The economy is humming, so why are state agencies bumming?
THE TIMING COULDN’T HAVE BEEN WORSE. AS THE Texas Department of Transportation embarked on an ambitious $2.5 billion construction program last year to ease worsening traffic conditions across the state, private companies—spurred on by expansive economic growth and desperate for experienced employees—began luring away the agency’s veterans with lavish pay increases. One engineer left to join Dell Computer, which doubled his salary to $70,000, and several bridge designers received a $20,000 pay raise by going to other private firms. “We’ve lost a lot of historical knowledge,” said Mike Behrens, the department’s assistant executive director for engineering operations. “We’ve got a big workload out there, and we need every person we can get. We’re fighting with the folks in the private sector.”
As Texas’ economic boom continues, the state finds itself enjoying what seems to be the best of times. Unemployment has dipped to a nineteen-year low of 4.7 percent, inflation is negligible, and consumer spending remains high. But like the first throb of a dull headache after too much champagne, there are signs that we are paying the price for prosperity. The painful consequences of unchecked economic growth are visible everywhere: Air pollution is on the rise, commuters now lose 1.4 million hours stuck in traffic each day (double the time lost fourteen years ago), and though interest rates are below 7 percent, homes are becoming less affordable, and low-income families are having to wait longer and longer to move into public housing.
Perhaps the biggest downside, however, to the booming economy is the pressure it places on the public sector, and the transportation department is not alone in its struggle to keep its best employees and attract talented new ones. Many state agencies are increasingly strapped for good workers just as the demand for their services is at an all-time high. In 1998 the boom that yielded intoxicating stock splits and instant millionaires also produced a 17.3 percent state employee turnover rate—up an unheard-of 3.1 percent over the previous year. The private sector sustained only a 12 percent turnover rate. Though the government has always been a training ground for the private sector, and has always lost employees to it, last year workers bolted to take advantage of the perks private companies can offer. Consider the hardest-hit areas:
Prisons. In East Texas a railroad boom linked to NAFTA has prompted the Missouri Pacific Railroad to raid the local prison, the Coffield Unit in Tennessee Colony. “It’s the good times that really hurt us,” said warden Keith Price, who has lost about seventy workers. “Our employees have an opportunity to make some big bucks, and they say, ‘I can always go back to work for the prison if times get bad.’ We’re kind of the fallback.” Price has had to maintain staffing at his four-thousand-inmate facility by encouraging correctional officers to work overtime. “That’s been keeping us afloat,” he said.
The Justice System. At the Texas Supreme Court, Chief Justice Tom Phillips keeps losing deputy clerks—at least seven of nine to date—to the hot job market in Austin, which has no trouble beating the state’s $22,000 salary. “There are other things to do in Austin besides the university and state government, and that didn’t used to be the case,” Phillips said. Austin’s high-tech growth, driven partly by companies drawn to the city’s natural charms, means that the capital “has a cost of living higher than anywhere else in the state,” he added. “I guess that’s why it’s a good reason to have your state government in a place like Juneau, Alaska, or Jefferson City, Missouri.”
Public Schools. As the economy grows, so does the population, which has put tremendous strains on the public school system. Of Texas’ 1,036 districts, 122 have accounted for 80 percent of the enrollment growth over the past five years. Those school districts have scrambled to hire qualified teachers—particularly in math, science, foreign language, and special education—but they have posted mixed results: The Houston Independent School District, for example, opened its doors this school year understaffed by three hundred teachers. The Cypress-Fairbanks Independent School District in the Houston area has grown by two thousand to three thousand students each year “with no indication that the rate is going to slow,” said Dan Casey, an Austin consultant to fast-growing school districts. “The major dilemma they face is space, and they’re having to recruit hundreds of teachers every year.” Though the Legislature spent $200 million on new school facilities last session, a coalition of fast-growing districts is appealing to lawmakers for state aid again this year.
All this is unwelcome news for state lawmakers, who are beginning to feel like the unsuspecting dinner guest who got stuck with the bill. They arrived in Austin in January with the promise of a $5.6 billion surplus—a windfall from escalating sales-tax revenues courtesy of economic growth. But they quickly found out that all but $2.5 billion of that money will be consumed by the demands of our state’s exploding population, which has increased by 3 million since 1990. As more people move to the state to take advantage of the job market, more sales taxes are collected. But the growth also means that more money will have to be spent on schools, prisons, welfare payments, and other state services.
Stopping the hemorrhaging of experienced public workers will also cost money. Republican state senator Bill Ratliff of Mount Pleasant, the chairman of the finance committee, acknowledges that “something must be done” to help state agencies retain valued workers; after all, doing nothing also costs money. The state auditor estimates that the 3.1 percent increase in turnover from 1997 to 1998 cost the state between $33 million and $66 million in expenses for recruiting, training, and lost productivity. Democratic state senator Gonzalo Barrientos of Austin has advocated an across-the-board pay raise for all state employees, but according to Eric Wright, a clerk at the finance committee, just a $100-a-month increase would cost the state at least $230 million a year. That proposal will have to compete with a wish list of other political agendas, which includes Governor George W. Bush’s proposed tax cuts.
Regardless, lawmakers will have to deal with the bad side of the boom in some fashion to cope with the problems of growth. And budget writers at the state capitol—as well as school administrators, new home buyers, and drivers everywhere—are no doubt haunted by the old saying: Be careful what you wish for, because you just might get it.