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Bacon
Chided but Unrepentant
I
didn’t pull any punches in my last column (“Paper
Cuts,” March 1, 2004), when I accused Gov. Mark R.
Warner of exaggerating the cuts he’d made to the state
budget in order to close a supposed $6 billion budget
shortfall early in his administration. So, it
shouldn’t come as a surprise that the governor’s
press secretary, Ellen Qualls, took exception to several
of my comments. Some of her complaints were substantive
enough to report back to readers of Bacon’s Rebellion.
Qualls
quarreled with three main points:
Regarding
the first point,
Qualls said, the governor never implied that he’d cut
state spending by 20 percent across the board. He cut agency
spending by 20 percent. By “agency” spending he was
referring to spending on administrative overhead, not
aid to local government or aid to individuals.
According
to Deputy Secretary of Finance Pamela Currey, “agency
spending” accounts for about 20 to 25 percent of the
budget. Therefore, “cutting every agency by 20
percent” translates into cuts actually amounting to four
to five
percent of the total state budget.
Fair
enough. I simply wasn’t sure what the governor meant,
and I said so in my column. Now I know. I’ve amended
the column to eliminate the confusion.
Regarding
the second point,
Qualls said that I used out-of-date budget numbers to
compare the level of state spending under the Gilmore
and the Warner administrations. In particular, I used
fiscal 2004 numbers that Gov. Warner had proposed to the
General Assembly last year, not the actual numbers as
modified by the legislature and signed into law, nor the
numbers reflecting administrative cuts the governor
ordered later in the year.
That
is a legitimate criticism. Obtaining the latest budget
numbers hasn’t been easy – they aren’t posted on
the Web, and even the secretariat of finance doesn't have
them readily available. But I will bring Bacon’s
Rebellion readers up to date as soon as I obtain them.
Regarding
the third point,
Qualls said the governor based his claim of eliminating
5,000 positions on data from the Department of Human
Resource Management. I had drawn my figures from the
Bureau of Labor Statistics suggesting that the number of
state employees had declined by roughly 1,400 in 2002,
but actually showed an increase
in the number of employees in the final months of 2003.
I
have to eat humble pie. The BLS’s “Current
Employment Statistics” that I quoted were estimates
subject to revision. Indeed, since publication of my
column two weeks ago, the Bureau has revised the average
number of state employees in
Virginia
downward by 2,000! The so-called increase in state
employment evaporated overnight.
Lesson
learned. I'll be a lot more careful how I use the BLS
numbers in the future.
According
to Currey, the total number of state employees dropped
from 115,361 at the start of the Warner administration
to 110,471 in December 2003, two years later – a net
reduction of 4,890. Currey made a
persuasive argument that the state numbers reflect
employment trends more accurately than the federal
numbers do because (a) they’re based on hard numbers,
not estimates, and (b) they express employment on the
basis of full-time equivalents, as opposed to the number
of state employees covered by unemployment insurance,
which includes a large number of part-time employees.[1]
But
I’m still not willing to let the Warner administration
totally off the hook. First, agency heads can play a lot
of games when forced to cut costs – and one is hiring
contract employees off the state books. The state
hasn’t tracked the number of contract employees until
the Warner administration, to its credit, started taking
head counts. Trouble is, the first count didn’t take
place until June 2003, when 4,809 contract employees
were listed. So, we'll never know the extent to which,
if at all, agency heads offset the loss of on-the-books employees by hiring temp
workers or contract employees.
Second,
payroll savings have been marginal. The whole purpose of
cutting head count is to control payroll expenses,
always an uphill battle when cost-of-living increases
are factored into the pay scale.
Drawing
upon Virginia Employment Commission numbers, I reproduce
here the payroll numbers for calendar 2001, the last year of
the Gilmore administration; calendar 2002, the first
year of the Warner administration; and the first
two quarters of calendar 2003, the most recent data
available.
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State
Government Gross Wages
(in
millions)
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1Q
2001
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2Q
2001
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3Q
2001
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4Q
2001
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Total
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$1,177
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$1,125
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$1,253
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$1,217
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$4,772
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1Q
2002
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2Q
2002
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3Q
2002
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4Q
2002
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Total
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$1,209
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$1,148
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$1,310
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$1,215
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4,882
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1Q
2003
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2Q
2003
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$1,200
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$1,128
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Source:
Virginia
Employment Commission, Quarterly
ES-202 data
Because
of seasonal fluctuations in state employment --
particularly adjunct faculty at state universities -- it
is not a valid exercise to compare total wages paid in a
particular quarter with the quarter immediately
preceding it. However, it is valid to compare a quarter
to the same quarter the previous year. Despite eight
percent across-the-board "agency" cuts enacted
soon after Warner soon after coming into office, year-to-year
comparisons show that total wages continued increasing
for the first three quarters of the new administration.
Part of the problem was that cost-of-living increases
offset some of the Warner administration's cuts in head
counts.
Total
wages did turn south by the 4th quarter of 2002, and
continued to do so for the next two quarters.
Bottom
line: Although Warner eliminated nearly 5,000 positions
in state government, about 4.2 percent of the head
count, total payroll for the first half of 2003 was only
1.1 percent lower than the same period in the last year
of the Gilmore administration. As additional data comes
in, the comparisons may improve but not enough
to change the picture of only marginal reductions
in government spending.
My
purpose here is not to belittle the accomplishments of
the Warner administration. Everybody knows that it’s
hard to cut government head count. State employees enjoy
protections that private-sector employees can only dream
of. Rather, the purpose of "Paper Cuts" was to show that the
cuts were not as deep or debilitating as suggested by the governor’s
rhetoric, borne as it was of a desire to justify his
proposed tax increases.
Based
on the evidence I have, I still don't think the
governor has made
that case. I'm
still sticking by last week’s analysis, although I’m
willing to stand corrected once I gather more
authoritative budget numbers.
-- March 15, 2004
1.
There are other, minor differences between the BLS data
and the state data. Says Currey:
"We
no longer count MCV employees as state government
employees (it is an Authority now), while the BLS does
consider them state government employees.
"There
may also be some overcounting by BLS as a result of
their using a pay period, rather than a single day, to
count employees. Using
the BLS method, if a position turns over during the
reference period, both the former and the new employee
may be counted for that month."
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