Numbers show Idaho growing extravagantly compared to other states? Experts say no
Let’s say, as a recent op-ed piece in the Idaho Statesman by Idaho Freedom Foundation Vice President Fred Birnbaum claimed, that comparing percentage increases in state general fund spending in Idaho to percentage increases for other states shows whether Idaho’s spending is growing too quickly or too slowly. Now look at the graph above. Birnbaum selected the time period from fiscal year 2011, the lowest point after Idaho’s deep recession-era budget cuts, to fiscal 2016. What growth! Without citing any sources, he said that Idaho’s state general-fund spending increased 28.9 percent in that period, while the average for all other states was just a 22.5 percent increase. “’Conservative’ Idaho is growing spending faster than the average state,” he wrote.
His conclusion: Idaho could have spent $150 million less over that time period – poof! – and not had to raise the gas tax to repair its deteriorating roads and bridges.
But what happens if, instead of measuring from that low point in 2011, you make the same kind of comparison from Idaho’s highest-spending point, two years earlier, in 2009? After Birnbaum told me he got his figures from the National Association of State Budget Officers, I contacted NASBO, and its director of state fiscal studies, Brian Sigritz, sent me total state general-fund spending figures, in millions, for every year from 1991 to 2016. The data for 1991-2015 came from NASBO’s State Expenditure Report, and the 2016 data came from its most recent Fiscal Survey of States.
Comparing those total figures, for all states, to Idaho’s general-fund expenditure figures, which are readily available from the records of the Joint Finance-Appropriations Committee, I found that the 2011-2016 percentage increase for Idaho was 28.9 percent, and the national increase was 24.5 percent.
But the result is dramatically different if you move the starting point: From fiscal 2009 to 2016, the national increase in general-fund spending was 21 percent. The increase in Idaho for the same time period? A measly 3.8 percent. Why, that shows that Idaho state spending has been growing far slower than other states ever since the recession year of 2009, right? And Idaho should have been spending far more?
Not exactly. Mike Ferguson, the retired Idaho state chief economist who served under five governors, calls Birnbaum’s conclusion – that Idaho has become unnecessarily extravagant – “ludicrous.” Said Ferguson, “You can pretty much work numbers, especially by picking start dates and end dates – you can show vastly different things.”
Ferguson, who’s done extensive research that documented a steep decline in Idaho’s investment in public schools as a percentage of the state’s total personal income since 2000, said, “What I can tell you is this: We saw some severe declines in the general fund, and a lot of that was dramatic cuts to education funding. Well, what have they been doing? They’ve been restoring education funding. But we’re still far, far below historical levels, which weren’t extravagant in the first place.”
Economist Don Holley, who teaches economics at Boise State University and is the former chair of BSU’s Economics Department, agreed with Ferguson. “It depends on where you start,” he said. In Birnbaum’s analysis, he said, “He decides he’s going to pick the bottom of the recession, and the recession probably hit Idaho worse than it hit most any other state. Consequently, we probably came out of the recession faster than most any other state. So it doesn’t surprise me that we could’ve grown faster as we came out of the recession, but he’s not looking at how fast we declined.”
When the Idaho Legislature’s Tax Working Group spent months studying the state’s tax system last year, one of its members, Rep. Robert Anderst, R-Nampa, asked legislative budget staffers to look into an interesting question: How does Idaho’s spending compare to other states? The result was eye-opening. Using U.S. Census Bureau data, analysts presented the panel with two graphs, one showing state and local per-capita expenditures for 2012, the most recent year available; and the other showing just state per-capita expenditures. On the state-only expenditures, Idaho ranked 43rd. And on state and local government expenditures per capita, Idaho was dead last – by a lot.
Those graphs can be seen online at the Tax Working Group’s website here.
Birnbaum, when asked why he selected 2011 to 2016 to make his case that Idaho’s spending too much, said, “Yes, 2011 was a low point, but I was comparing Idaho’s spending recovery to other states. Every state dipped after the recession, some more dramatically. I was comparing Idaho’s spending rebound to the other 49 states over the same time period.”
Holley said Idaho’s state spending is low largely because its per capita income is low. “We’re down there with Mississippi on per-capita incomes,” he said. “So how are you going to decide what we should or should not be spending?” Trying to match Idaho’s state spending to a national average “doesn’t make sense,” he said. “That’s a question for the Legislature. … That’s a much deeper question than just comparing growth rates of one state to another.”
He added, “We were hit very hard in the recession, and we’ve recovered faster. But as far as general fund revenues are concerned, we’re barely back to where we were before.” And, he said, Idaho’s far below where it would have been predicted to be if the recession hadn’t occurred.
