Economic Freedom in Alabama

Forbes and the Pacific Research Institute ranked Alabama 25th among the states in terms of economic freedom, falling from 11th in the 1999 study. In the study, states were ranked across 5 sectors - fiscal, regulatory, judicial, government size, and welfare spending. Alabama's rankings in each of these categories were (1 = most free, 50 = least free):

Fiscal - 1
Regulatory - 30
Judicial - 6
Government size - 46
Welfare spending - 31

So, we ranked high in the fiscal and judicial categories, but low in the regulatory, government size, and welfare spending categories. These rankings are curious, to say the least.

46th in government size? What's up with that? Only Alaska, New Mexico, North Dakota, and New York ranked lower in that category, which doesn't seem to make any sense whatsoever. In the government size category, states were scored on 7 parameters:

1. State and Local Total Expenditures as a Percent of GSP 1999
2. State and Local Total Revenue as a Percent of GSP 1999
3. Rate of State and Local Government FTE Employees 03/2001 (Per 10,000)
4. Rate of FTE Local Government Employees as Percent of Rate of FTE State and Local Government Employees 2001
5. Legislators Per Million Population 2003
6. Total Number of Government Units 2002
7. Ratio of Local to State Total Education Employees

(Note: GSP = Gross State Product, FTE = full-time equivalent)

It sounds like the kicker here may be that Alabama has a higher percentage of state and local government employees than other states (ranking 18th, according to the Census Bureau) and that of all government employees, more are employed by the state than by local governments. That's just a guess, but it would agree with what I would expect. Alabama relies on state funding of education to a greater extent than most other states, as opposed to local funding. In any event, it's debatable whether these 7 categories constitute the best measure of "government size."