State spending grew at slower pace in 1990s

By Ralph Thomas
Seattle Times Olympia bureau
 

	By the numbers Where the state got its money How state spending has grown How the money was spent State spending: a matter of perception

OLYMPIA — From the looks of the state budget, Washington's job is to educate, incarcerate and medicate. That's where state spending grew the most and fastest in the past decade.

Annual state spending grew by about 66 percent to $13.4 billion between 1991 and 2001, more than two-thirds of that increase going to public schools, higher education, prisons and medical care for the poor.

But no matter the measure, the 1990s were not exactly a spend-a-thon for state government.

Held in check by a new spending limit and an anti-tax mood, total state spending grew at a much slower rate in the 1990s than during the previous two decades, a fact quite contrary to the government-run-amok sentiment common to political and anti-tax campaigns in recent years.

"It wasn't on a starvation diet, but it's awful hard to say it was gluttony" during the 1990s, said Dick Davis, president of the Washington Research Council, a business-backed economic think tank.

In fact, many Washington residents think the state needs to spend more on some things.

A new Seattle Times poll found that, by roughly 4-to-1 ratios, residents want the state to spend more on schools and highways.

The poll also found that a vast majority of people think spending had grown "about right" or "too slow" for other major areas of state government. Though social and health services have long been among the fastest-growing areas, less than 20 percent of the 600 people polled said those programs had grown "too fast."

Politicians are confounded by such "spend more" messages from residents.

After all, it was voters who in 1993 approved Initiative 601, one of the nation's strictest spending limits. They also have made it clear they do not want to pay more in taxes to increase government spending.

But David Olson, a University of Washington political-science professor, said the poll findings make sense.

People view "nonlabeled, generic spending increases" as government waste, he said. "But when you get it down to specific programs, there's a great deal of eagerness to spend more than we are."

The pace of growth

To get a real sense of how government has grown, take a look at spending from all state funds. The budget is usually characterized as spending from just the general fund, the primary account where most state tax dollars are collected. But the state spends billions more from scores of other funds.

And as a way around the general-fund spending limit, budget writers in recent years have steered hundreds of millions of dollars in spending to accounts separate from the general fund.

To be sure, state government grew larger during the past decade, and in dollar terms grew more in the 1990s than in the 1980s. But on a percentage basis, even when adjusted for inflation, spending grew much faster in the 1980s than it did in the 1990s.

Another measure of government's growth: Real (adjusted for inflation) spending per person grew by about 12 percent to more than $2,000 per capita between 1991 and 2001. But per-capita spending grew twice that fast during the 1980s.

The pattern — slower growth in the '90s — also holds true when comparing numbers of public employees.

From 1991 to 2001, the total state work force grew by about 14,500 "full-time equivalent" employees — a 19.5 percent increase that matched the overall growth in state population. During the previous decade, the state work force had grown by 25 percent — somewhat faster than population.

State government also appears to have grown less here than in other states.

The American Legislative Exchange Council, an association of state legislators that promotes fiscal conservatism, earlier this year released a report titled "Crisis in State Spending." The group compared the 1990-2000 change in general-fund spending for all 50 states.

While general-fund spending in some states, including Oregon, more than doubled, Washington ranked 36th with a 60 percent increase.

"Compared to other states, that's pretty good," said council staff member Chris Atkins, who edited the report.

Washington also gained fewer state- and local-government employees than most other states did during the 1990s, according to a comparison by the U.S. Census Bureau. In 2000, the bureau ranked Washington 34th in the per capita number of state- and local-government workers.

Still, budget writers here live in a different reality.

"That's what I've been grappling with," said Senate Ways and Means Committee Chairwoman Lisa Brown, D-Spokane. "This perception that people seem to have that spending is out of control."

Although the recent Times poll did not find wide veins of that sentiment, anti-tax crusader Tim Eyman and others have built several citizen initiatives on the message that government has more money than it needs.

"In states where there are strong initiative movements, it seems there are people with a great incentive to inflame the perception," said Nicholas Johnson, who studies state fiscal policy for the Washington, D.C.-based Center on Budget and Policy Priorities.

Davis, at the Washington Research Council, said state government has increased its "regulatory reach." And that, in turn, fans the flames.

"I'm not sure people differentiate between government spending and government regulation," Davis said. "It's just 'more government in my life.' "

We brake for voters

Sen. Dino Rossi of Issaquah, the ranking Republican on Ways and Means, thinks spending grew faster than it needed to in the 1990s.

He likes to point out that although the state work force grew slower than the state population during the decade, the reverse has been true since Democratic Gov. Gary Locke took office in 1997. And some of the biggest spending increases in state history came in 2001 and in the current fiscal year, which ends June 30.

Still, Rossi agrees spending slowed somewhat during the 1990s, and he credits I-601, the state spending limit that voters approved in 1993 and that took effect in 1996.

Under the limit, general-fund spending was not supposed to grow faster than the combined average population and inflation growth for the previous three years. Though lawmakers found ways around it, politicians on both sides of the aisle agree I-601 slowed things down.

"We would be in a much more difficult situation today if it wasn't for 601," Rossi said, "because we would have done even more starting new programs and obligating ourselves to things we couldn't come through on when the economy takes a dip."

Brown, the Spokane Democrat, said other factors helped hold down spending in the 1990s, such as a feared revenue shortfall in 1993 and the clear anti-tax signals from voters.

She and others have argued that I-601 is not a reasonable way to limit state-spending growth because it does not take into account that caseloads and costs in certain programs often grow faster than population and inflation.

Some have suggested tying state spending to the growth in "total personal income," a measure of the state economy similar to the national gross domestic product.

In the past two decades, state spending has grown much faster than population and inflation but slightly slower than total personal income. So hitching the limit to personal income would allow government to grow on an ability-to-pay basis.

Republicans bent on shrinking government don't like that idea.

"Just because a higher number of people have been highly successful, that doesn't mean that the needs of the state have grown," Rossi said.

Rossi railed against Democrats when they voted this year to temporarily suspend spending-limit provisions that require supermajority votes in the Legislature for new taxes and emergency-reserves spending. He supports adopting an even-stricter limit.

Spotlight on biggest increases

During the 1990s, about the same number of programs and agencies tripled their spending as reduced it.

"The government never seems to announce, 'OK, we're there, we're done. We can turn off that spending,' " said Paul Guppy, research director at the Washington Policy Center, a conservative, Seattle-based think tank.

Much of state government's growth was deliberate — popularly supported decisions by state government to do more for more people.

Like most other states, Washington worked aggressively to enroll more people in Medicaid, a joint state-federal program that provides health coverage to the poor, elderly and disabled. From 1991 to 2001, the number of people on Medicaid nearly doubled and the state's share of medical-assistance payments more than tripled to $1.2 billion a year.

But Washington also expanded state-subsidized health care for low-income working people. In 1991, there were only about 20,000 people in the state's Basic Health Plan. But by 2001, the program covered more than 120,000 people and cost the state nearly $240 million a year.

In recent years, the fast-rising caseloads have been compounded by soaring health-care costs, especially for prescription drugs.

Prison costs soar

The state also experienced a rapid increase in prison costs, because of anti-crime measures pushed through in the late '80s and early '90s. From 1991 to 2001, the state's prison population grew nearly 75 percent to more than 15,000 inmates. Prison spending more than doubled to $500 million a year.

More than a third of the total increase in spending during the 1990s was for public schools. But it wasn't only because of enrollment, which grew just 15 percent. Efforts to reduce class sizes by hiring more teachers, along with education-reform programs such as mandatory testing, also contributed.

Now that the economy is receding and the state is facing some of its worst revenue shortfalls ever, policy makers in Olympia are being forced to rethink decisions.

For instance, lawmakers this year reduced penalties for nonviolent drug offenders and steered the prison savings toward treatment programs. That will save the state money in the long run, or so the theory goes.

The Locke administration is attacking Medicaid costs on several fronts, such as seeking federal permission to make recipients pay a portion of their medical costs. And some lawmakers plan to make another push at reining in prescription-drug costs.

"We have to go back and re-examine what we're doing," Brown said. "Over time, the state's priorities change. But there are very few things we're doing where I've heard people saying, 'We don't want to do that any more.' "

Ralph Thomas can be reached at 360-943-9882 or rthomas@seattletimes.com.

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