Government Spending

Are The Most-Broke States The Most-Democrat? Or Just The Most Taxed by DC?

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Via the must-read Washington Examiner comes this Forbes story about the sad state of the states:

Political Litmus Test: Bluest States Spilling The Most Red Ink

Powerful unions, big spending put Democratic states in deepest fiscal holes.

Want to know which states are in the worst financial condition? One telling indicator that might not immediately come to mind is whether most of its citizens identify themselves as Democrats.

The five states in the worst financial condition–Illinois, New York, Connecticut, California and New Jersey–are all among the bluest of blue states. The five most fiscally fit states are more of a mix. Three–Utah, Nebraska and Texas–boast Republican majorities and two–New Hampshire and Virginia–skew Democratic.

Read the whole story (and the larger package of which it is part) and then figure out how much it costs to move off-planet.

And also consider this less-partisan question: Why do blue states give so much to Washington and get back so little? According to Tax Foundation data from 2005 (the most recent I could find quickly), for ever dollar of tax money residents sent to the feds, here's what they got back:

Illinois: 75 cents (45th out of 50)

New York: 79 cents (42)

California: 78 cents (43)

Connecticut: 69 cents (49)

New Jersey: 61 cents (50)

Here's what the "five most fiscally fit states" got back:

New Hampshire: 71 cents (47)

Texas: 94 cents (35)

Utah: $1.07 (29)

Nebraska: $1.10 (25)

Virginia: $1.51 (10)

Let's not quibble about the political leanings ascribed to the various states (though we could: New York's state senate, for instance, has been a GOP stronghold for decades, suggesting that factors other than party affiliation play large roles in idiotic budget decisions). We know the basic reason why state budgets are in the crapper:

In the five years between 2002 and 2007, combined state general-fund revenue increased twice as fast as the rate of inflation, producing an excess $600 billion. If legislatures had chosen to be responsible, they could have maintained all current state services, increased spending to compensate for inflation and population growth, and still enacted a $500 billion tax cut. Instead, lawmakers spent the windfall. From 2002 to 2007, overall spending rose 50 percent faster than inflation. Education spending increased almost 70 percent faster than inflation, even though the relative school-age population was falling. Medicaid and salaries for state workers rose almost twice as fast as inflation.

Throw in liabilities for pensions, and you've got even bigger problems. Contra Forbes, this is not particularly a Red State-Blue State thang (witness the moocher mentality among all those red or leaning-red states above [and god bless New Hampshire, even if it does have state-run liquor stores; live free or die, whatever]). It's a state thing. And pretending that it's a Democrat thing is simply one way to let Republicans off the hook, which as George W. Bush could tell you at the national level, is never a good thing.

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  1. Education spending increased almost 70 percent faster than inflation, even though the relative school-age population was falling.

    What we need to do is break this number down into component elements, because what really drove the increase in education spending was:

    1. Teacher and retiree health care
    2. Federal special education mandates

    I hate the state governments too, but the story is only partially “State Government Spending Spree”. It’s also a “Overbearing Federal Government” story and a “Pension and Health Care Time Bomb” story.

  2. FSP FTW!

  3. The percentages don’t tell the entire story with small states like New Hampshire, Nebraska or Utah. If you have fewer people, federal transfer payments for things like Social Security and the like are going to surpass your tax revues more easily. Further, things like air force bases will make a bigger percentage of your economy than the will in larger states.

    Further, how exactly does anyone plan to solve this problem? Do you want to spend billions and move Offet AFB to California? Do you want to pay the people of Utah lower social security than those in California?

    1. Fair enough. Though how does population size account for the situations in Texas or Virginia?

      1. Virginia owns half of the National Capital region. That is what accounts for it. Texas has a lot of influence and has used it. It is probably the only legit example of such a thing. And even then, it still pays in more than it receives.

      2. Don’t forget that Virginia has the largest military base complex in the country in the Hampton Roads area. You can’t get elected down here without groveling before the military gods.

        1. …largest military base complex in the country in the Hampton Roads area.

          But, it is not like a similar base complex could be set up in Illinois.

          1. I’m surprised Harry Byrd hasn’t had it all moved to good ol’ WV.

            1. Probably because Harry Byrd has been dead for nearly 45 years and represented VA, not WV, in the Senate. As for Robert Byrd, I don’t know.

      3. Texas is also home to Fort Hood and several other large military bases.

  4. I can’t speak for other states but the reason Connecticut’s budget is in the toilet is that during the boom years, when real estate values were artificially inflated (and so too were things like property tax bills and income taxes on commissioned real-estate agents), not a single state or city-level elected official here thought “Woo hoo! Now we can pay down debt and save for the future!” No, every last damn one of them spent every penny they got, borrowed still more and now that the bust is here they all raise their hands and cry “Oh no! This impossible-to-foresee revenue loss is hurting us!”

    You know, my own income averages X dollars per month — with “X” being “A pathetically small number” — but one month when I happened to get an unusually high number of freelance commissions, my income was roughly 3X. As a private citizen forced to live within her means, I put that extra 2X in the bank; if I managed my finances the way government manages theirs I would’ve spent every penny I made that month, upgraded to a more expensive car and apartment on the assumption “I will make 3X a month now and forevermore,” and then screamed “I’m an impoverished victim!” when my monthly income dropped back down to X and my bills remained higher than that.

    Of course, the difference is, when I have money problems I don’t have the legal right to walk over to taxpayers and say “Gimme money or I’ll confiscate your house, garnish your wages or put you in jail.”

    1. Oh, I would do that if I could. I would find the nearest lefty and force him to pay my bills and then buy me a bunch of shit I don’t need. If he complains, I’d just say “you started it.”

      1. It’s not a “lefty” problem. The only differences remaining between right and left wing are what excuses they use to spend your money, and what excuses they cite to justify taking your freedom away.

  5. I’ve seen that “blue states give so much and get back so little” meme a lot. Do any of you guys know where there is a further breakdown? Like, I’d expect states with large military presences, such as Alabama, to see more Federal dollars. How does social security get included in these analyses (if at all) – picture the typical retiree working a lifetime “up north”, paying FICA, and then retiring to Florida or Arizona – do those dollars count as “paying in” up north and then “going out” down south? What about Corporate taxes? Picture a company with HQ in New York City, and filing returns there, but that does business (and thus generates income) nationwide…does New York then get the “credit”, in this study, for paying in dollars even though the revenue pushing those dollars was nationwide?

  6. As much as I abhor even the idea of state-run liquor stores, I’m always impressed by New Hampshire’s. They’re well-stocked, reasonably priced, and so danged convenient.

    1. They really do quite well. And prices are lower than any private liquor stores I have been to (except for the few private ones in NH). Good news is that they are looking at expanding the non-state-run sale of spirits.

    2. My uncle used to work in one for a few years. He was a professional salesman all his life, and I can guarantee he didn’t sit on his ass when a customer came in the store. He’d be up, chatting, joking, and offering advice (and he knew / knows his booze).

      I don’t know why, but everything I’ve heard from family and friends up in NH is that they have somehow managed to avoid the ‘government crap shop’ that plagues other state-run industries.

      1. Probably because they are running an industry that people actually want rather than foisting light bulbs onto people.

        1. How do you explain the suckitude of the PLCB then.

  7. The state employee unions are busting the budgets. Over paid, cadillac healthcare and high paying pensions. State empoyees retire from one high paying job and turn around to another higher paying job with the state while collecting a pension from the state. The blue states have to bust these up or fail. California is a victum of this and is fianacially a third world state.
    http://www.suckitupcrybaby.com

    1. And then when they retire for good they move to Florida or Arizona and the state they used to work for essentially busts its ass to pay residents of another state.

      Perhaps we put some conditions in that if you move to another state your pension is reduced by 5%?

      1. For current pensions, no.

        Definitely for future pensions.

        1. Typical libertarian viewpoint.

        2. Typical libertarian viewpoint.

      2. No. The problem isn’t “pensions are taken out of state” but “pensions are too high.”

  8. It’s simple— pork per rep.

    Red states tend to be more rural. So while their ppr in the House roughly correlates to their size, in the Senate, they get two votes whether they have 30 million people or 2 million. If each rep pulls roughly the same amount of pork (a vote is a vote is a vote), then in the Senate the rural (i.e. red states) are going to start skewing the pork per capita numbers.

    1. Rd states may be more rural, but those states are loaded with ag subsidies (which used to be the darling of Democrats but now the whole gang loves ’em).

  9. If the blue states want to cut the spending programs that go to the red states (instead of having their defense of that spending be proof of their moral superiority), go ahead.

    1. No kidding. But they don’t want that. The people who trot out these statistics don’t give a shit about spending. They just want an excuse to tax more.

      1. You’re right John. Even Reason seems to find it difficult to post a blog entry about busted budgets without mentioning how “spending is going to need to be cut *and* taxes raised to make up the shortfall.”

        For me, it’s quite simple. Nothing fundamental has changed about the relationship between man and state in recent years. So if your state taxes have gone up from 2% to 4%, that’s kind of hard to justify, isn’t it?

        Cut every state budget back to what it was in 2001. Problem solved. If that “hurts the most vulnerable” I don’t give a damn. In fact, they probably deserve it.

      2. It’s a point used to accuse red state voter of hypocrisy. That’s the reason this shit comes up. Nobody gives a damn about the underlying tax issues. It’s just a convenient bludgeon to beat your opponents with.

  10. There’s a very interesting Constitutional takings problem sitting out there over government employee benefits. I believe that vested benefits have been deemed to be property rights. Cue the Fifth Amendment:

    “No person shall. . . be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.”

    Is their property being taken “for public use” such that they must receive “just compensation”? What would just compensation be? A crammed down bankruptcy-type valuation?

    Could their vested benefits be reduced via “due process of law”? What would that consist of in this case? Bankruptcy again? How exactly does a state go bankrupt?

    1. I don’t know how a state would go bankrupt, but I anxiously await it, even though I fear that the feds would nationalize it.

  11. Budget problems everywhere? How about we do this:
    1- Pull out of Stupidistan. Let these idiots mary their goats and do what they’ve done for 8,000 years
    2- Quit protecting all these stupid countries all over the world how will never pay us back a dime for it (Deutshland, Korea, Japan, etc..)
    3- Let’s drill for oil at HOME instead of shoveling $750 Billion at year to the middle east. And they think we’re so stupid for doing it, they despise us.
    4- Park half of our carriers.
    5- Quit paying the UN…they just want to bleed us to death anyways and for what? What do WE gain out of them?
    6- Close the damn space station and park those outdated shuttles. THere are enough problems on earth before wasting time and effort in space. Let’s fix our infrastructure and agriculture first. At $5B/launch we’d save a bunch.
    7- Kill every prison lifer. Yes, do them a favor. Really. Why do We have to support murderers and rapists who will never contribute anything to society. These guys will NEVER repent, they just can’t, and the government is taxing your’s grandma’s soc sec checks to pay for those gigantic prisons. Why do we do this to ourselves?

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