Quantcast

Which Governors Are Proposing Spending Increases and Which are Proposing Cuts?

by Matt Mitchell on June 3, 2011

in Tax and Budget

This week, the National Governors Association (NGA) and the National Association of State Budget Officers (NASBO) have released their biannual Fiscal Survey of States. It is full of lots of interesting information, much of which I plan to highlight over the next week or so.

Today, I’ll start with a simple look at the proposed changes in FY2012 spending, alongside enacted changes in FY2011 spending. I’ve organized the data by FY2012 changes, so you can see that Florida’s Gov. Rick Scott is proposing the single-largest percentage increase in General Fund Spending, while Nevada’s Gov. Sandoval is proposing the largest cuts. I should note that, unlike NASBO’s other regular report (the State Expenditure Report) this one only includes General Fund spending, which is less than half of total state spending. Nevertheless, it is the portion of state spending over which state politicians have the most control, so it does provide some important information. I also included indicators for the party-id of the current governor. It is not surprising that there are greater differences between the parties when it comes to proposed 2012 changes than when it comes to enacted 2011 changes; partisan differences in proposed spending tend to be moderated by the legislative process.

In FY2012, the average Democratic governor proposed a spending increase of 5.8 percent, while the average Republican governor proposed a spending increase of 3.4 percent. I ran a regression and these differences were not statistically significant, even after controlling for regional effects. It was a very simple analysis, with limited data, few control variables, and no attempt to overcome concerns about reverse causality (maybe states whose institutions encourage spending growth are more-likely to elect Republicans in hopes of reining in spending?). Nevertheless, this does comport with more-sophisticated analyses. For example, a study by Besley and Case (2003) finds “little evidence of Democratic governors spending more overall” (though they do increase workers’ comp spending).

The literature does, however, find that the political id of the governor–in conjunction with the political makeup of the legislature–does make a difference: Rogers and Rogers (2000) find that when Democrats control both the house and the governor’s mansion, government tends to be larger than when Republicans control both.

It also turns out that divided government, in and of itself, can make a difference. Besley and Case (2003), for example, found that “greater party competition in the legislature is associated with significantly lower taxes, and significantly lower spending on workers’ compensation.”

More analysis of the NASBO/NGA data to come…

Previous post:

Next post: