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A Comparison Of Three Government Budgets – OpEd


One effect of the ongoing recession is that it reduces tax revenues. That’s one reason the federal deficit is as large as it is. But not all governments have responded the way the US government has.

I live in Florida, where total state appropriations (that is, state government expenditures) peaked in 2006, prior to the recession, at $73.9 billion. Because of declining revenues, expenditures fell to $66.2 billion in 2008, and in 2012 have come back to $70.0 billion, which is 5.3% less than their peak six years ago. The fiscally conservative Florida legislature has held the line on taxes, and state government spending has fallen.

In California, 2006 state expenditures were $130.0 billion, and and in 2012 are $137.3 billion, a 5.6% increase. Not much of an increase over six years, but it looks like more when compared to Florida’s expenditure reduction.

Meanwhile, federal government expenditures in 2006 were $2,655.1 billion, and rose to $3,795.6 billion in 2012, for an increase of 43%. I conjecture that few Americans would argue the federal government is providing 43% more value to them now than it was in 2006.

If the federal government had kept its spending increase to the same level as California’s state government from 2006-12, federal expenditures would be $2,803.8 billion, or 26.2% lower than they are today.

If the federal government had reduced its expenditures as much as Florida did, federal expenditures would be $2,514.4 billion, or 33.8% lower than they are today.

The Floridians I hear complaining about government budget cuts are government employees, the people who get paid by government. I never hear ordinary Floridians in the private sector complaining about reduced government services. I suspect you’d have few complaints if the federal government budget were cut 33.8% today, except for the people who are recipients of taxpayer dollars.

One final thought: 2012 federal tax revenues are $2,468.6 billion, so if the federal budget actually were cut by 33.8%, we’d still have a $48.8 billion budget deficit.

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Randall G. Holcombe

Randall G. Holcombe is Research Fellow at The Independent Institute, DeVoe Moore Professor of Economics at Florida State University, past President of the Public Choice Society, and past President of the Society for the Development of Austrian Economics. He received his Ph.D. in economics from Virginia Tech, and has taught at Texas A&M University and Auburn University. Dr. Holcombe is also Senior Fellow at the James Madison Institute and was a member of the Florida Governor’s Council of Economic Advisors.

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