No one likes to diet. It’s hard and takes an awful lot of willpower. But sometimes life doesn’t give you a choice.
Recent unemployment data from the Texas Workforce Commission has set off alarm bells and revealed some brutal new realities.
For April, the state’s unemployment rate jumped to almost 13 percent as “the Texas economy lost 1,298,900 nonfarm positions.” It also tops the state’s worst-ever monthly unemployment rate of 9.2 percent reached in November 1986.
What’s more, employment in virtually every sector suffered a contraction, with the largest year-over-year losses seen in the leisure and hospitality, and the mining and logging industries, down 39.3 percent and 17.9 percent respectively.
But then there’s government.
Despite widespread private sector job losses and Great Depression-like economic conditions, public sector employment has barely taken notice. The number of Texas government employees fell year-over-year by a microscopic 0.4 percent. No other industry’s workforce has weathered the storm quite so well, save those in the financial activities sector.
That public sector employment has gone largely unscathed is a point worth remembering. First, because most governments’ largest expense is payroll. Second, because there are some tough conversations ahead.
This summer, cash-strapped local governments will begin writing their budgets for the upcoming fiscal year, which starts in the fall. Most will have to contend with sharply lower revenues and elevated spending levels, the likes of which have grown fat thanks to soaring sales and property tax revenues. Local officials must cut spending if the Texas economy is to fully recover.
Then in January, the Texas Legislature will convene for its biennial session and appropriators will start drafting the state’s next two-year budget. Expectations are that lawmakers will be staring down a multibillion-dollar budget shortfall, and here, too, how they bridge the gap matters. Make smart choices and the economic rebound will be swift. Choose poorly and the damage could linger.
Difficult decisions lie ahead. But more so than ever, Texans need their elected officials to right-size government. Gone are the days when we could afford to ignore bureaucratic bloat and government glut. Today, every dollar must be stretched and every penny saved.
Ample opportunity exists to reduce the size of government. The Texas Workforce Commission’s employment data confirms as much. The real challenge is knowing which specific programs and personnel need to go.
One tool to aid decision-makers in that regard is the use of third-party efficiency audits. When conducted properly, the practice lets an outside auditor do a deep dive into an entity’s budget and operations “to examine fiscal management, efficiency, and utilization of resources.” Unlike regular audits, an efficiency audit seeks to determine the relationship between certain inputs, such as the amount of tax dollars spent, and the outcomes achieved. Evaluating government in this fashion can really help to “generate ideas for significant cost savings,” like identifying positions that are no longer needed and opportunities to consolidate functions.
Paring down the public sector workforce isn’t the only way to rightsize payroll expenses. Decision-makers can also institute hiring freezes, suspend across-the-board pay raises, pause travel and training programs, and reform public pension programs. These are all ideas that should be strongly considered, in tandem with efforts to reduce the number of non-essential public employees.
Texas governments must go on a diet. Today’s private sector, decimated by the coronavirus lockdown, can no longer afford to pay for a portly public sector. Whether officials like it or not, it’s time for governments to lean up.