Vogel notes “Nevada delivered a balanced budget while taxes stayed the same” but can’t fail to note that both candidates for Nevada Governor last year promised that they would not renew taxes scheduled to automatically expire. The promise – which appears to have been what most Nevadans wanted, if the polls that drove the major candidates’ campaigns were right – was not kept.

Here’s the complete study, and here are some important highlights:

• Bigger government damages a state’s economy.
• Nevada’s tax structure is generally good for the economy because it offloads a good chunk of the cost of running government onto tourists and companies who cater to tourists (who merely pass their tax burden onto their tourist customers).
• Nevada ranks medium to high on lists that compare tax burdens on residents – again, because Nevada offloads its cost of government onto visitors.

Ralstonian math doesn’t consider government spending a valid measure of government (!). Instead, it only measures how much taxes residents pay. By that measure, Nevada fares poorly.

And that’s the continual harping you’ll hear from those who use Ralstonian math – mostly government unions, socialists and people who curry favor with elected officials in order to trade political influence for a living.

(Full disclosure: ALEC named the webmaster one of a handful of its “State Legislators Of The Year” a couple of years ago).

Conservatives, on the other hand, understand that you cannot tax wealthy people, business owners, or businesses. Their positions of success gives them the ability to shift the cost of higher taxes onto others – either their employees (by not granting as large a pay raise, or moderating benefits, when it’s time to counter inflationary creep) or their customers (by raising prices) or their renters (by raising rents) or… well, anyone but themselves.

At the end of the day, the cost of tax hikes are borne by people who can least afford it.

Conservatives understand that.

So it’s a surprise only to California’s “progressives” that low and middle income people are leaving California faster than high income people (although all categories are leaving almost as fast as new rubes move in from foreign countries, folks who apparently are making their migration decision on the basis of a thirty-year-old marketing brochure). Here’s a sample of the news coverage – from the newspaper in California’s far-gone state capital…

The states without personal income taxes, such as Texas, Nevada and Florida, are the most likely destinations for high-income families and individuals leaving California. However, those states are also among the most frequent destinations of low-income families as well.

Strangely, California’s “progressives” are reacting to the news as if they are vindicated – it’s okay to raise taxes on the wealthy in order to help the lower and middle class after all, they say.

Ironically, the Las Vegas Review Journal ran a letter to the editor on the same day that this news broke from a woman who noted that her and her family’s favorite fast food breakfast went up in price by one third the same day the Nevada Legislature’s latest record tax hikes AND the minimum wage hike went up.

The Las Vegas Review Journal reports the story…

The Census Bureau says the Metro area hit 1.866-million last June 30, vs. local government estimates (passed up to the State Demographer before becoming “official”) that had us at just under 2-million. The difference is more than six percent, equal to three years of our current pace of 2% annual growth.

Cities and Counties in Nevada are incented to exaggerate growth because each jurisdiction’s population is a primary factor in determining how much of the state’s “Consolidated Tax Distribution” they get.

CTX, as it is known in government finance circles, is a complex formula that divvies up a group of state taxes including the car registration tax, liquor taxes, and cigarette taxes.

If Henderson, for example, has more people than North Las Vegas, then Henderson gets a bigger piece of the pie and North Las Vegas gets a smaller piece of the pie. As a result, all local governments exaggerate. Every ten years, they have to drop down to the official census count.

The unfortunate side effect of exaggerating growth is that anti-family lawmakers point to the exaggerated population counts and claim they need to raise taxes on existing Nevada families in order to provide government services to pretend people.

In response to having spent all of their substantial take from taxpayers, a coalition of 76 Democrats and 6 Republicans today passed a $13-billion tax hike. Nevada political pundits jealously coveted the plan’s “stable tax structure.”

The tax hikes include a full percent increase in sales tax, increasing the state income tax to 14%, and doubling car registration fees. The tax hike packages is about 65% the size of Nevada’s 2003 tax hike package, on a per-capita inflation-adjusted annual basis.

Standard & Poor’s has cut California’s credit rating to last place amongst 50 states.

Here’s coverage from the Wall Street Journal.

A closed mind will not help us reach the compromises that, whether you accept it or not, are part of the legislative process.

In the future, if you want to give me a message or talk with me, be a man…

Raggio won a GOP primary against Sharron Angle last year on his promise to not raise taxes, but has since “opened his mind.”

This Raggio mind changes state so fast, only Dr. Edgerton could capture it.

It’s gotta hurt, then, to wake up and read the Nevada Controller’s legally-mandated report on actual taxing and spending. Last fiscal year, state government spending increased 4.5% (although revenue “plummeted” by 2%).

We start with a media account of the critical 2008 CAFR. The actual CAFR will follow in a few days.

Me, well, I’m now a volunteer. But a game volunteer.

Just to catch everyone up, Parker wrote a column for the Las Vegas Sun here, which I believe was deceptive by quoting some parts, but leaving out the most important parts, of studies by such esteemed sources as the US Census Bureau and the Tax Foundation, about Nevada’s taxing and spending. When all parts of the Census and Tax Foundation studies are considered, Nevada is revealed, contrary to Parker’s pained portrait, as a state with midline state and local government funding, though we spend those dollars ineffectively. Parker contends that Nevada’s state and local government is “the smallest.”

I posted a rebuttal to Dr. Parker’s opinion the same day Parker’s article was published in the Sun. Ten days later, I wrote about the interesting reaction to Dr. Parker’s and my debate here.

This weekend, Parker posted his counter-rebuttal on his own website: linked, and reproduced here, with my endnotes added:

A Reply to Former Senator Bob Beers About State Spending

I want to thank former Senator Beers for his reply to my column in the Las Vegas Sun, which was printed in the Las Vegas Review Journal recently. It is an important issue, and I appreciate him keeping it before the public so we can clear up apparent areas of confusion, even if he mistakenly thinks I was wrong or reporting selectively. I insist, emphatically, that I was telling it like it is.[A]

Senator Beers says I did not give details on my sources, but newspapers appreciate brevity. Had he asked me, I would have gladly shared my sources and calculations, and like any professor I appreciate people checking my facts. I am easy to find online for anyone with access to a search engine, especially if you spell my name correctly, and I have made the data available on my website.[B]

Senator Beers reports that state revenue was higher than the number I reported for expenditures.[C] We were near the peak of the housing bubble at the time, and revenues were unusually high. Rather than saving the surplus for a rainy day, Governor Guinn and the Legislature chose to give most Nevadans a pretty significant tax rebate. I said I was reporting expenditures, which were more representative of the actual state budget than revenues.[D]

Senator Beers also reports that the data he found did not exactly match what I reported. In the month between when I downloaded the data and the column was published, it seems a new Statistical Abstract came out. I have checked these new data, and include them, with updated calculations, on my website. [B] Nothing significant changed. As in prior years, Nevada still ranked 50th in the nation in the relative number of state employees, total state and local government employees, and employees in higher education, as well as 49th in the nation in K-12 employees.

While Senator Beers admitted that I might be right about the relative number of employees in state and its higher education system, he argues instead that we are overpaid. He reports that government employees make significantly more in Nevada than the national average, but the data he cites – Table 448, column M – only reports earnings for local government employees[E], which are three-quarters of the total. That is relevant for county commissions and city councils, not the state legislature[F]. For the quarter of employees working for the state, average earnings are equal to the national average even though Nevada’s cost of living is higher than average.[B]

Regarding how our state and university benefits compare to those of other states, I don’t yet have a consistent set of data on this, but I will look for one. If Senator Beers has one, I would appreciate him sharing it with me. I do know that we compete in a national marketplace, and our benefits are reasonably competitive but not any more than that[B]. You should not compare our benefits against those in casinos[G], but against other states and other universities.

On his web posting, Senator Beers said that I think we should “further expand government.” I don’t know how he reads that in what I wrote. I certainly doubt that my former economics students – there must be several thousand working in Nevada by now – would say that I advocate big government, and I am quite critical of excessive government. Instead, I wrote that we should not make the smallest state government[H] in the country even smaller, for it would damage the future of the universities and the state. These are not equivalent statements[I].

Finally, I apologize if I offended any Nevadans who earned their degrees online or at small private colleges when I said Nevada only had two universities.[J] I certainly support the desire of anyone to improve themselves through education, but I also assume anyone who has graduated from UNR, UNLV, or any other similar university knows that the institutions are not comparable. The fact that Senator Beers suggests that they are causes me some concern. Is that his objective for our state universities?

My notes to Dr. Parker’s post…

[A] Keynes was just as emphatic that it’s cool to foist irresponsible levels of government debt off on future generations. He was wrong, too. Your enthusiasm does not make you right – in fact, your undeniable self-interest makes you suspect.

[B] Then reference your work. I can understand not doing it in the Las Vegas Sun – it’s chronic on their opinion pages. But here, on your own webpage, it’s just too easy to link to your work. For you to not do so is telling.

[C] Actually, I don’t recall making that argument. Are you creating a paper tiger? I did lay out a series of calculations using Census Data, which you are apparently not disagreeing with in any detailed manner, that Nevada’s per-capita state-and-local government spending at about the middle of the 50 states.

[D] This seems like introducing a bushel of bananas into an argument sorting out apples and oranges. Worse, it sounds like you’re admitting to having included the 2005 tax rebate (where state government apologetically gave taxpayers back some of what they’d been overcharged) as an expenditure? The proper accounting treatment would be to not include those funds in either revenues or expenditures, but certainly never as an expenditure.

[E] Professor Parker is correct. My initial post was incorrect. Column M shows local government employee wages, where we rank sixth. Column J (here’s the data table) shows state government employees separately, where we rank sixteenth. Both rankings are above the national average. My original argument, that Nevada’s government employee benefits are much richer than average, which would lift our rankings compared to other states, remains subject to further study.

Remember, though, that Professor Parker’s original essay argued that Nevada’s low number of government employees per thousand citizens proved that Nevada’s citizens were chintzy in funding goverment. I argued that it was deceptive to “prove his case” with that tiny part of the Statistical Abstract of the United States, especially when the rest of it showed Nevada’s above-average government wages.

[F] Incorrect. This is absolutely the Legislature’s concern. NRS 288 (like all state laws, this exists soley by legislative authorization) allows government unions in Clark and Washoe Counties to prohibit city councils and county commissions from exercising common sense. State government wages are set directly by the Legislature. Both are clearly the Legislature’s doing, and their rehabilitation are clearly the Legislature’s responsibility.

[G] I wasn’t comparing them to those in casinos. I was comparing them to those throughout the private sector. Employment benefits in casinos are actually above average (though not up to government levels).

[H] This is how we got engaged in this debate in the first place. All evidence points to Nevada having a per-capita mid-sized state-and-local (or just state) government, unless you deceptively quote tiny parts of studies, as you did in your original Sun article. It’s not a very academic term, but around Nevada’s dinner tables, your case is what we call “bullshit”. I am floored that you are not ashamed to make it.

[I] Sorry, Dr. Parker. You cannot get away with saying that your opposition to making state-and-local government smaller (reflecting the economic shrinkage in our job market, incomes and Nevada at large) does not equate to further expanding government. It does. You sound like a politician, running for office. Campaign season is over.

[J] More incorrect. Remember, you said there are no private universities in Nevada. My point was not to try to compare them to you, it was to point out your very large factual error. But while we’re on the topic, Touro University’s medical school is larger than the University of Nevada. Not counting their medical students on campuses in other states. Is that what you mean by “small private college?”

Parker’s column essentially says Nevada’s people have been terribly chinzy when it comes to funding government, particularly as compared to other states. It would be a mistake, he implies, to not raise taxes and further expand government.

As an economist, government or not, Parker should be embarrassed by his intellectual dishonesty.

He writes:

According to the most recent version of the Statistical Abstract of the United States, only 5.5 percent of Nevadans work for the state or local governments, the lowest share in the 50 states by far.

This is probably a true statement, although the Statistical Abstract of the United States is very large, and Parker should offer a more detailed attribution. However, it presents only one half of what’s wrong with Nevada’s structure of government.

The very same authority (the Statistical Abstract of the United States) also says our government employees are paid the six highest of all states. Here is the Statistical Abstract of the United States. Table 448 – here is a direct link – column M details average earnings in 2006, the most recent year reported. [Subsequent correction: column M details local government only. Column J details state government, where Nevada ranks sixteenth, still above the national average.]

These wage numbers – in which Nevada ranks the sixth highest state – do not reflect Nevada’s exceptionally generous benefits package.

All of Nevada’s government employees participate in perhaps the only “defined benefit” retirement plan found in the entire state, public or private sector. And for local government and school employees in Clark and Washoe County  – well over half of all state and local government employees in Nevada – taxpayers foot the entire bill.

To put it in terms that most taxpayers can understand, where we lose 6.2% of our paycheck to fund social security, our government employees do not. So, for a given wage, they take home a bigger paycheck. (The rest of Nevada government employees, by the way, fund half of their own retirement plans out of their paychecks but it’s over 10% rather than 6.2% – on the other hand, they get alot more retirement income and retire much younger than the rest of us.)

If you factor in how government retirement works in Nevada compared to the five states that outrank us in average government pay, we’d likely rank higher than sixth.

Nevada’s “structural deficit” lies in giving government unions too much power, which has resulted in our having the fewest government employees per thousand residents (dutifully reported by Parker) who are paid at or near the top of America’s government pay scale (incredibly omitted by Parker).

Parker next rambles down the taxes-per-capita path without attributing his statistics. For example:

Adding in spending by local governments, Nevada ranks 48th in government spending as a share of income.

Since the Statistical Abstract of the United States does not explicitly calculate this, he owes us a peek at the bar napkin he scratched his out on.

Here’s mine:

Statistical Abstract of the United States, Table 424, column B has total revenue by state for 2005. Table 12, column AK, has 2005 population estimates, which appear to be overstated for Nevada. Nevertheless, you can put the two of those tables together to calculate tax revenue per person. Nevada ranks 29th, at $7,868 per person.

Since this clearly does not support the “chintzy Nevadans” refrain, and since Nevada’s historically modest government has not surprisingly produced a society with a robust economy, low poverty and high incomes, Parker had to track down average income levels. They’re here, in table 684, column M (unfortunately, this lists family median income by state for 2006, which is not quite average income for 2005, but it’s close).

And Nevada ranks 42nd, ahead of 8 states. Not 48th.

Parker finishes up with the now almost-legendary deception that:

The Tax Foundation reports that Nevada has the next-to-lowest tax burden in the nation, just slightly above Alaska. That ranking is roughly where we have been since the 1970s.

The Tax Foundation actually found that while we rank low on the taxes we assess on ourselves, we rank high on the taxes we assess from non-residents (tourists), and at the national median for total spending per capita. Once again, Parker selects a deceptively small subset of the available information to lead readers to an incorrect conclusion.

In case his subtle sins of omission are not enough, Parker finishes with a couple of whopping lies:

…there are also many things the private sector cannot efficiently provide. Like national defense, affordable and available public education is one of these.

and

Unlike most other states, Nevada has no private universities, so this is an important responsibility.

These are really the heart of the matter for Parker. As a government economist in Nevada, he’s been enjoying doubled cost-of-living raises for years (once for inflation and again from the NSHE “merit” program under which almost all professors get an extra COLA bump). And if we don’t raise taxes, he may not get either next year.

Of course the private sector can efficiently provide education. In Las Vegas, for example, Faith Lutheran‘s middle school tuition was $7,260 in 2006 including capital costs and debt service; that same year, Nevada public school funding was $7,345 not including capital costs and debt service.

And there are a growing number of private colleges in Nevada, including: Touro College, Sierra Nevada College, DeVry University, National University, ITT Technical Institute, University of Phoenix, Morrison University, University of Southern Nevada, with my apologies to the many more I don’t have time to list.