by Howard Stephenson
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The Utah Legislature has increased state spending at a faster rate during the Huntsman administration than it did during the administrations of Governor Leavitt and Governor Walker, according to a recent analysis by the Utah Taxpayers Association. State spending consisting of education and school funds as well earmarked general funds has been increasing at an annualized rate of 14.6% during the Huntsman administration compared to 11.2% for Governor Olene Walker and 5.6% for Governor Mike Leavitt. While governors play a very important role in the formation of budgets, the Legislature’s role is equally significant. Annualized State Spending Growth during Leavitt, Walker, and Huntsman Administrations (FY1993 to FY2008)
Calculations by Utah Taxpayers Association based on data from Governor’s Office of Planning and Budget. Education/general fund includes earmarked sales taxes that are usually not reported as such in GOPB and legislative documents. Huntsman growth rate includes proposed FY2008 budget. In 1993 total state spending was $3.97 billion. Governor Huntsman’s proposed budget for FY2008 is $10.7 billion. Combined inflation and population growth during this 15-year period has been about 5.2% annually. The annualized growth rate for each governor is based on spending increases from the preceding governor’s last budget to the next governor’s last budget. Even though much of the Leavitt administration coincided with the economic boom of the mid to late 1990s, annualized state spending growth rate during Leavitt administration was significantly impacted by a recession which caused flat-to-declining revenue growth for three years. During the Leavitt administration, public school enrollment increased by less than 1% per year while enrollment growth during the Huntsman administration is expected to be in the 2% to 3% range. However, this difference in enrollment growth accounts for about a one to two percentage point difference in the spending growth rates between Huntsman and Leavitt since K-12 appropriations account for less than half of total EF/GF (including earmarks) expenditures. In the first several years of the Leavitt administration, state spending increases were significantly higher than inflation and population growth, but spending slowed during the last three years of the Leavitt administration due to the recession. Since the economic downturn of 2001 to 2004, state spending growth has accelerated tremendously as shown in the following chart. Annualized State Spending Growth Since FY2004
Calculations by Utah Taxpayers Association based on data from Governor’s Office of Planning and Budget. Education/general fund includes earmarked sales taxes that are usually not reported as such in GOPB and legislative documents. But isn’t recent state government growth making up for three Even though the state experienced difficult budget times from 2001 to 2004, the budgets preceding 2001 and the budgets since 2004 experienced significant growth. As shown in the first chart, annualized state government growth (education/general funds) since 1993 has been 7.7%, much higher than combined inflation and population growth of about 5.2%. Even if the high-growth years prior to the recession are excluded, annualized state spending growth has still been higher than inflation and population growth of about 6%. Annualized State Spending From FY2001 to FY2008 (includes recession)
Calculations by Utah Taxpayers Association based on data from Governor’s Office of Planning and Budget. Education/general fund includes earmarked sales taxes that are usually not reported as such in GOPB and legislative documents. But isn’t a lot of recent spending growth in “one-time” capital projects? While using ongoing and one-time cash for capital projects functions as a “working” rainy day fund and is a sound year-to-year approach to budgeting, capital projects such as transportation should not be considered “one-time” projects from a long-term structural budget perspective. Utah will be building roads every year for the next several decades which means transportation appropriations are not “one-time” expenditures. But the number of state employees is not increasing as fast as Officially, the number of state employees is not increasing as fast as the state’s population, but much of the spending growth is being used to hire more employees at the school district level. While K-12 enrollment growth necessitates increased hiring at the school district level, these hires should still be considered when calculating government growth. Aren’t government revenues and expenditures growing at the rate Government expenditures are growing faster than the economy. Personal income and gross state product data for FY2007 and FY008 are not yet available, but taxpayers can assume that the economy will not grow by 21.9% in FY2007 and 14.8% in FY2008. In fact, double-digit economic growth is rare, and annualized state government growth has been 13.8% over the past four years. Certain government revenues such as corporate income tax, individual income taxes on dividends and capital gains, sales taxes on business inputs grow at faster rates than the economy during good times. These same revenue sources decrease faster than the economy during recessions. What can be done to slow the growth in state government spending? Education reform – including vouchers, merit pay, and differential pay – will enable the state to cost-effectively improve education. Congestion pricing will slow the growth in vehicle miles traveled, which will allow the state to slow the growth in expenditures for capacity expansion. Purchasing transportation corridors now before land prices escalate due to encroaching development will allow the state to save millions of dollars. Prioritizing rail and road projects based on cost effectiveness of reducing congestion will ensure that transportation dollars are efficiently spent. |
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