Spending by state and local governments has grown nationwide without interruption for decades, in good times and bad times alike. It has not fallen since 1944, and it has grown faster than the rate of inflation every year since 1982. The rate of spending growth is down slightly from the late 1990s, but governments remain one of the healthiest parts of the economy. They are growing at a time when corporate profits and cash flow are declining.
State and local governments also have been doing more hiring than firing since the economy weakened. States employed about 31,000 more workers in December than a year earlier, an increase of 0.6%, the Bureau of Labor Statistics reports. Local governments employed 189,000 more workers, up 1.4%. Both are historic highs. By contrast, the private work force shrank by 467,000, a decrease of 0.4%.
Meantime, Nevada Gov. Kenny Guinn reneged on a request he made in November for residents to propose spending cuts. Guinn rejected a proposal by Republican lawmakers to cut $479 million in state spending, saying the recommendations came "too late" for him to alter the budget he hasn't yet presented to the Legislature.