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Government Spending

If government does anything well, it is this: spending tax dollars. Though Utah is rightly praised as a well-managed state, it is no exception to this rule.

In 2008, just before the recent recession decreased state tax revenues, Utah state-government spending from its General Fund (sales taxes), Education Fund (income taxes), and Transportation Fund (gas taxes) was 24 times what it was in 1970, and more than three times what it was in 1990. Further, in 2008 the state spent 68 percent more for every Utahn than it did in 1970, adjusting for inflation, and 29 percent more than it spent in 1990. The point: Government in Utah will, over time, always spend more taxpayer dollars.

But in the short term, state spending of Utahns’ tax dollars swings up and down with the economy. While spending cuts in a recession can help correct excessive increases in government spending during good times, they also usually mean cuts to public schools, law enforcement, road maintenance, and other essential government services that most Utah families rely on – especially low-income and disabled families. For instance, the recent recession forced the state to cut funding for health care services for disabled Utahns – services that could help these families lead more self-reliant lives than would be possible otherwise.

So what?

Every dollar the government spends creates a burden on taxpayers – who provide every dollar that the government spends. Another dollar spent by the state spends means that dollar is not available for Utahns to provide food for their families, pay the utility bills, or save for future expenses and the unknown. Up to a certain point the benefits of government spending outweigh the burdens: It is not very beneficial for a Utahn to have more money to buy food if there are no police officers to keep robbers from stealing that money before you get to the grocery store. But the primary impact on Utah families of excessive government spending – signified by steep spending increases – is to decrease their ability to use their resources to improve their lives.

Significant growth in government budgets over time often also translates into newer and bigger government programs that usurp the role of important social institutions such as the family, churches and local community groups. This increases life’s difficulties by substituting a dependence on an impersonal and often distant state government as our provider in times of need in place of the close personal and community connections that often provide for our emotional and psychological needs in addition to the material ones.

Further, the government spending cuts that occur during a recession make life more difficult for Utahns at the exact time that many of them are having economic struggles due to the bad economy. Given the added emotional and psychological stresses that a recession creates, such spending cuts also often contribute to a public attitude of cynicism toward government which can undermine the basic trust that is necessary for a representative government system to work.

What can we do about it?

While the status quo of “spend when times are good and cut when times are bad” has been sufficient to meet Utah’s needs in the past, it will not be enough in an era when the federal government will be forced to make up for its fiscal irresponsibility by dramatically cutting its budget, including funds that go to states. The right approach is to do what a responsible family or business would do: spend less in good times to prepare for the bad times ahead.

This can be done by amending the state constitution to: (1) limit growth in state spending to growth in population and inflation, and (2) set aside surplus tax dollars to prepare for economic downturns, natural disasters, or a loss of federal funds.

This government spending amendment should be practical in scope, flexible in implementation, and should conserve Utah’s heritage of representative government for policy decisions.
Dig deeper:

Website: Utah Public Finance

Video: Summary of Spending Amendment

Policy Paper: Taming the Beast of Government Spending

Video: Taming the Beast of Government Spending 

Policy Paper: Smoothing Out the Peaks and Valleys

Video: Smoothing Out the Peaks and Valleys

Blog: The case for a government spending amendment

Blog: Limited government = more jobs, higher incomes, better services

Study: Journal of Public Budgeting & Finance

Video: How to Solve America’s Spending Problem

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