Note: This article comes in response to a recent post by the Spokesman Review's Betsy Russell. You can read her post by clicking here.
It was never stated or implied that Idaho’s general fund spending was growing extravagantly. I simply pointed out that spending has grown faster than the average of the other 49 states since the recession ended. Growing government faster than the private economy means the government spends an ever increasing share of the average taxpayer’s money.
The data was not cherry picked to show that the general fund (GF) spending in Idaho is growing faster than other states. Rather it was clearly about spending growth from the post-recession low point of 2011. The comparison I made was from 2011 to 2016, using National Association of Budget Officers (NASBO) data from their Fiscal Reports on all states. Since my letter was published, the preliminary 2017 data (for the fiscal year appropriation) became available. It actually shows a more dramatic increase in GF spending when you compare Idaho to the other 49 states, from the low point of 2011. Idaho is up about 37 percent and the other states about 27 percent; from FY 2011 to FY 2017.
My main point was a “managerial” one, not an economic one. I was pointing out that, as a conservative state, Idaho has used the recovery to grow general fund spending faster than the average of the other 49 states.
It’s interesting to note that many corporations — GM and Ford, for example — were forced by the recession to restructure their operations. Did we get that with state government? No, just temporary restraint and then no change in the basic formula of base-line budgeting once the recession ended.
There are other ways to view the spending increases in Idaho and rebut the notion that the post-recession spending increases were necessitated by the large cuts to general fund spending in 2010 and 2011.
What Idaho spends at the state level is composed of general funds, federal funds and dedicated funds. Guess what, when you look at the total funds you also see that total spending has grown greater in Idaho than the average of the other 49 states.
Using NASBO data from their State Expenditure reports, one can compare total Idaho state spending to the other states.
I did so for the period, 2007-2015 (latest available year and it is preliminary data — note data is proprietary to NASBO).
Two things jump out. One is that total spending in Idaho went down in only one year during the period 2007 to 2015; from 2011 to 2012, decreasing from $6.603 billion to $6.267 billion. There have been NO large cuts in overall state spending. The second comparison I made was to compare the compound annual growth rate (CAGR) in Idaho total spending to the other 49 states. The CAGR for Idaho from 2007 to 2015 was 4.1 percent vs. 3.5 percent for the other 49 states; for 2009 to 2015 the CAGR was 3.2 percent vs. 2.8 percent for the other 49 states, and from 2011 to 2015 the CAGR was 3.8 percent vs. 3.0 percent. All figures exclude capital spending, however, the capital spending is not material. This annual growth rate exceeds CPI inflation, too.
So, Idaho is growing total state spending faster than the average of the other 49 states.
It is interesting to note that some economists believe that if the state does not grow spending, in Idaho’s case at an accelerated rate since the recession ended, that overall economic growth will stall. Did it ever occur to them that allowing people and businesses to spend and invest more of their own hard earned money might drive economic growth as well?