“The problem is not that the people are taxed too little, the problem is that the government spends too much.” –Ronald Reagan
This past legislative session much of the discussion in the media centered on allegations that state agencies were experiencing dramatic cuts to their budgets. This narrative might be useful in selling newspapers or holding opportunistic press conferences, but it is not rooted in fact.
Total state appropriations in Mississippi have increased in the last five years by over $2.75 billion, or 15%.
This is $2.75 billion that comes from Mississippi families and businesses that are struggling to get by. It includes debt that will be paid by our children and grandchildren. While it may pale in comparison to a national debt that exceeds $19 trillion, it marks a significant increase in dollars taken out of the private sector from a population that can ill afford it.
It’s important to understand this truth as you hear proponents of big government weave fictional tales of Draconian cuts with calls for higher taxes and more spending.
The budgeting process is complex, making it extremely difficult to determine how tax dollars are being collected and spent. Over the coming weeks, we are going to dig down in the weeds, but want to start with some basics.
The state budget is set by “fiscal year” starting on July 1st and ending on June 30th. So when you see FY2013, for instance, that is talking about the fiscal year that started on July 1, 2012 and ended on June 30, 2013. FY2017 started on July 1st of this year and will end next June 30th.
Every year, the Mississippi Legislature is responsible for “appropriating” funds for the operation of the state—this simply means that your elected Representatives and Senators designate how money will be spent. There are four broad categories of revenue appropriated by the Legislature: (1) General Fund; (2) State Support Funds; (3) Federal Funds; and (4) Other Funds.
Of those four sources, the news and legislators most frequently reference the General Fund. All four funding categories are built on the backs of taxpayers. FY2013 was the first budget set by a Republican-controlled Mississippi Legislature since the late 1800s. Total state appropriations in FY2013 were $18.15 billion. By FY2017, this number ballooned to $20.95 billion.
While many are quick to point to increased federal funding as the cause of increased appropriations—as if that absolves the state of responsibility to spend wisely—the numbers do not bear out federal funding as the primary driver of spending increases. From FY2013 to FY2017, state General Fund spending increased by over $1 billion, or 23%. By contrast, Federal Funds expenditures increased by roughly $830 million, or 10%.
The bluster surrounding our state budget and supposed cuts is disingenuous. Mississippi’s problem is not that the government is too small or that we are taxed too little. It’s that we spend too much.
We are routinely ranked as the state most dependent upon government spending. We’ve been ranked as having the fourth largest public sector in the country based on population.
For decades now, Mississippi has tried the big government, planned economy approach. It has failed to produce the kind of real, sustainable growth that will move us off the bottom.
What we have not tried is the kind of genuine economic freedom that affords people the right to earn, keep and spend their own money in a system unburdened by unfair taxation, excessive spending and mounting regulations that favor the connected. Over a wide swath of human history, there exists substantial correlation between this kind of limited government, free enterprise system and prosperity.