Spending makes a better state

The claim that Oregon government spending is out of control was an important part of the campaign against Measure 30. Emboldened by their success, the Washington, D.C.-based Citizens for a Sound Economy and their allies are sure to recycle these claims as they push “spending limits” that force deep reductions in public services over time.
The chief problem with their rant is that it just isn’t true. Spending by state and local governments in Oregon has risen only with economic growth, leaving public services at a relatively constant level.
Statistics don’t lie, but the folks at CSE do use them to deceive the public.
CSE routinely decries “huge” spending increases without making any adjustments for inflation or population growth. Even these adjustments are insufficient to make an accurate assessment of growth in spending. The costs of major services, especially education and health care, tend to rise faster than inflation in general. The quickest way to see if spending is actually growing, or merely keeping up with the cost of and demand for services, is to compare it with income. Notably, CSE and company don’t do that.
How has Oregon’s government spending changed compared with income; that is, with Oregonians’ ability to pay for the spending? State and local government general expenditures, not counting federal dollars and compared across peaks in Oregon’s business cycles, were 17.4 percent of income in 1978-79, 15 percent in 1988-89, and 15.2 percent in 1999-2000. That’s hardly evidence of a spending problem. (Since 2000, state spending has declined as a share of income.)
The attack on public services also relies on misleading and meaningless cross-state rankings. Census figures show Oregon ranked eighth among states for total state and local government expenditures per capita in 1999-2000. The more relevant category of “general expenditures less federal aid,” however, shows Oregon state and local governments ranked 16th — just $50 above the national average. State spending alone fell below the national average.
But what does a rank of “16” even mean? Is it good or bad? Is it “too high” or “too low”? Is Maine, which ranks 24th, with only $200 less spending per capita, really better than Oregon? The 10 lowest spending per capita states include Oklahoma, Mississippi, Arkansas, West Virginia, South Dakota, Tennessee and Kentucky — all “low services” states that hardly serve as models.
Even cleared of deception, state-versus-state rankings offer little guidance. Oregonians needn’t neglect education, health care or other vital services just because residents of some other state have decided to do so. Who wants to win the race to the bottom?
The vast majority of state and -local government spending goes to -services that are vital to all Oregonians: education, public safety and health care. Spending on these ser–vices has risen along with the costs of providing them and the ability to afford them. Major policy initiatives, such as the Oregon Health Plan and “tough on crime” reforms, have enjoyed broad public support. The idea that spending in Oregon indicates a Legislature run amok makes no sense.
Governments must spend money to meet public needs. If Oregonians want to provide better education to more people, provide health care to more children, keep more criminals behind bars for longer and put more troopers on the road, we have to pay for it.
Government, like every household and business, could become more efficient. Pursuing greater efficiency, though, is an ongoing process. It takes time and can often end up costing more upfront, saving only in the long term. Becoming more efficient is not an alternative to adequate funding.

Jeff Thompson is an economic and policy analyst with the Oregon Center for Public Policy. He can be reached at OCPP, P.O. Box 7, Silverton, OR 97381; by telephone, 503-873-1201, or by e-mail at jthompson@ocpp.org. He lives in Northeast Portland.