Conservatives routinely express indignation about the rate of growth in state government. Going back to the end of the Eisenhower administration, they point to figures that indicate a large jump in state expenditures as evidence of “spending run amok.” However, a closer look at these claims indicates that they are more spin than substance.
Since 1960, state spending has grown significantly, though not by as much as some claim. A blogger recently asserted that state spending from 1960 to 2008 grew 4.7 times faster than would have been the case had spending been driven solely by inflation and population growth. In fact, this blogger was using an inappropriate inflation adjustment for state government spending. If we adjust state spending using the inflation index suggested by non-partisan experts, real per capita state spending has increased 3.6, not 4.7, fold from 1960 to 2008.
Even so, a 3.6 fold increase in state government spending requires an explanation. What was different in 2008 versus 1960 that would explain this rate of spending growth? In a nutshell, society and the expectations of Minnesota citizens-progressives and conservatives, Democrats and Republicans-regarding the appropriate role of state government has changed.
For more on MN government spending, at state and local levels, see Minnesota communities: the biggest budget cutters
For example, in 1971 the state adopted a series of property tax reforms known collectively as the “Minnesota miracle.” These reforms involved shifting the cost of public education and other local government functions off of local property taxes on to state revenues, thereby causing growth in state general fund spending. In this way, the quality of public education and local services and level of local property taxes around the state were equalized.
In the late 1990s and the early part this decade, state leaders again sought to reduce property taxes by shifting a larger percentage of school costs into the state general fund. This culminated in the complete state takeover of general education costs effective for school fiscal year 2003, which added nearly $1 billion annually to state government spending. At the same time that the state assumed responsibility for funding general education, it also took over funding for transit operating costs.
In addition to using an inappropriate inflation adjustment, our agitated blogger commits at least two other fallacies. First, he assumes that all of the growth in the state general fund resulted in a dollar for dollar increase in the taxes paid by Minnesotans; in fact, state general fund growth resulting from the Minnesota miracle and the state takeover of general education and transit funding led to corresponding reductions in property taxes.
Second, he blames all of the general fund growth on partisanship. In fact, the Minnesota miracle was approved with bi-partisan support from a Republican controlled House and Senate and a DFL governor. The state takeover of general education and transit funding were approved with tri-partisan support (including Independence Party Governor Jesse Ventura), although the takeovers were spearheaded by House Republicans.
Another factor that contributed to growth in state spending was special education costs. In 1960, there was no systematic effort to make sure that the needs of students with physical or developmental disabilities were being addressed in public schools. In the 1970s, special need students were increasingly “mainstreamed” into public classrooms. Currently, the medical care of special need students must be paid for by the public while the student is under the supervision of the school district. Much of these costs are borne by the state.
In addition, with advances in medical technology, more medically fragile students survive and are mainstreamed into public schools, with a corresponding increase in public costs. Once again, a significant portion of these costs fall upon state government.
Does Minnesota want to return to the days when our special needs students were largely neglected by the public school system? Those who believe that there is a public responsibility to give all children-including disabled children-the opportunity to achieve their full potential should not shrink from the responsibility of providing the public resources necessary to make this a reality.
More generally, rapid growth in the body of human knowledge and the need to produce a technologically proficient workforce has led to a growth in school curricula since 1960. In particular, science, math, and technology education has expanded greatly over the last five decades. This trend was driven initially by the space race and cold war fears and more recently by the need to compete in the global market place. Insofar as the State of Minnesota funds a large portion of the K-12 and higher education systems, the expansion in curricula undoubtedly has lead to growth in state spending.
Incidentally, public investment in education has had spin-off benefits for Minnesota, including the growth of a successful medical device industry. These investments probably would not have been possible if state spending was frozen at the 1960 level.
Environmental policy is another area that has seen dramatic growth since 1960. During the 1960s and 1970s, society recognized the hazard posed by pollution, not just to threatened and endangered species but to public health in general. The environmental threat posed by pollution arose primarily from private sector-not public sector-activity, although the cost of dealing with the problem fell largely to government. The state established programs to clean up past pollution and established regulations to mitigate future pollution. All this costs money.
Yet another portion of growth in state expenditures was driven by the enactment of the Medicaid program in 1965. Medicaid is largely funded by state government; most Medicaid dollars go to pay for the long-term care of the elderly and disabled. Those who want to slash funding for these programs back to the 1960 level should consider the cost to their personal budget of having to assume care for a parent with Alzheimer’s or for a severely disabled sibling or child.
Society itself has changed since 1960. The two-income household is now the norm, not the exception. This fact-combined with urban sprawl (which many conservatives do not want to restrict)-translates into more commuters on our roads and higher transportation costs. Furthermore, economic activity as measured by GDP has far outpaced both population growth and the rate of inflation-which means even more demands on public infrastructure and services. To compound matters, the state’s population has aged, contributing to higher health and human service costs.
No foreign dictator came to Minnesota and imposed upon us the level of state government spending that we know have. It is the people of Minnesota, on a bi-partisan basis, who have chosen this level of spending in recognition of changing societal conditions and in response to changes in our collective priorities. There are no victims here.
This is not to say that we must not debate the current level of state government spending. However, rather than merely carping about the expansion of government, those who pine for the halcyon days of 1960 should submit a state budget that would shrink state spending by the 72 percent necessary to return to the 1960 level. They should then explain to the public all of the cuts that would be necessary to achieve this reduction and how it would affect their lives. Finally, they need to elect candidates to state offices who are willing to implement this 72 percent cut. Good luck with that.
It contributes nothing to a meaningful policy discussion to complain about growth in state government spending over the last half century without acknowledging changes in society or the increased demands that we have placed on state government on a bi-partisan basis. If they truly think about it, the vast majority of Minnesotans of all political persuasions would never support the contraction of public services required to shrink state government to the 1960 level.
The blog post cited above goes on to credit Tim Pawlenty for curtailing the “outrageous growth” in state government during his tenure as governor. However, the truth of the matter is more complicated than the blogger realizes. More on this tomorrow.
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