Tag Archives: National Governors Association

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

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…

What Spending Contraction?

Eileen has a great response to Ezra Klein’s piece on the “anti-stimulus.” Klein writes that “[state] budget shortfalls are the equivalent of a massive anti-stimulus, which some experts believe has overwhelmed the $787 billion stimulus passed by the federal government in 2009.” Have state budget cuts really overwhelmed federal budget expansions?

The National Governors Association, in conjunction with the National Association of State Budget Officers, recently released their “Fiscal Survey of States. In it, they show that, indeed, aggregate state general fund expenditures declined by 4.3% in 2009 and 6.8% in 2010. Assuming fiscal stimulus actually works (and that is not a point that should be readily conceded), it is plausible that these huge declines would be enough to offset any increases in spending by the federal government. But the fact is they come nowhere close to offsetting the Federal Government’s massive spending spree.

If you pop over to the White House’s Office of Management and Budget website, you can see what the Federal Government has been up to. At the same time that aggregate state spending was falling by 4.3% and 6.8%, federal spending was increasing by a whopping 17.9% (2009) and 5.8% (2010). This, combined with the fact that the Federal Government spends trillions while states spend hundreds of billions (in the aggregate), means that the state spending contraction comes nowhere close to offsetting the federal spending increase.

In the chart below, I combine the data from NGA/NASBO with the data from the White House Office of Management and Budget. You judge for yourself. Does this look like a massive fiscal contraction to you?

Governors Revolt!

What’s gotten in to the governors? Across the country, a number of them seem to be fed up with their respective budget crises and are proposing bold action. As Eileen has written in the New York Post, New Jersey’s Governor Christie has shown remarkable resolve in tackling “the third rail of New Jersey’s budget: union-negotiated contracts and control.”

On Tuesday, I wrote about New York’s Governor Paterson and his plans to lay-off nearly 10,000 government workers (effective upon his successor’s first day in office). Now the Governor has gone a step further, announcing that he is “taking over” the budget cuts in order to keep the state afloat. After weeks of fruitless negotiations with state lawmakers, the state budget is more than 2 months overdue and there seems to be no consensus about how to deal with the $9.2 billion gap. So Paterson plans to impose dramatic cuts by including them in an emergency spending plan.

A little further west, in Illinois, Governor Pat Quinn and the state legislature are wrestling with a yawning $13 billion gap. Yesterday, the governor declared his intention to make the tough cuts that legislators seem unwilling to make. Of course, when pressed for details, he declined to offer a substantive plan. Hopefully, he’ll come around.

Hopefully, all of the governors will come around. A new report by the National Governors Association and the National Association of State Budget Officers (NASBO) will be released this morning. According to the Wall Street Journal (gated), it shows that states across the country still face a $127 billion gap over the next two years.

Talk on States Fiscal Health at GMU, April 21

George Mason University’s Department of Public and International Affairs is hosting Ray Scheppach, executive director of the National Governors Association, on April 21 from 4 to 6 PM for a talk entitled “The State Fiscal Situation, Health Care Reform and Federalism.” This should be of interest for most of the readers of this blog. The talk will be in Enterprise Hall on GMU’s Fairfax Campus. Continue reading

State Budget Crises Casualty: The National Governor’s Association Meeting

One casualty of the state budget crises is the low attendance of governors at their annual meeting in Mississippi. NPR reports that Governor Ed Rendell of Pennsylvania, chairman of the National Governors Association, opted to stay home to work out the state’s budget stalemate, and because, as of today, state employees are not being paid.

He was not the only governor who stayed home. Only about half showed up.

As NPR notes, with states facing a $200 billion revenue shortfall, this year’s budget crises are certain to continue into the next fiscal year.

Continue reading