West Virginia government grows, shrinks - Beckley, Bluefield & Lewisburg News, Weather, Sports

West Virginia government grows, shrinks

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When the West Virginia Capitol was completed in 1932, it housed every office of state government.

Every single office of state government … in one building. That's unthinkable today.

Barring another mid-year budget adjustment, West Virginia state government is an $11.47 billion enterprise that employs about 43,000 people directly and an unknown number indirectly.

While the size of the federal government is debated endlessly among progressives, conservatives and libertarians, the size of state government here in West Virginia is seldom discussed. When The State Journal asked several people for their thoughts about the size of state government, many were hard pressed to answer, as they had not thought about it.

Cal Kent, a professor of business, director of the BB&T Center for American Capitalism and a distinguished fellow in economics at the Marshall University Center for Business and Economic Research, said he has thought about studying exactly how big state government is — and local government, too, considering how much of local government is controlled by the state — but he realizes that would be a formidable task requiring the time of a number of researchers.

"We are a high-need, low-financial capacity state," Kent said. People are older, poorer and more isolated — that is, rural — than the national average," he said. "It's very expensive to provide state government under those circumstances. 

"It's not surprising that we have a large government," he said.

As state government has grown in the past 81 years, its core functions as outlined in the state constitution have remained in the Capitol. It's the other, newer functions that have spread. Whoever thought in 1932 that West Virginia would be part of a multi-state gambling operation? Or building four-lane highways so people could drive from Morgantown to Charleston and back in one day?

Measuring growth

Whatever the growth trajectory of state government has been since the early years of the Great Depression, it has leveled off, both in terms of employment and the size of the state budget.

Where the federal government can spend beyond its means by borrowing billions upon billions of dollars and running trillion-dollar deficits, the West Virginia Legislature must produce a balanced budget each year. As some revenues shrink and some stabilize, so too does the overall size of the state budget and state government.

According to TransparencyWV.org, a website maintained by the state auditor's office in conjunction with the governor's office, the size of state government based on spending has almost doubled in the past 14 years. The site lists the total state budget as about $6.87 billion in 2001 and about $11.47 billion this fiscal year.

All three major revenue sources — general revenue, special revenue and federal revenue — about doubled in that span.

The state budget peaked at $12.06 billion in 2011 and has declined each year since.

In terms of employment, the state had 41,405 employees in 2002. That number increased to 41,889 in 2007, then dropped to 40,550 in 2009 before rising to 42,274 in 2012.

There's another way of measuring the size of state government. That's by calculating the state government budget against the state's gross domestic product.

West Virginia state government accounts for about 13 percent of the state's GDP. That's the second-highest percentage in the nation, trailing only Mississippi.

On the other hand, that number has remained fairly steady or even declined in the past few years, depending on how it is calculated.

In its most recent statewide economic outlook, the West Virginia University College of Business and Economics attempted to answer the question of how large state government is. Using U.S. Census Bureau data, WVU researchers found that total state and local government spending equals 26.5 percent of West Virginia's total personal income, compared with the national average of 24.4 percent. That is among the highest in the nation.

Yet when measured as state and local government expenditures per capita, West Virginia ranks low.

"Overall, the answer to the question ‘How large is state and local government in West Virginia?' is mixed depending on the metric used: The absolute size of the government is relatively small, but a relatively large portion of the state's resources are devoted to government activities," the WVU report says. 

One analyst's thoughts

Ted Boettner, executive director of the West Virginia Center for Budget and Policy, was willing to share his thoughts on how large state government needs to be.

"The big test of state government is not its size but whether it is making investments in the things that really create good-paying jobs and communities we all want to live in," Boettner said. "Right-sized government makes smart investments in education, transportation, innovation, workforce development, public safety and health care.

"The worst thing we could do is engage in a race to the bottom with other states by discounting our future and not having the resources we need to make our state prosper."

Boettner said rather than striving to be a cheap place to do business, West Virginia needs to be a good place to do business. 

"Instead of being a state that makes it harder for families to make ends meet, we need to be a place that rewards hard work, helps people find work and ensures that everyone has access to quality child care, health insurance and education," he said. "We got to where we are today because the people who came before us made the right decisions to build schools and roads, make college affordable and create strong, safe communities. Abandoning these commitments will undermine our economy and hold jobs back. Now more than ever we need the kind of investments that help to create jobs.

"We owe it to our children to be good stewards and provide them with a strong future and a world-class public education. Their legacy is our responsibility.

"We also owe it to our business community. They cannot thrive without a well-prepared and healthy workforce, a good transportation and information system and access to customers. And businesses won't have customers unless we build a strong middle class that will create a stable source of demand for the goods and services that they provide."

Equilibrium

Based on most measurements, it appears West Virginia state government has achieved something of a balance point. Its overall size in most metrics has remained fairly stable the past few years, indicating a balance has been reached between what people expect and what they are willing to pay for.

One question is whether government will be able to maintain that balance as revenues trend downward.

Kent said West Virginians need their state government, but they can't afford everything they need government to provide.

"All the voices are out there, and all the voices have a point," he said.

"We just don't have the capacity to do everything we ought to do," he said.