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Day 5 - State Spending Growth Accelerates

Yesterday, the Utah Taxpayers Association released a report documenting large increases in state spending growth. You can access this report in [pdf format] and [html format].

Annualized state spending growth has been much higher during the Huntsman years than during the Walker and Leavitt years. (Note: EF/GF = education funds and general funds)

Annualized EF/GF growth
Leavitt .............. 5.6%
Walker..............11.2%
Huntsman...... ..14.6%
FY93 to FY08.. ..7.7%
includes GF earmarks

Total spending growth, annualized
Leavitt................6.4%
Walker................6.1%
Huntsman........ ..9.1%
FY93 to FY08.. ..6.9%

Annualized growth since FY04
EF/GF incl earmarks... ....13.8%
Total spending...................8.3%

Some argue that current growth rates are justified because of the slight decrease in state expenditures during the economic downturn of FY2001 to FY2004. Annualized state government growth including the FY2001 – FY2004 period has been higher than combined inflation and population growth as the follow data demonstrate

Annualized growth, FY93 to FY08
EF/GF incl earmarks..........7.7%
Total spending...................6.9%
Inflation/pop. growth.........5.2% (approx)

Annualized growth, FY01 to FY08
EF/GF incl earmarks.........7.1%
Total state spending..........5.8%
Inflation/pop. growth........5.5% (approx)

I appreciate your insights. Part of the problem may be that we just spend more because we have had more revenue recently.

I particularly like the point in the whitepaper that a way to reduce the increasing rate of spending is to offer more educational alternatives. I agree. Here's an explanation of why that is the case in a growing state.

Frank,

We do have more money, but the revenues are coming in faster than the economy is growing.

How is that possible? Some types of revenues grow faster than the economy, including corporate income taxes, sales taxes on business inputs, individual income taxes on capital gains and dividends. These same revenue sources also decline faster during economic slow downs.

Also, sales, property, and severance taxes on extractive industries have skyrocketed in recent years.

What goes up...

This is the reason a sound tax system relies on stable revenue sources, not volatile revenue sources.

I think you highlight an issue that should be tackled but then you lose all credibility with me when your number one solution is to move our public education system to vouchers which is debatable as a viable means to providing quality education to all Utah children and reducing what we spend on education.

Stop pandering to the anti-public school crowd and then maybe you will get more people working with you to get our budget more inline.

The anti-public school crowd? Sheesh. Nearly all voucher supporters that I know support public schools. They just want more viable alternatives for families of modest means. One size does not fit all. Competition improves the product. Thank you.

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