance application process.
The NYS Department of Labor has been working with Google to redesign the website, which has been crashing under the unprecedented load of new unemployment claims. One change: More people will be able to finish the application online without speaking to a representative on the phone.
A crisis, however, is a very costly and inefficient time to try to make improvements. Doesn’t this ordeal raise the question of where else in the Bureaucracy similar issues were lurking?
Within New York State, the Upstate Rural counties are collectively the only region where local government Bureaucracy expenditures are above the U.S. average per $1,000 of personal income. The averages, excluding public Health, were $4.40 for NYC, $3.51 for the Downstate Suburbs, $4.50 for the Upstate Urban Counties, and $6.41 for the rural counties in the Rest of New York State, compared with the U.S. average of $5.25.
The small populations, and large number of local governments, in many of New York’s counties mean the number of elected and appointed officials is a very high share of the overall population. But many of those jobs are part-time, and not highly paid, limiting their cost.
On the other hand, the large population of major cities ought to provide economies of scale, reducing the cost of the Bureaucracy. That appears to be the case for New York City, which spent about the same on these functions per $1,000 of city residents personal income as Dallas County and Harris County (Houston) in Texas, and less than all the other major urban counties chosen for comparison other than Suffolk County (Boston) and Mecklenburg County NC (Charlotte). As noted, many government activities conducted by counties elsewhere have been moved to the state level in Massachusetts, which no longer has local courts.
While New York spends less than average on Social Insurance Administration, it continues to spend more than average on Judicial and Legal. In FY 2017 the State of New York spent $2.09 per $1,000 of state residents’ personal income on this function, far higher than the U.S. state government average of $1.41. New York City spent $1.29 on local government Judicial and Legal agencies, and the rest of the state averaged $1.20, only modestly below the U.S. average of $1.41. Adding it up, and assuming state expenditures are allocated between New York City and the rest of the state in proportion to personal income, state and local government Judicial and Legal expenditures equaled $3.38 per $1,000 of personal income in NYC, and $3.29 in the rest of New York State, well above the average of $2.82 for the U.S. as a whole.
The distribution of Judicial and Legal expenditures between state and local government varies from state to state, with virtually no local government spending in the category in small states such as Connecticut, Massachusetts, and Vermont, and mostly local government spending in Pennsylvania, Georgia, Michigan, Ohio and Washington state.
Adding state and local government together, however, New York’s Judicial and Legal expenditures per $1,000 of personal income, at $3.33 on average, were higher than the $2.64 for New Jersey, the $2.63 for Connecticut, the $2.61 for Massachusetts, $2.93 in Pennsylvania, $2.36 in Vermont, $2.06 in New Hampshire, $1.80 in Maine, and $2.88 in Rhode Island. Among large states around the country, only Ohio ($3.36), California ($3.79) and Oregon ($3.93) spent significantly more than New York.
New York’s courts are the last bastion of old fashioned political patronage in the state. (As opposed to the more modern, and more expensive patronage based on special interest groups that has taken its place). Most state and local judges are “elected” in elections almost no one knows about, generally with only one name appearing on the ballot. County committees dominated by political machines determine who that name is. Non-judicial jobs, and some of the judgeships, go to those with connections. In fact, judgeships are often awarded to state legislators retiring in the middle of their term, so their designated replacement can first face a regular election as a well-financed incumbent. In this environment, improving efficiency is not going to be top of the list. A court reform era under former chief Judge Judith Kaye was only partially successful, due to opposition from the state legislature.
At the state government level, the trend in Judicial and Legal expenditures per $1,000 of state residents’ personal income is down. The FY 2007 to FY 2017 decrease was 10.3% for the United States, 13.9% for New York State, 17.0% for New Jersey, 12.9% for Connecticut, 14.0% for Massachusetts, 16.3% for Pennsylvania, 22.9% for Michigan, 19.1% for California, 13.8% for Oklahoma, and 7.0% in North Carolina. Spending increased per $1,000 of state residents’ personal income in Illinois (18.5%) and Colorado (19.0%), but Illinois remained well below the U.S. average.
At the local government level, Judicial and Legal expenditures per $1,000 of personal income fell 14.3% nationwide from FY 2007 to FY 2017. The decrease was 19.3% in New York’s Downstate Suburbs, 11.4% in the Upstate Urban Counties, and 14.0% in New Jersey. Such expenditures, however, fell just 1.3% relative to personal income in New York City, and increased 8.0% in rural counties Upstate. There, affordable but legally informal Justice of the Peace courts, where many of those presiding are not lawyers, have been the subject of reform efforts in recent years.
New York State is about average in state and local government Financial Administration expenditures per $1,000 of state residents’ personal income. For state government, the $1.52 for New York in FY 2017 compares with a U.S. average of $1.43. For local government, the $0.92 for New York City and $0.90 for the rest of New York State compare with a U.S. average of $1.15. Adding it up, you get $2.58 for the United States, $2.44 for New York City, and $2.42 for the Rest of New York State, along with $1.91 for New Jersey, $2.36 for Connecticut, $2.02 for Massachusetts, and $2.68 for Pennsylvania.
Even so, the State of New York’s Financial Administration expenditures totaled $1.96 billion in FY 2017, and the City of New York’s expenditures in the category totaled $588 million. And yet once again the person providing comparative data on state and local government finances from the Census of Governments is me, in my spare time, rather than someone paid to do so on the job. And I have run into more and more examples of questionable reporting coming out of New York, always in a way that makes spending seem lower than it actually is. Low-spending low-tax states where taxes are going down don’t like these compilations either. Many localities didn’t even report their finances to the Census Bureau.
Providing accurate comparisons that everyone can see, so they make up their own minds about the value they are getting from government, isn’t something anyone is going to be paid to do. It is something you could get paid to not do. Written 12 years ago.
With regard to those actually on the job rather than retired from it, however, state and local government expenditures on Financial Administration are going down as well. At the state government level U.S. spending per $1,000 of state residents’ personal income fell 22.7% from FY 2007 to FY 2017, with decreases of 34.1% in New York State, 23.8% in New Jersey, 25.0% in Connecticut, 27.6% in Massachusetts, 8.6% in Michigan, 8.4% in Illinois, 39.6% in California, and 20.6% in Colorado. There were big increases in North Carolina and Oklahoma.
There were FY 2007-to-FY 2017 decreases in Financial Administration expenditures, per $1,000 of personal income, at the local government level as well. The decreases were 21.3% nationwide, 25.7% in New York City, 15.0% in the Downstate Suburbs, 22.8% in the Upstate Urban Counties, 8.1% in Upstate Rural Counties, 18.3% in New Jersey, and 11.8% in Connecticut.
This is a function where advancing information technology ought to allow more and more work to get down at a lower and lower cost, so falling expenditures don’t necessarily mean falling services. At the national level, however, the press reports that the Internal Revenue Service is using obsolete computers and doing fewer audits as a result of ongoing budget cuts. The New York State Tax Department relies on the IRS for help in auditing is income payments.
New York’s expenditures on Other Administration at the state government level, and Central Staff and General Public Buildings at the local government level, were well below the U.S. average per $1,000 of personal income in FY 2017, both in New York City and in the rest of New York State. At the state government level, the $0.45 for the State of New York was below the U.S. average of $0.62. And at the local government level, the $1.59 for NYC and $1.96 for the rest of the state were each below the U.S. average of $2.35. Since the City of New York is one of just two significant local governments within its boundaries (the Port Authority of New York and New Jersey is the other), it has enormous economies of scale. But even rest of the state, with its many layers of local government, including counties, townships, cities, villages, school districts, and other special districts, is well below the U.S. average.
Adding state and local government together, and allocating the expenditures of the State of New York in proportion to personal income, you get $2.04 for New York City and $2.41 for the rest of New York State, compared with $2.96 for the U.S. as a whole, $1.61 for New Jersey, $3.11 for Connecticut, $3.15 for Massachusetts, and $3.73 for Pennsylvania. Only Florida, at $1.53, and New Jersey were significantly lower than New York.
For the most part there were reductions in state government “Other Administration” expenditures per $1,000 of personal income as well from FY 2007 to FY 2017. The decrease was 10.4% for the U.S., 35.8% for New York, 42.2% for New Jersey, 39.3% for Michigan, 63.1% for Illinois, 57.3% for California, 44.9% for Oklahoma, and 24.1% in Colorado. With regard to eliminating country governments, it does appear that some of the related officials have tuned up at the state government level in Connecticut and Massachusetts. The increase in Connecticut is inexplicable given its perpetual fiscal crisis over this period.
There were, as well, decreases at the local government level, by 13.8% nationwide, 36.4% in New York City, 38.4% in the Downstate Suburbs, 0.7% in the Upstate Urban Counties, 9.6% in the Upstate Rural counties, and 9.9% in Connecticut. Inexplicably, there were increases of 43.1% in Cook County, including Chicago, and 84.0% in San Francisco. While state-level spending jumped in Massachusetts, local spending plunged 77.6% in Suffolk County (Boston).
Back in New York, I hear there were big increase in spending on the Department of City Planning after years of austerity, with big raises handed out and high quality staff hired. There was even talk of updating the city’s commercial use and parking regulations, using research I had done 20 years earlier, before the project was killed just before a report was published. So what if the Department is in charge of a regulatory system that is a mess? Why bother? Despite the fact that obsolete rules make a large share of New York’s businesses illegal, often because they are the wrong side of the street, and make it illegal to build today buildings of the type that have become very valuable and desirable.
They were going to try again. But I subsequently heard that the DeBlasio Administration has once again killed the project. Why bother? If bureaucrats aren’t allowed to do a good job, they either leave or become sullen civil servants waiting around for a pension. And next think you know, a crisis emerges and bureaucratic idiocy becomes a real problem.
For example, have you been working at home during the coronavirus crisis? If so, perhaps you’d better make a campaign contribution to a state legislator or two and prepare to tip the Department of Buildings. New York City’s home occupation rules were written in 1958, with the intention of keeping those smelly working class people and their home work out of the better off neighborhoods in Queens and the Upper East Side. You’ll need a separate room for a home office tax deduction, but if you live in a small apartment, you probably violate the space limitations. And if someone shows up to work with you, or a customer shows up to receive a service, that’s a violation as well. “Rent parties” don’t appear to be specifically excluded. Try looking through here.
In New York City there is a traditional workaround for obsolete and unreasonable rules. Non-enforcement, often in exchange for some consideration, except in response to complaints, and against certain types of people. Evidently this practice dates back to the 1850s, according to the book Gotham, as Tammany Hall politicians made NIMBYs happy by banning taverns from being open on Sunday, and then took bribes to not enforce the law. Having laws that actually prohibit what really should be prohibited, and then enforcing them, allows to much equality.
There is pro-business corruption – taking bribes to allow what really should be banned, at the expense of consumers, workers and the community at large. And anti-business corruption – taking bribes to allow what should not have been prohibited to begin with, or even to not stall what already is allowed so long that a business goes broke. NYC specializes in the latter category.
In FY 2017 the State of New York spent $0.44 on Protective Inspection and Regulation per $1,000 of state residents’ personal income, below the U.S. state government average of $0.52, but the City of New York spent $0.60 on the function, far in excess of the U.S. average of $0.34. Adding it up, it comes to $0.86 for the United States, $1.04 for New York City, and $0.71 for the Rest of New York State, compared with $0.76 for New Jersey, just $0.39 for Connecticut (perhaps explaining that state’s high general administration expenditures), $0.65 in Massachusetts and $0.53 in Connecticut.
Whereas New York City has lots of complicated rules that are not enforced, or enforced only sporadically, California apparently has lots of complicated rules that are enforced by an army of well-paid incorruptibles.
Mandatory parking requirements, sidewalks, curb cuts, fire lanes, on site stormwater management, handicapped accessibility, draught tolerant native plantings… It’s a very long list that totaled $340,000 worth of work. They only paid $245,000 for the entire property. And that’s before they even started bringing the building itself up to code for their intended use. Guess what? They decided not to open the bakery or brewery. Big surprise.
I’ve heard many officials and professionals get very derisive in their assessment of such efforts. “Oh, they were idiots. They didn’t do their homework before they started their project. What? They thought they could just do whatever they want with the place? There are rules you know.” These are precisely the same individuals who butter their bread each day with impact fees and billable hours. They have no skin in the game.
That state spent $1.78 per $1,000 of state residents’ personal income on state and local government Inspection and Regulation. In California, one has to do an Environmental Impact Statement to building a building that the zoning already allows. A crank was able to use “environmental litigation” to hold bike lanes up for years.
For the most part, state government expenditures on Protective Inspection and Regulation are going down per $1,000 of personal income, like just about everything else other than spending on the current generation of anti-tax, anti-government, public debt-loving NIMBY-crazy seniors.
The trend in Protective Inspection and Regulation expenditures per $1,000 of personal income is generally down at the local government level as well – but with an 18.5% increase in New York City, and an 8.3% increase in the Downstate Suburbs. One might hope that the increases went to expedite reviews and approvals. That is not, however, the way to bet.
That concludes my tabulation of data from the 2017 Census of Governments. If you read all the posts, and looked at all the data, you might agree that it doesn’t quite match up with what you hear in the media. There is, however, nothing to prevent the media from using this information. Information that, unfortunately, you won’t find anywhere else. Will anyone else compile this data five years from now? And what if no one does? Will that mean those who have already taken more, compared with the past and with other places, without any worry about it even being questioned?
I’ll conclude my effort with a graphic summary.