Amendment To Hold Back State Government Growth Would Be Fraught
With Problems, Economist Cautions
December 9, 2003 --
In an era of troublesome state and federal budget deficits,
the 2004 General Assembly may well see the introduction of new
to constrain the growth of Virginia government spending by proposing
an amendment to the state constitution.
than half the states now have some type of limit, with the most
popular being a constitutional
amendment that ties government
spending increases to such
variables as population growth and inflation. Such a permanent straightjacket,
however tempting on the surface, would be a simplistic and dangerous move for
Virginia, one of the state’s best known economists warns.
some critics blame the state’s current fiscal crisis on
government-spending growth in flush years of the 1990s, according
to John L. Knapp, director of
economic research at the University of Virginia’s Weldon Cooper Center
for Public Service, much of that growth was driven by programs with wide
to meet social needs or was used for re-building programs weakened by the
16 percent of growth in Virginia’s spending
between 1998 and 2001 was for reimbursing localities for the politically
popular rollback of the car-tax,
Knapp writes in the
current issue of Virginia Issues and Answers newsletter, published by Virginia
Tech. Much of the rest of the growth went for K-12 and higher education,
Medicaid costs, highways, mental health, prisons, and aid to local police.
constitutional amendment limiting growth in spending could mean
that creative new initiatives couldn’t be undertaken or that needed existing
programs couldn’t be strengthened,
Knapp said. “Constraining growth in years of prosperity would remove a
recovery mechanism that now exists” to bolster programs hurt by recessions
or sudden needs. “It would take away the flexibility to deal with new demands
on state government.
the past, Virginia has launched important and expensive new programs
such as the community college system, the state share of Medicaid,
new highway construction,
and aid to local law enforcement. Without the flexibility to address
new demands, state government will either have to ignore them, make cuts in
programs, or circumvent the constraints with budgetary gimmicks.”
the last session of the General Assembly, seven bills were introduced
that provided for an amendment limiting the growth of state spending.
are likely to draw increased attention in the future, Knapp predicted.
Tax and spending
limits have been widely promoted nationally by such groups as the
Cato Institute, a conservative think tank, he noted.
constitutional amendment would be “fraught with technical and policy
problems,” such as how to estimate population growth or which
inflation or income formula to use, Knapp said. “There is no
need to overlay the traditional budget process with a new constraint,” he
said. It “assumes
that today’s decision makers and voters know better than future
generations what will be best for them. This breathtaking assumption
Contact: Bob Brickhouse, (434) 924-6856