When Speaker John Boehner revealed yesterday that President Obama, during the fiscal cliff talks, absurdly asserted that the United States does not have a spending problem, we pulled out our excel spreadsheets and reviewed Colorado’s spending habits. While Colorado is likely more frugal than other states, state and local governments have spent more than can be accounted for by either inflation or population growth as a total. Below is a chart of total state and local government spending over the past 10 years.
Some might argue that the increase in spending is due to population growth, so we also examined spending as a function of population growth. If the increase in spending was due solely to population growth, the chart below would be relatively flat across the top. It’s not. Further, some might say that inflation is to blame. We’ve include the projected line of inflation (accounting for population growth) across this chart in blue.
Viewers of the chart might ask, “what happened in 2007 to cause such a huge jump?” A couple of things may have impacted spending – first, Colorado elected a Democratic governor, Bill Ritter, who was no fiscal hawk. Second, voters voted on Ref C in 2005 and it’s possible that it started affecting spending trends in 2007. But, after eight years of the sound fiscal leadership of Gov. Bill Owens, it’s more likely Ritter’s influence.
So, to answer the original question – does Colorado have a spending problem? When government spending outpaces both inflation and population growth, it’s a problem. Perhaps the federal government has different spending trends (we doubt federal government spending is more responsible); however, Colorado has gradually moved from a fiscally sound state to one that has allowed outsized government growth.