Tag Archives: Oneida County

Unsustainable Spending Growth Hurts

Local governments cut about 76,000 jobs last month and over 143,000 in the last three months. As David Leonhardt explains:

Since the Labor Department began keeping records in the 1950s, the only other time that the cuts were so steep was in the harsh 1981-2 recession.

Meanwhile, David Vock over at Stateline.org has an eye-opening piece on the ways states have foisted their fiscal problems on local governments and private contractors:

Anthony Picente decided he’d had enough. The state of New York had fallen $34 million behind on payments to Oneida County, the Upstate county around Utica where Picente is the top elected official. Picente was counting on the money to reimburse the county for services it provides that are in high demand these days: job training, food stamps and other key pieces of the social safety net.

By July, Picente hadn’t seen a check from Albany in months.

The county passed its troubles along to vendors:

… To deal with its own cash crunch, Oneida County started doing to its contractors what the state was doing to the county: skipping payments. At one point, the county owed a local agency for youth roughly $800,000.

Austerity is painful. When people come to count on services and jobs, they suffer when the rug is pulled out from under them.

But it is not reasonable (and ultimately more painful) to bury one’s head in the sand and pretend that state and local government spending can continue to go on at its current pace. As I have noted before, state and local governments have grown at about twice the pace of the private sector for decades:

Since these governments depend almost entirely on the private sector for their resources (they only have what they can tax or borrow from the private sector, plus a little more that they charge in fees), this is simply not sustainable.

In fact, I view the state and local government sector as not unlike the finance or housing sectors of a few years back: unsustainably large and systemically risky. 

And as the current fiscal crunch shows, it isn’t just the taxpayer that is getting hurt: state and local workers, private contractors and those who have come to depend on government services are all feeling the squeeze. In my view, the real shame is that unrealistic and unsustainable promises were made to these people. Public sector unions and advocates for the poor should be the first to object to unsustainable growth in state and local spending. 

In a few days I plan to post on the reasons why state and local governments have experienced such excessive growth.