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Wednesday, January 24, 2007

Shrinking Government? Looking at the numbers a different way

We're hearing a lot about the rapid growth in government, so we asked staff to analyze how Utah State Government growth compares to the change in population and inflation over the past several years.

Here are several slides to scroll through that tell the story - or at least offer more perspective on the story. Check them out.

The message: Putting money in a savings account, and paying for roads & buildings doesn't grow government very much. Focus in on the expenses that actually make government bigger and you might be surprised at how the numbers pan out.

We're not in love with all government, and we're not saying this is true in other states or in D.C. but, here in Utah, government growth seems to be falling behind growth in population and inflation.

Same basic message as our last blog.

As always, we appreciate your feedback.

10 Comments:

Blogger Utah Taxpayer said...

Thanks for posting this information.

Questions:

- could you redo the slides showing the Governor's FY08 projections or at least the Senate's best guesstimate on FY08 expenditures? If the Senate wants to top the Governor's education spending recommendation, FY08 operating expenditure growth will be substantial.

- did you include FY07 supplementals?

- did you include earmarked general fund dollars?

Spending tax dollars on roads and buildings really does grow government. Tax dollars spent on roads are still tax dollars that taxpayers aren't able to keep and spend and invest on their own.

Roads are NOT one-time expenditures and must be considerd part of the ongoing budget structure, especially since the state anticipates spending BILLIONS of dollars on roads over the next several years.

Once the state's population stops growing and vehicle miles traveled growth slows down, then we can talk about transportation as being a one-time expenditure that is not structurally growing government.

1/24/2007 10:52 PM  
Blogger Utah Taxpayer said...

Just a follow up.

Using ongoing and one-time cash revenues to fund capital projects is a good year-to-year budget management mechanism. Some call this a "working" rainy day fund. If revenue projections don't pan out, then the state can transfer cash from capital projects to cover operating shortfalls and can then use bonding to finance the capital project or simply delay the capital project to a later year.

Nevertheless, these expenditures are still tax dollars and are functionally ongoing expenditures since the state anticipates spend huge volumes of tax dollars on transportation for as long as any of us are still alive.

1/24/2007 11:00 PM  
Anonymous connor said...

Growing slower != shrinking.

1/25/2007 9:27 AM  
Blogger The Senate Site said...

Good points U.T. Let me work on some answers for you.

Connor: Only in porportion to society at large.

1/25/2007 9:33 AM  
Anonymous connor said...

The comparison should, in my mind be made against Utah itself and not other states. Growing slower in comparison to other states might create an illusion of a shrinking government, but Utah's government compared against itself in previous years should be the standard for judging the size of Utah's government.

1/25/2007 9:48 AM  
Anonymous Concerned in Lehi said...

I appreciate the Senate Site's work on this as I've been concerned about the recent spate of rhetoric about the growth of Utah's government.

When you have a growing population and a growing economy, the state's budget is also going to grow, even if the actual programs in the budget aren't statutorily expanded. This is especially true for capital programs such as roads and buildings – more people create more need for roads to drive on and buildings to serve them with.

What's more, these expanded budgets don't automatically translate into increased tax burdens for Utah's citizens, because there are more people in the state to share the burden.

This should be intuitive, but the Utah Taxpayers Association seems keen to ignore the growing economy and growing population in its rhetoric about state government and budget growth. They trumpet overall budget numbers as proof that Utah's government is growing while their own report shows that state expenditures ARE FLAT when adjusted for population size.

Let me repeat that, Utah's government, when measured by spending per capita, is not growing, it is holding steady. The Taxpayers Association knows this but continues to disingenuously claim otherwise.

Once again, I applaud the Senate for taking an honest look at the issue.

1/25/2007 10:11 AM  
Blogger Utah Taxpayer said...

Concerned in Lehi,

FY07 growth will be 21.8% higher than FY06. FY08 growth will be 14.8% higher than FY07.

You don't really believe that Utah's econommy will grow by these amounts in FY07 and FY08, do you? Not even China and India grow at these rates. Even during the 90s, Utah's economy did not even come close to these types of growth rates. This should be very intuitive.

Our charts show that state spending has been relatively flat from FY96 to FY06 as a percent of income and real per capita. However, once FY07 and FY08 personal income and CPI are known, state spending by any measure -- percent personal income and real per capita -- will be much higher than in recent years.

1/25/2007 2:08 PM  
Anonymous Anonymous said...

This post has been removed by a blog administrator.

1/25/2007 7:26 PM  
Blogger The Senate Site said...

Be nice.

1/25/2007 10:19 PM  
Blogger The Senate Site said...

I promised answers for Utah Taxpayer (first comment, above), so here they are.

could you redo the slides showing the Governor's FY08 projections or at least the Senate's best guesstimate on FY08 expenditures? If the Senate wants to top the Governor's education spending recommendation, FY08 operating expenditure growth will be substantial.

Sure we can redo the slides, but, good heck, not until a long nap after the end of the session. When do so, we will also revise population and inflation using most recent U.S. Dept of Commerce numbers (6.9% combined for FY 2008 vs. 4.7% for FY 2007).

did you include FY07 supplementals?

No FY 2007 supplementals had passed the Legislature when this analysis was done. The only ones that have passed as of right now are for repayments to the Rainy Day Funds, which would increase the slope of the appropriations line in the first slide (the "Before" slide, if you will) but it wouldn’t change the rest.

did you include earmarked general fund dollars?

Earmarked sales tax revenue that requires appropriation (like the Industrial Assistance Fund, Rainy Day Funds, and Tourism Marketing Performance Fund) are included. Those that do not require appropriation (like the Transportation Investment Fund of 2005) are not included. Including the transportation earmarks would also increase the slope of the spending line on pages 1 - 3, (the "before" slides) but drop-out on page 4 (the "after" slide).

Spending tax dollars on roads and buildings really does grow government. Tax dollars spent on roads are still tax dollars that taxpayers aren't able to keep and spend and invest on their own.

Roads are NOT one-time expenditures and must be considerd part of the ongoing budget structure, especially since the state anticipates spending BILLIONS of dollars on roads over the next several years.

Once the state's population stops growing and vehicle miles traveled growth slows down, then we can talk about transportation as being a one-time expenditure that is not structurally growing government.


Part of the apparent "growth" in the "before" slides is because we borrowed for buildings and roads in the early years. That spending did not show-up in the General/Education Fund amounts on the slides in those years because we used bond proceeds to pay for the buildings and roads. We still built them, but we didn't pay cash for them. So, the "base" for these things was artificially low and the current expenditures are artificially high. We are now paying for buildings and roads twice - once to repay the debt we used in the past, and once to pay cash for what we are building right now (so that we avoid debt repayment -including interest costs - in the future).

Thanks for your thoughtful questions U.T.

P.S. I appreciate 'Concerned in Lehi' and thought his comments were apt, but I strongly disagree with his opinion that the Utah Taxpayer’s Association is disingenuous. They can do numbers just as well as we can; they just slice them up and lay them out a different way. I believe examining government and government spending from all angles is a very healthy exercise.

1/25/2007 10:42 PM  

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