Pataki’s Smaller Gov’t

by E.J. McMahon |  | New York Posts

Much of Gov. Pataki’s proposed state budget (his costly expansion of health care, in particular) is a far cry from the leaner, cleaner fiscal plans of his first term. But in at least one crucial respect, New York’s revenue shortfall has prompted a welcome return to his budgetary roots: For the first time in seven years, the governor is launching a concerted effort to reduce the size of the state work force.

Pataki plans to cut 5,000 government jobs through attrition and early-retirement incentives by the spring of 2003. Based on the current average salary and fringe-benefit cost for state employees, 5,000 fewer workers would ultimately translate into reduced spending of $275 million a year (not counting the as-yet-unspecified costs of early retirement). It would also trim the executive-branch head count to at least a 20-year low – lower than when Mario Cuomo took office as governor in 1983, according to figures from the State Comptroller’s office.

Indeed, though Pataki in recent years has allowed state spending to rise at the fastest pace since the end of Cuomo’s first term, he’s done a much better job of controlling the state payroll.

During his first two terms, Cuomo boosted the employee head count by 15 percent, to a record level of over 257,000 workers. A severe recession forced him to trim the payroll in 1991 – but by 1994, state government employment was rising again.

In 1995, the newly-elected Pataki faced a state budget gap of nearly $5 billion – at least as large, proportionately, as the one that materialized in the wake of Sept. 11. He cut 20,000 positions during his first year and a half in office. By 1997, he’d pared the state’s total head count of full-time equivalent (FTE) employees to just over 222,000.

And payroll spending hasn’t exploded since: Over the last four years, the estimated total number of FTE state workers counted by the Office of the Comptroller has risen by about 3.5 percent, but virtually all of that occurred in the state court system (whose caseload has skyrocketed) and at the State University of New York and City University of New York (whose enrollments have grown). Otherwise, throughout this period there was virtually no significant change in the head count for executive branch agencies.

Following Pataki’s lead, the state Senate and Assembly also have trimmed their staff totals by about 10 percent – although this still leaves New York with the most expensive and heavily staffed state Legislature in the nation.

The state operations budget is often belittled as a source of potential savings, because employee wages and benefits consume only one-fifth of Albany’s total spending. But it’s clear that work force reduction under Pataki has paid big dividends for taxpayers. At current average salary and benefit rates, a 1994-level state work force would cost an additional $676 million this year. If state employment had risen back to the peak level of the Cuomo era, those costs would be at least $1.6 billion higher.

Regardless of who’s in charge, the toughest challenge for state and local politicians isn’t trimming payrolls in a budget crisis – it’s stopping them from growing in flush times. Consider the example of Rudolph Giuliani, who inherited a similar fiscal mess when he became mayor in 1994. In his first two years in office, Giuliani also closed a budget gap by reducing head count significantly via attrition and early retirement incentives. But by the time he left office, the number of full-time employees had risen to its highest level at least a decade.

Pataki, by contrast, has kept a pretty tight lid on employment by the agencies he most directly controls. He deserves credit for this accomplishment. Indeed, under the circumstances, he should be encouraged to do much more. Why stop at 5,000?

- E.J. McMahon is the Research Director at the Empire Center for Public Policy.