Texas Outspending California?

Last month Paul Krugman, the doctor, messed with Texas after state Comptroller Susan Combs estimated a shortfall in revenues for the 2010-2011 budget. The Nobel laureate made the best possible case that the looming deficit in Texas, long held up by free marketers as the Gallant to California's free-spending Goofus, had demolished the idea of cutting state spending as a ticket to prosperity, opining, "If the theory can't make it there, it can't make it anywhere." Advocates of big state spending had a good old time deriding Gov. Rick Perry, the big-talking executive who had been concealing the state's dire fiscal condition.

But something didn't add up. How could a drop in projected revenues of 2.9 percent – far below the 27 percent drop California experienced between 2008 and 2009 – account for a deficit pegged by Krugman (though not by Combs) at $25 billion?

Bill Murchison of the Institute for Policy Innovation suggests one reason: In Texas they do everything big, even spending:

Texas' state government spending from all the funds at its disposal rose nearly 300 percent between 1990 and 2010. At the same time population was growing just 115.5 percent. In other words, spending as a percent of the population nearly tripled in 20 years. Health and human services spending rose 406 percent during the period, education spending 276 percent.

Murchison seems to be getting those numbers from a report [pdf] by the Texas Public Policy Foundation, which in turn is drawing on figures from the Lone Star State's Legislative Budget Board. From that report:

In 1990, the entire budget for the state of Texas was $23.3 billion…

For the most recently completed fiscal year, FY 2010, the state's total appropriations amounted to $92.7 billion, a growth of almost 300 percent in the All Funds budget.

Since 1990, the state's population has grown from 17 million to approximately 25.4 million, an increase of 49.1 percent. Inflation, as measured by the Consumer Price Index, has increased by 66.4 percent over the same period. Combined, the sum of population growth plus inflation between 1990 and 2010 totaled 115.5 percent; state spending increased by roughly two-and-a-half times that amount.

That rate of spending growth doesn't just beat California's. State expenditures of $92.7 billion in 2010 mean Austin is actually outspending the Sacramento, which logged $86.6 billion in expenditures in its 2010-2011budget. The growth rate is even higher than California's was before the recession threw cold water on the Golden State. As Reason Foundation's Adam Summers wrote a while back, "Since former Gov. George Deukmejian's final budget in Fiscal Year 1990-91, California's spending has skyrocketed 181 percent. Spending nearly tripled from $51.4 billion in FY 1990-91 to $144.5 billion in FY 2008-09." Texas, by comparison, nearly quadrupled its spending.

Texas has had plenty of defenders since the budget debacle came to light. At newgeography.com, Tory Gattis notes two points in favor of Texas:

• there's no such thing as a shortfall in Texas, since we use zero-based budgeting (i.e. we start from nothing building every budget with no assumptions from prior years), and

• our unemployment rate, which is better than the national average, is even more impressive when you consider our huge population gains and the jobs we've had to provide just to keep up with it.

It would be opportunistic to dismiss Texas as a big government failure now, after using it as a model of fiscal restraint, but don't these numbers cause the same problem for the Krugmanites? From what little I know of Texas geography (isn't it next to that country Cantinflas came from?), I gather Austin is less in thrall to "the complete dominance of conservative ideology" than the rest of the state. Texas contains multitudes. Could it be the nightmare of austerity Krugman claims, and also a nightmare of public profligacy the spending figures indicate? Can Razzles be a candy and a gum?

And where can the Texans be spending all that money, when Krugman says the state's health care system does nothing but "impose great pain" and its education policy is designed "to shortchange the future"? In fact, Texas public schools don't educate kids at all; they just chain them in a line and have them break rocks to build private toll roads. The Department of State Health Services just sends one bloody chicken head to needy cancer patients—that's it! And if you try to go on unemployment in Texas, the Rangers come to your house and shoot you.

So why do people keep leaving California and moving to Texas?