New York has one of the nation’s largest and highest-paid state and local government workforces, according to the latest U.S. Census Bureau data.

Based on March 2010 payrolls, the average annual salary per full-time equivalent (FTE) employee of state and local government in New York came to $62,365, third highest among the 50 states and 24 percent above the national average. Only California and New Jersey paid higher average government salaries. The state ranking breakdown is at the Empire Center’s Data Bank.

The high cost of living in downstate New York and powerful public employee unions provide much of the explanation for its relatively high government salaries. But those factors don’t completely explain the exceptional size of the government workforce in the Empire State, as illustrated in the nearby chart.

While other big states have relatively smaller government payrolls, New York’s average of 63 FTEs per 1,000 residents is well above the national average of 54 FTEs per 1,000.  The only states with larger ratios of government workers to population are small, such as Alaska, Vermont and Wyoming.  In fact, New York has significantly more state and local employees than any of the nation’s other most populous states. Using this measure, relative to population, even California and Illinois have small government workforces by comparison.

Why is New York’s public sector so large?  Likely explanations include New York’s unusually large collection of public authorities and public benefit corporations, including the state Metropolitan Transportation Authority and the New York City Health and Hospitals Corp., as well as New York City’s exceptionally large (and, to be sure, effective) Police Department.

Meanwhile, consider this: if New York was just halfway closer to the national average ratio of government workers to population, it would have about 85,000 fewer FTEs.  At the average salary, that would translate into savings of $5.3 billion.