Tags: Overspending | Returns | Haunt | States

Overspending Returns to Haunt States

Monday, 07 January 2002 12:00 AM

According to ALEC, "Many state governments now face serious budget deficits as economic growth and tax receipts are widely outpaced by government spending."

"State governments have not lived within their means during the last decade," ALEC national chairman Jim Dunlap, an Oklahoma state senator, said in a statement. "Families in America manage to live within their means. Government must live within its means as well."

The ALEC report noted that about two out of every three surplus dollars going into state coffers since 1996 were used for new spending, not for tax reduction. "If states had limited spending increases to the growth in population and inflation, [they] could have cut taxes by $300-$400 per person," the report said.

Dunlap believes that because the states spent so much in the past decade, they should look to spending cuts, and not tax increases, to restore balance to their budgets.

ALEC suggests that state legislators could responsibly manage future economic growth and government spending by passing laws limiting taxes and expenditures, passing a truth-in-spending law and competitively contracting for public services.

Last September, the U.S. Census Bureau released a study on state government spending. It found that spending by state and local governments increased 6.3 percent in 1999 to $1.6 trillion, while revenues rose only 4.3 percent to $1.8 trillion.

The Census Bureau also found that state and local governments spent more than half of their money in areas such education, public welfare, highways and hospitals.

Taxes continue to be the "primary source" of government revenue, with state governments relying primarily on general sales taxes and individual income taxes, the Census Bureau found.

In fact, in 2000, the Census Bureau found no state where total tax revenue decreased.

According to the Census Bureau, California was the nation's biggest spender, spending $218 billion, and it also led the nation in the receipt of revenues, bringing in $242 billion.

New Hampshire, a state without an income tax, relied heavily on property taxes to keep the government operating.

Alaska, which has no state sales tax or state income tax, saw its total tax revenue increase because rising oil prices raised severance taxes.

Georgia's state tax revenue rose in 2000 because of individual income and general sales taxes. Those taxes also helped Massachusetts, Hawaii, Colorado and Utah see a rise in their tax revenues as well.

But, on the other end of the spectrum, individual income taxes and general sales taxes accounted for less than 50 percent of state government taxes in North Dakota, Vermont, Wyoming, Montana, Delaware, New Hampshire and Alaska.

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According to ALEC, Many state governments now face serious budget deficits as economic growth and tax receipts are widely outpaced by government spending. State governments have not lived within their means during the last decade, ALEC national chairman Jim Dunlap, an...
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2002-00-07
Monday, 07 January 2002 12:00 AM
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