Legislative audit commission documents, but does not acknowledge, huge budget increases
Public school spending increases ten times faster than enrollment
Starting with the 2001 General Assembly session,
the Fairfax County Taxpayers Alliance has hired the only anti-tax
lobbyist in Richmond. The FCTA lobbyist has repeatedly publicized
graphs showing that since the governorship of Chuck Robb, Virginia
state spending has grown much faster than population and inflation.
Now a recent study by the Virginia Joint Legislative Audit and Review Commission (JLARC) confirms the FCTA position.
The report is entitled Review of State Spending: June 2002 Update.
It studies Virginia spending trends between 1981 and 2001. The most
significant findings, which appear in a table on page 11 of the report,
- State spending for public schools increased ten times faster than public school enrollment;
- State spending for four-year public colleges increased more than four times faster than enrollment;
- Medicaid-eligible recipients increased four times faster than overall population;
- The Medicaid budget increased seven times faster than population;
- The state’s prison inmate population increased nine times faster than population; and
- While the mental health institutional daily census decreased by almost two thirds, mental health funding increased by a third.
(Note: All spending increases are adjusted for inflation.)
Transportation spending grew the slowest. While vehicle miles traveled increased three times faster than population, transportation spending increased only slightly faster than population.
However, the JLARC report never suggests that the spending growth it documents is excessive.
The report does not explicitly state, for example, that public school
spending increased ten times faster than enrollment. It simply presents
figures showing that enrollment increased ten percent while
inflation-adjusted spending for the Department of Education increased
The report’s major finding is that between 1981
and 2001 Virginia government spending increased faster than population
and inflation by an average annual rate of 2.3 percent. The JLARC did
not mention though that the 2.3 percent annual spending increase
compounded over 20 years is costing the taxpayers an extra $9 billion
this year. (See related story in this FCTA Bulletin, "Two Percent: A Lot or a Little?")
Two percent: A lot or a little? (It’s a lot)
Every year school and government administrators
and their pro-tax allies among elected officials proclaim a budget
crisis to justify higher taxes and fees and to beat back demands for
For example, Virginia Governor Warner
has been proclaiming a $6 billion budget shortfall. Fairfax County
officials in turn insist that the state shortfall creates a crisis in
the Fairfax County budget.
The Fall 2002 FCTA Bulletin showed that
the state crisis is not due to a shortage of revenues as proclaimed by
Governor Warner. State revenues are near their all-time high. The
shortfall is based on overly optimistic revenue projections made during
the "dot-com" bubble. The crisis is due to out-of-control spending.
Nevertheless, these annual budget crises are
so well orchestrated that the average citizen believes that government
revenues and school budgets are not keeping up with population and
The Fairfax County Taxpayers Alliance
has for years been publicizing the truth, which is that state and
county revenues and spending are increasing much faster than
population, school enrollment, and inflation.
Now there is confirmation from an official
Virginia government commission that the FCTA claims about soaring
Virginia spending are correct.
The Virginia Joint Legislative Audit and Review
Commission’s (JLARC) recent study of Virginia state spending trends
between 1981 and 2001 states that after adjusting for population and inflation, the Virginia budget grew at an average annual rate of 2.3 percent.
This finding appears in both the preface and page 1 of the JLARC report, Review of State Spending: June 2002 Update.
However, there is no indication in the JLARC report as to whether an
annual real growth rate of 2.3 percent is small or large. It seems intuitive that 2.3 percent is small. Is it?
The top line of the following graph,
"Growth of Virginia Spending", also appears in a graph on page 2 of the
JLARC report and shows the total Virginia budget from 1979 through
2004. (The JLARC graph goes from 1981 to 2001.) The bottom line in the
"Growth of Virginia Spending" graph shows how much the Virginia budget
had to increase to keep up with population and inflation. State
spending growth matched the growth of population and inflation from
1979 until the middle of Governor Chuck Robb’s term. Then during the
prosperous Reagan era, state spending took off.
For the current fiscal year (FY2003),
Virginia state spending, after all the downward revenue projections due
to the collapse of the "dot-com" bubble, is expected to be about $24.4
billion. However, to keep up with population and inflation growth since
1981, the budget only needs to be $15.5 billion, or $8.9 billion less
than this year’s budget. (Only one percent of the $8.9 billion went to
The JLARC report could have shown the spending
growth needed for population and inflation in its graph on page 2 of
its report. The JLARC also could have stated that twenty years of
spending increases over and above population and inflation are costing
the taxpayers an extra $9 billion each year.
However, the JLARC chose to omit this fact.
Nine billion dollars is more money than the state of Virginia collects from corporate and individual income taxes. If state spending had not grown faster than population and inflation, income taxes could have been eliminated.
So state government became bigger. Did it become
better? Please see the related article in this FCTA Bulletin, "What
services? How Virginia spends its tax dollar."
How the JLARC arrived at its 2.3 percent figure
: Between 1984 and 2004 Virginia spending (top line in graph) increased
at an average annual rate of 6.8 percent. The average annual increase
in population and inflation over the same period (bottom line) was 4.3
percent. Therefore the average annual growth in actual state spending
was 2.5 percent more than the growth needed to keep up with population
and inflation. Compounded over 20 years, this extra growth is now
costing the taxpayers almost $9 billion this year alone. (The 2.5
percent growth rate cited here is based on spending between 1984-2004.
The JLARC’s 2.3 percent growth rate is based on spending between 1981
The Fairfax County Taxpayers
Alliance mourns the untimely passing of Hunter Mill District Director
Ray Coggin. Ray had served as director since 1998 and faithfully
maintained the membership database. His service, wise counsel, and
friendship will be sorely missed. The FCTA extends its sincerest
condolences to Ray’s wife and two children.
The article, "Vote ‘NO’ on all bond referenda," in the Fall, 2002, FCTA Bulletin
incorrectly stated that 18 cents of the homeowner’s $1.21 tax rate pays
for bond interest. It should have stated that the 18 cents pays for
debt service on bonds. Of the 18 cents, six cents is for interest. The
remaining 12 cents pays for principal. Therefore the real estate tax rate increase resulting from bonds is six cents, to pay for the bond interest.
What services? How Virginia spends its tax dollar
When big-government advocates defend high taxes,
they say that the public "demands" quality government services. Does
Virginia government provide quality services? It seems that what the
taxpayer gets for higher taxes is crowded roads and schools.
Seventy-five Percent for Social Spending
The following pie chart shows the major
programs funded by Virginia’s budget this year. Almost 75 percent of
the budget is spent on public education (Public Schools and Higher
Education), welfare (Individual and Family Services) and law
enforcement (Administration of Justice).
largest program, Individual and Family Services, includes Medicaid,
Social Services, and Mental Health and Substance Abuse. Medicaid is the
fastest growing program in the Virginia budget.
The "Enterprises" category represents state
money-making activities, which primarily include tuition payments to
public colleges and hospital fees. Also included are prison
money-earning enterprises, the lottery, and the ABC stores.
The cost of local jails, which are funded by the
state, and state prisons account for about half of the Administration
of Justice program. Also included are the court system and the state
Parks, which come under Resources and Economic Development are less than one percent of the budget.
Does government social spending provide quality services?
Public Schools and Economic Opportunity?
As noted elsewhere in this Bulletin,
the Virginia Joint Legislative Audit and Review Commission (JLARC)
reported that over the past two decades, inflation-adjusted public
school spending increased ten times faster than enrollment.
What did this accomplish?
The average SAT score of Virginia public schools
is slightly below the national average. The average SAT score of
Fairfax County Public Schools, which regards itself as an excellent
school system, is at the 65th percentile, a fact that the school system does not publish.
A major role of public schools is to create equal
economic opportunity through education. Yet because public schools have
failed to close the minority student achievement gap, they are
perpetuating economic inequity.
Public schools are anti-rule, anti-drill, and
anti-fact. Because phonics-based reading instruction, grammar, and
arithmetic are rule-based, public schools resist teaching them. Rules,
it is felt, are boring and tedious while education is supposed to be
fun. Failure to teach phonics drives up the demand for
learning-disabled and speech therapy services, for which schools
receive extra funding. Hand calculators and computers supersede math
drills. Since history and geography are "just facts" that anyone can
look up if needed, schools do not feel it is important to teach these
College Drop Outs
The JLARC reported that
inflation-adjusted spending for Virginia four-year public colleges
increased more than four times faster than enrollment over the last
There needs to be an accounting for how this
massive increase in funding was spent. After this large a funding
increase, why was it necessary last November to have a $900 million
bond referendum for college construction?
According to studies by the State Council on Higher Education for Virginia (SCHEV):
- twenty percent of college freshmen in Virginia four-year public colleges drop out;
- forty percent of freshmen do not graduate within six years; and
- forty percent of first-year full-time students in Virginia community colleges drop out.
The high dropout rates do affirm that
colleges have standards. However, are the standards as high as they
were twenty years ago? Also why should the taxpayer subsidize the
education of such a large number of students who drop out? Wouldn’t it
be better to have higher admission standards and motivate more
attention to high school studies?
Massive welfare spending began in the 60s with President Lyndon Johnson’s "Great Society."
Welfare incentivizes out-of-wedlock births by
providing a low-income unwed mother subsidized housing, subsidized
food, subsidized childcare, and subsidized Medicaid.
Welfare’s message to the low-income male is that
if he fathers a child, he is not needed to provide food, shelter, or
medical care for the child or mother. The state will provide it for him.
According to William J. Bennett’s Index of Leading Cultural Indicators - 2001,
the percentage of African-American children born out of wedlock has
increased from 23 percent in 1960 to 69 percent in 1991. (The increase
for white children is from two percent to 27 percent.) Bennett states
that the average income of a household headed by a never-married mother
is less than one-quarter the average income of two-parent families.
The JLARC states that the state inmate population
increased nine times faster than overall population. Bennett points out
that seventy-percent of long-term inmates come from fatherless homes.
Despite extensive government-provided affordable housing, there is a chronic shortage of low-income affordable housing.
According to the JLARC, Medicaid is the fastest
growing item in the Virginia budget. As Medicaid grows, the health care
industry’s economic state is becoming more precarious. It is tempting
to regard quality healthcare as a right, but who will provide that
right if hospitals go out of business? The JLARC report states that
over the past two decades the number of Medicaid-eligible persons
increased four times faster than overall population. Two-thirds of
Virginia’s Medicaid recipients are welfare mothers. The other third are
individuals in nursing homes.
The 21st Century Plantation
There are similarities between today’s
welfare state and slavery before the Civil War. Under slavery it was
illegal to teach a Black person to read. Just the ability to read, it
was thought, could empower a slave to attain independence.
One hundred and forty years later, our public
schools are still not teaching low-income children how to read. The
minority student achievement gap apparent in high school SAT scores is
also apparent in third and fourth grade standardized tests, which
primarily measure reading and arithmetic skills. The inability to read
traps a person in dependency as much in the information age as it did
during slavery before the Civil War.
Also, while slavery broke up families at the
auction block, the welfare state breaks up families with the subsidy
check. By not teaching reading, schools deprive low-income children of
the ability to be independent. Welfare undermines their incentive to be
independent and to create families. The result is that so many
low-income youth end up in prison that going to jail is no longer a
stigma. America is second only to Russia in the percentage of its
citizens behind bars.
Government social spending is not a "quality
service." It is destructive, and it is expensive. It is the social
spending programs that destroy families, drive up taxes, pre-empt tax
cuts, and divert revenues from transportation,.
USA TODAY: State spending "overambitious"
Two articles in the Wednesday, January 15, 2003, issue of USA TODAY reported that state spending crises nationwide are not due to low revenues but to rapid spending growth.
The front-page headline article quoted the
National Governors Association as saying that states face the "most
dire fiscal situation since World War II." Then article then stated,
"But a USA TODAY analysis shows that most of the budget cuts
being studied are not declines in spending from last year. Instead,
they are reductions in spending increases that were approved when the
U.S. economy was booming."
The article observed that state and local
government spending nationwide has increased without interruption for
decades. "It has not fallen since 1944, and it has grown faster than the rate of inflation every year since 1982."
While the private workforce shrank 0.4 percent
compared to a year ago, according to the article, the number of state
employees increased 0.6 percent. The number of local government
employees increased 1.4 percent.
A second article on page 3A, "Costly programs
stagger states," said, "State governments are struggling to pay for
expensive programs that were approved or expanded during the economic
surge of the late 1990s." It continued, "The extra money has gone mostly to the two big items that account for 60 percent of state spending: education and Medicaid health care for the poor."
Between 1997 and 2002, Virginia had the fifth fastest-growing budget of all fifty states.
California’s spending grew the fastest.
COMMENTARY: Uninventing government
"Government is not the solution to our problem. Government is the problem."
Needed: New Policies
Big government social-spending programs are
perpetuating and exacerbating the problems they are supposed to solve.
They destroy families and human diginity. However, if government
programs do not work, what is the alternative?
What are the non-government solutions for:
- better schools?
- ending poverty?
- affordable housing?
- affordable medical care?
- reducing the prison population?
Even if non-government solutions were
found, transitioning to them would be a challenge. Thousands of
government employees have careers in these areas. Finding
non-government solutions for these problems would result in many
government employees having to switch careers. Assuming that the
average government salary, including benefits, is $50,000 a year, then
each $100 million reduction in government spending would cost the jobs
of 2000 employees. Downsizing government should, as much as possible,
be done by normal attrition and turnover and preferably over several
years instead of all at once. Governor Warner cut the number of state
employees by eliminating 4000 unfilled positions.
Moreover, as damaging as social spending may be,
people depend on it for food, shelter, medical care, and childcare. How
does government transition them into independence while maintaining
their safety net?
Remembering First Principles
Politicians try to cut budgets without
changing policies. However, policies drive spending. Cutting taxes
requires changing policies.
There are reasons why current government policies do not work.
Capitalism is harsh but productive. To survive,
capitalism requires you to produce competitively successful goods or
services. However, capitalism allows you to keep all you earn.
Government social spending undermines capitalism by rewarding those who
do not produce and punishing those who do produce.
Ultimately the only way to guarantee food,
shelter, and medical care is for people to earn it. By providing these
items for free, welfare creates a downward spiral in which demand
increases while the wealth available to pay for the demand decreases.
Government is a monopoly, which especially in
elementary and secondary education means it can produce a mediocre
product and still stay in business.
Moreover, politicians cater to the National
Education Association, not to students. Albert Shanker, president of
the American Federation of Teachers between 1974-1994, stated in a
remark included in the August 1985 Congressional Record that "when
schoolchildren start paying union dues, that’s when I'll start
representing the interests of schoolchildren."
For decades, public school funding has
increased much faster than enrollment and inflation. Yet test scores
are stagnant, salaries are unchanged, and buildings neglected. The
principal change is the increase in school staff, which benefits
You get what you subsidize. Government will never
end poverty as long as it continues subsidizing women who have children
out of wedlock.
Government-provided welfare is too easily abused.
Consider welfare reform, which now provides childcare subsidies instead
of paying subsidies to mothers to stay at home with their children. The
result is that children are cared for by relatives who then receive the
childcare subsidy check and share it with the mother. There is still a
financial reward for having children out of wedlock.
Government subsidization of medical care
increases paperwork and invites fraud. As Medicare has expanded, the
financial footing of healthcare has weakened.
Subsidized housing is unsafe. Communities do not
want low-income housing developments nearby. The only hope for safe
low-income housing is to build units that individuals earning $10 and
hour can rent without a subsidy.
The one truly effective social program, which the
government should subsidize, is the stay-at-home mother with a working
These women provide free childcare, education,
eldercare, and community policing. They provide supervised activities
for youth after-school. They volunteer in schools, libraries, churches,
It is paradoxical that governments tax mothers
out of the home in order to pay professionals to provide the services
that mothers provide for free.
Ironically, both Fairfax County and Virginia
refer to their welfare programs as "Family Services". Only families can
provide family services.
Families should be the front-line provider of welfare to family and extended-family members.
The family is the basic economic unit and the
basic unit of government. If families did their job, state and local
government’s only significant responsibility would be transportation.
Alternatives to Social Spending
The following policies can emancipate both welfare recipients and taxpayers from the tyranny of government social spending.
To earn a living in the information age, people
need to read. Because they adamantly eschew phonics-based reading
instruction, public schools have failed to teach low income children
how to read. The only hope for educating these children is school
competition through tax credits for private school tuition and
scholarships (and for home schooling).
To rebuild families, government must phase out
subsidized food, housing, and medical care for mothers who have
children out of wedlock. Mothers with children born before a certain
date may be "grandfathered" in, but pregnancies after a certain date
would no longer qualify. Low-income women will do what is logical.
Right now government has made it logical to have children out of
Government needs to withdraw from medical care
and let the profession do the "cost shifting" between patients who can
pay and cannot pay.
Subsidized housing cannot be phased out until
affordable unsubsidized housing is made available. Local governments
need to zone and perhaps provide tax breaks for low-cost UNSUBSIDIZED
affordable housing with nearby mass transit.
Finally, government’s highest social priority
should be to subsidize -- through lower taxes -- the one social program
that works: the stay-at-home mother with the working husband.
Government has become a modern-day god.
It is believed to be all-wise, all-knowing, and all-powerful. It is
believed to have the ability to solve all problems. There is no problem
but that some legislator will sponsor a new government program to fix
it. Individuals, according to this theology, are incapable of taking
care of themselves.
However, decades of experience have shown that
this is a false theology. To reduce tax-driving and
individual-destroying government social programs, we must repose full
confidence in individuals and place upon individuals the responsibility
for their personal and family’s welfare. Individuals and private
institutions can solve problems better than the government can.
-Arthur G. Purves
The trouble with state spending ranks
Beware when they say, "Virginia ranks 27thth among the 50 states in education spending."
In its report, Review of State Spending: June 2002 Update,
the Virginia Joint Legislative Audit and Review Commission (JLARC)
compares Virginia spending per resident with all fifty states.
The JLARC found
that between 1981 and 1999 Virginia’s rank compared to all states for
total state spending per resident (in inflation-adjusted dollars) was
unchanged. In 1981 Virginia ranked 36th; in 1999 Virginia still ranked 36th.
However, during the same period Virginia
spending per resident, adjusted for inflation, increased 65 percent,
from $2089 to $3445.
How is it that Virginia’s rank remained the same while its spending per resident increased 65 percent?
The answer, according to the report, is that "…
spending by other states kept pace or even exceeded Virginia’s rates …
Thus increases in state spending appear to have been the norm over this
period, and Virginia’s spending increases merely served to maintain the
State’s position relative to other states" (p. 17).
The average increase for all states was 60 percent, from $2378 per resident to $3819 per resident.
That is the problem with judging a state’s spending by comparing it with other states. Because all states are increasing spending rapidly, spending-rank comparisons conceal large spending increases.
For another example, the JLARC report states (p. 69) that in 1999, Virginia’s public school spending per pupil ranked 27th
out of fifty states. Based on this low ranking no one would suspect
that Virginia inflation-adjusted spending for public schools increased
ten times faster than enrollment and that spending for public colleges
increased four times faster than enrollment.
This is another example of taxation by
misrepresentation. Advocates of higher taxes avoid comparing this
year’s spending with previous years’ spending. Instead, they cite
spending ranks, which can conceal large spending increases. Or, like
Virginia Governor Warner, they compare this year’s spending with overly
optimistic spending projections.
Officers of the Fairfax County Taxpayers Alliance
President: Arthur G. Purves
First Vice President: Connie Bedell
Second Vice President: Peter Ferrara
Treasurer: Kent Webber
Secretary Perry Young
Braddock: David C.F. Ray
Hunter Mill: David Swink
Lee: Jeff Dircksen
Mason: Warren Hill
Mount Vernon: vacant
Providence: Marie Schumacher
Springfield: Bradford Butler
Sully: Jim Parmelee
The Fairfax County Taxpayers Alliance
P.O. Box 356
Fairfax, Va. 22030