Last week’s column outlined Georgia’s 20 place jump in tax burden on its citizens. This is perplexing, so this week’s column begins an analysis of spending and taxation history, first by the state government and later by local governments.
Additionally, the governor’s recent discussions about the Homeowners Tax Relief Grant (HTRG) raises interesting questions about the growth of all levels of government in Georgia. This week’s column will examine the current size of state government and its growth over the last 20 years.
Population growth and inflation
In examining government spending over time, there are two factors to be considered in order to paint an accurate picture of growth. First, it is important to understand and account for the growth in population that Georgia has experienced over the past few decades. Between 1989 and 2008, Georgia’s population grew by about 3.5 million people. As Georgia’s population has grown, state government has become larger and more expensive. It is helpful to examine the budget in terms of what the state spends per citizen. Looking at the amount spent per citizen, per capita is a way to gauge whether government spending is growing faster than the population it serves. In addition to accounting for Georgia’s growing population, there is inflation to consider. In order to account for inflation, the consumer price index (which measures the cost of goods over time) is used to more accurately gauge prices.
In 1989, the state legislature appropriated approximately $6.4 billion in state funds, which was about $990 per citizen.
• In 1994, the total amount appropriated was approximately $8.9 billion, or $1,245 per citizen. However, when adjusted for inflation, the government actually spent only $1,045 per citizen.
• In 1999, the total amount appropriated was approximately $12.7 billion, or $1,571 per citizen. Adjusted for inflation, the state only spent $1,179 per citizen.
• In 2004, the total amount appropriated was approximately $15.2 billion, or $1,701 per citizen. Adjusted for inflation that amounts becomes $1,137.
• In 2009, the total amount appropriated in the general budget was approximately $20.1 billon. This will not be the final amount appropriated for 2009 as the legislature has not yet passed the amended budget, which will certainly be lower. However, if the original appropriation were to stand, it would equal $2,028 per person in 2009 dollars, but only $1,167 in 1989 dollars. However, once the $1.6 billion is taken out of the budget to account for the revenue shortfall, the total budget for 2009 will be about $18.5 billion, or $1,867 per person in 2009 dollars. When this figure is adjusted for inflation, the state is spending only $1,074 per person.
Therefore, when the amount spent by the state is adjusted for both inflation and population growth, it is clear that the state is spending more per citizen ($84) than it did 20 years ago but spending less, (-$105) than it did 10 years ago.
Spending by agency
The Senate Appropriations Committee divides the state budget by 13 subcommittees. An easy way to study spending trends is looking at funding through those subcommittees.
While some subcommittees have shrunk in their share of the state budget, others have grown.
The Community Health Subcommittee, which is primarily composed of the Department of Community Health, received about $1.37 billion in 1998. In 2007, the agencies within the Community Health Subcommittee were appropriated $2.04 billion, even adjusted for inflation, this is about 48 percent more than 10 years ago. Similarly, funding for education agencies has increased from $4.5 billion to $5.8 billion between 1998 and 2007 in inflation adjusted dollars.
While overall per capita spending has not grown tremendously across the state over the last 20 years, the issues and areas where the state spends its funds have changed over time. For example, state spending on agencies within the Agriculture Appropriations Subcommittee accounted for $41.9 million in 1998. By 2007, the Agriculture Subcommittee accounted for only $34 million of the state budget (when adjusted for inflation to be comparable to 1998 dollars). In actual dollars agriculture agencies only increased from $41 million to $42 million across these 10 years. Similarly, the Natural Resources Subcommittee, which includes the Department of Natural Resources, the Forestry Commission, and the Soil and Water Conservation Commission among others, was appropriated close to $141.3 million in 1998. These agencies accounted for $116.2 million in 2007 in inflation adjusted dollars. In actual dollars the Department only increased from $141 million to $146 million across 10 years.
So, the conclusion is that state spending and taxation has changed little in the past 10-20 years on a per capita basis adjusted for inflation. In today’s dollars, the adjusted 2009 budget will return the state to the same level as two to three years ago.
Next week, we’ll look at how local spending has changed over time.