State government is spending too much money, says a leading Republican lawmaker, as he touts an analysis of his own, which shows that state spending has increased at nearly twice the national inflation rate over the past 14 years.
But two independent budget analysts say that the figures released by state Rep. Lance Harris, R-Alexandria, overstate the growth in state spending.
In fact, under an alternative measure endorsed by both LSU economics professor Jim Richardson and Steve Winham, who spent a dozen years as the state’s budget director under Republican and Democratic governors, the increase in state spending over the past 14 years has actually trailed the expansion of the state’s economy over that period of time. Those figures could suggest that the state ought to be spending more.
The difference in views is no academic exercise since Harris has been citing his study to advance his argument that state legislators should rely only on cuts when they begin meeting Monday in a 10-day special session to fill a midyear $304 million budget gap. Harris leads the 58-Republican delegation in the House, so his views hold considerable sway. Other Republican House members have repeated Harris’ comments to call for greater spending cuts.
Gov. John Bel Edwards, however, is asking lawmakers to take $119 million from the state rainy day fund — the maximum allowed — to reduce the amount of cuts needed to close the $304 million shortfall. If lawmakers don’t take the full $119 million, Edwards warns, among the entities likely to suffer cuts are the state’s colleges and universities, K-12 schools and programs that assist families with developmentally disabled children get through the day.
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A wealthy businessman in his second term who favors less government spending, Harris asked the state House Fiscal Division to generate a set of numbers. They showed that the total amount of government spending in Louisiana has risen at a 3.9 percent clip on average over the past 14 years while the national consumer price index has expanded at 2.08 percent on average.
“Our government has been growing at two to one over the private sector,” Harris told Edwards and other legislators two weeks ago when the governor outlined his budget plan to the Joint Legislative Committee on the Budget. “We should have affected the overgrowth of government years ago.”
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The 3.9 percent figure includes what budget analysts call the “Total Means of Finance,” which includes state taxes and fees paid in Louisiana and the billions of dollars that the state receives each year from the federal government to provide health care, pave roads and pay for research at public universities. The money from the federal government also covers much of the cost to recover from hurricanes, flooding and other natural disasters.
And it’s Harris’ decision to include federal money spent by state government that causes problems, according to Richardson and Winham.
Both men point out that with Harris using a 14-year time frame, his 2004 starting point came just before the amount of federal spending in Louisiana rose dramatically from the billions of dollars that Washington poured into the state following hurricanes Katrina and Rita. Indeed, federal spending alone over the past 14 years has risen by 5.1 percent on average. So the 2004 starting point pumped up government spending in Harris’ analysis.
The year chosen as the starting point can sharply alter the figures, as a critic of Harris demonstrated.
Countering Harris’ claims at that budget committee hearing, state Rep. Walt Leger III, D-New Orleans, pointed to figures showing that the Total Means of Finance — which is all the revenues from state taxes and fees plus federal dollars — actually dropped by 2.8 percent on average over the past decade. By choosing a 10-year period, Leger’s figures don’t include the peak of federal government spending in Louisiana, as Harris’ do.
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Richardson and Winham believe that a much better way to measure state spending over the past 14 years would come from examining what budget experts call “State Effort,” which includes only the state taxes, tuition and fees paid in Louisiana and doesn’t include the federal dollars.
“State Effort represents what the citizens of Louisiana are paying for the services the government provides,” Winham said in an interview. “Federal spending is not necessarily tied to what the state wants to do. It’s often tied to what the state is mandated to do. The disasters and mandates, neither of which are state initiatives, skew the federal part of our budget.”
The House Fiscal Division numbers show that State Effort has risen by 3.3 percent on average since 2003, substantially lower than Harris’ 3.9 percent rate.
Richardson and Winham, when asked by The Advocate, also said they believe that comparing the increase in state spending to the national inflation rate is an incomplete measure.
They both believe a better measure is comparing the increase in the State Effort to the expansion of the state’s economy, which has grown by 3.52 percent on average since 2004. That means the 3.52 percent growth in the state economy has grown faster than the 3.3 percent increase in state spending under State Effort.
Richardson uses an additional measure to study the growth in state spending by factoring in the state’s population growth.
His figures show that 5.71 percent of what the state economy produced in 2004 was spent by state government for public activities. In 2016, 5.92 percent of what the state economy produced was spent by state government.
So state spending under this measure “has gone up a tad,” Richardson said. In other words, it’s up but not nearly as much as Harris contends.
In 2008, 6.81 percent of what the state economy produced was spent by state government, or more than the 5.92 percent in 2016. This means that state spending by last year had declined relative to the state’s economy and population growth, counter to the figures from the longer time frame that Harris is using.
In an interview, Harris noted that the state is facing its 15th midyear budget cut over the past nine years.
“We’re overspending every year,” he said. “The revenue doesn’t match the spending. When are we going to wake up?”
Winham, who served as budget director under governors Buddy Roemer, Edwin Edwards and Mike Foster, offered this perspective: “The amount of money we want to spend is higher than what we take in. That’s a simple problem that no one seems to want to solve. We seem unwilling to make the cuts that would balance the budget or raise the revenue that would balance the budget. The governor and the Legislature need to say this is what we’re going to cut and stick with it.”