Figure 6
State and Local Bureaucracies Outpace Growth of the Private Sector in the 1990s
2.0%
1.91%
1.5%
1.48%
1.46%
198090
1.28%
199096
1.0%
0.5%
0.0%
State & Local Government Employment
Total Nonfarm Employment
and local bureaucracies has come at a time
Jersey, Lowell Weicker of Connecticut, Bruce
when more and more governments are turn-
Sundlun of Rhode Island, Bob Casey of
ing to contracting out and other forms of pri-
Pennsylvania, and George Voinovich of Ohio
States increased
vatization. The privatization trend should lead
all enacted "soak the rich" income tax increas-
their tax burdens
to reduced bureaucracies, not expanded ones.
es. Those states suffered substantial losses of
by an unprece-
In addition, numerous states have imposed so-
jobs, income, and investment capital relative
called hiring freezes, yet their payrolls contin-
to the rest of the nation following those tax
dented amount in
ue to expand. For instance, Arkansas has been
hikes.12
1990 and 1991.
under a hiring freeze for more than a decade
In 1995 the trend was dramatically
now, but the state added 2,000 additional
reversed. Twenty-eight states enacted tax cuts
employees a year from 1990 to 1996. Total
that year. "[Nineteen ninety-five] was the
state employment there increased by 20 per-
largest tax-cutting year for states in a decade,"
cent over those six years.9
concluded economists Arthur Laffer and
Victor Canto in their annual report ranking
What Drives Spending? Revenue Growth
the tax competitiveness of the states.13 In 1996
The first half of the 1990s was a period of
another 28 states cut their tax burdens, and in
economic stagnation, steeply rising tax bur-
1997 and 1998, 30 states cut taxes.
dens, and rising state expenditures on welfare
In Michigan John Engler has cut taxes
and health care.10 States increased their tax
more than 20 times in eight years in office and
is now planning to cut the state income tax
burdens by an unprecedented amount in 1990
from 4.3 to 3.9 percent starting in 2000. New
and 1991. Moreover, rates of income taxes, the
most destructive of state taxes,11 were raised
Jersey's Christine Todd Whitman cut income
taxes by 30 percent in 1995. Wisconsin's
substantially in many states. Govs. Pete
Tommy Thompson has cut income and prop-
Wilson of California, James Florio of New
10