What does history say about growth paying?

I do not believe that the growth control element of the Douglas County master plan is grounded exclusively or even primarily on public finance concerns. Still, after the Feb. 1 meeting, I felt I needed a better understanding of whether, in Nevada, "growth pays for itself and more."

Since economic forecasting is so difficult and can never escape arguments over whether the essential assumptions are valid, I decided to do research using historical data. I hope the information I found will be helpful to the commission in its upcoming deliberations.

I looked at changes in population and overall local government budgeting in four counties that represent a broad spectrum of population growth patterns: (1) Clark County, (2) Douglas County, (3) Washoe County and (4) White Pine County.

Using figures from the state demographer and the department of taxation, I looked to see if the cost of local government per resident went down when population grew in these counties, as one would expect if "Growth has paid for itself and more."

I needed population figures and county budget figures for the four counties that were prepared using a consistent methodology over a meaningful period of recent history. I found that the state demographer has published population figures for each county as of the beginning of each fiscal year; and that beginning with the 1997-98 fiscal year, expenditures for each county. While the demographer's figures are only estimates and the department of taxation figures include budgeted estimates for multiple local agencies, the reports are prepared in a consistent format for each year and therefore they should provide a valid basis for examining trends and changes over time.

I did not attempt to determine what percent of the funding for these budgets would come from local taxes and what percent would come from distributed state taxes. How much out-of-county taxpayers pay for our growth and how much we pay to finance growth elsewhere in the state was beyond the scope of what I could determine. In any event, all the expenditures for local budgets have to come from somebody paying taxes somewhere and therefore, it all must be considered a cost of local government.

According to these sources, Clark County's population grew by 51 percent from the beginning of fiscal 1997-98 to the beginning of fiscal 2005-2006. The county's budget more than doubled growing by 134 percent the same period and the resulting budgeted cost of local government per resident grew by 59 percent.

For the same fiscal years, Douglas County's population grew by 28 percent and the budget grew by 56 percent. The resulting budget per resident grew by 22 percent. This figure may be misleading since the budget growth in the first two years of the period I looked at were unusually low, Beginning with fiscal 1999-2000, the Douglas County budgets and the resulting budget per resident began to grow substantially faster even after adjusting for inflation.

Washoe County's population for the period grew by 24 percent, its budget more than doubled, growing by 109 percent and the Washoe county budget per resident grew by 69 percent.

White Pine County experienced a 9 percent decline for this period, a 31 percent increase in total budgeted expenditures and a 43 percent increase in the calculated budget per resident.

For the same period, the Bureau of Labor Statistics reported overall CPI inflation to have been 21 percent.

No county that experienced population growth was able to hold the budgets for local government per resident down to the inflation level, much less reduce it. The largest increases in the cost of government per resident occurred in the most urban counties, Clark and Washoe. Even with the special disadvantage of having to spread imbedded historic costs over a declining population, White Pine County held the increase in its budgeted expenses per resident in check better than the major growth centers of Clark and Washoe counties.

In none of the three growth counties I looked at, did growth create any economies of scale that reduced the cost of local government per resident as the county grew, even after adjusting for inflation. Although the data is limited, the experience of Clark and Washoe counties also suggests that as urbanization increases, cost become harder to control.

-- John E. Carne is a Minden resident and retired attorney. He served on The Record-Courier's Reader Panel.


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