A Government Product News analysis of state government per-capita spending data shows Texas spends the least per-capita among the states. The other top five states with lowest per-capita spends are Nevada, Georgia, Tennessee and Missouri. Among the 20 states with the lowest per-capita spends, half are in the South or Western United States. The five states with the highest per-capita spending rates are Hawaii, Vermont, Delaware, Wyoming and Alaska, which has the highest per-capita spending rate among all states.
Government Product News compiled data on state government per-capita spending from a variety of sources, including the Tax Foundation, Pew Center on the States and the Kaiser Family Foundation’s State Health Facts Web site.
We also consulted other spending statistics sources, including the U.S. Census Bureau, National Association of State Budget Officials, National Conference of State Legislatures, Center on Budget and Policy Priorities, Council of State Governments and the National Governors Association. Statistics used in our calculations are from 2008 or 2007 budget years, with the most recent data weighted more heavily.
Can efficiency be measured in state spending? “Yes, there is value to ranking states in per-capita spending,” David Patti told Government Product News. Patti is president and CEO of the Harrisburg, Pa.-based Pennsylvania Business Council (PBC), a business and executive membership organization that defines long-term policy strategies and solutions for Pennsylvania.
Patti adds: “But it’s not the sole measure of efficiency, and it has its limitations. Governments, like firms, have certain fixed costs. Not all of these are population-related. And even for population-driven government functions, there can be incredible economies of scale. Larger states like Pennsylvania, tend to look good on measures of the number of state employees per 1,000 citizens, for example.
“Similarly, there is probably little difference in processing tax forms for distribution in Pennsylvania (population 12.4 million) and Delaware (population 0.8 million). Some western states with small populations but large geographical boundaries will be hurt by data related to road maintenance or state police operations. Some costs are driven by demographic factors beyond population size. For example, age and lower socio-economic class will drive health care costs.”
The Tax Foundation, a Washington-based tax-exempt educational organization that gathers data and publishes information on the public sector, sees value in per-capita state spending rankings. “Our general view is that a table showing the amount and ranking of state-local spending per capita is useful to a reader if he has a sense of how valuable government services are to him,“ says William Ahern, the foundation’s director of policy and communications.
Ahern adds: “We do not see it as a measure of efficiency, although it may be plausible to say that all states basically provide the same services, so low per-capita spending must indicate some degree of efficiency. In short, then, we do see a value in the ranking, but mostly in the context of other information.”
One caveat, Ahern offers to Government Product News: “A lot of state-local spending is federal money funneled through, especially Medicaid.”
Another caution comes from Brian Sigritz, a staff associate at the Washington-based National Association of State Budget Officers (NASBO) who notes: “States are so different that trying to rank them on a per-capita basis can be somewhat misleading. That being said, some groups in the past have tried to calculate per-capita spending using a combination of our NASBO spending figures and the U.S. Census Bureau’s population totals.”
Likewise, Arturo Perez, program principal in the Fiscal Affairs Program at the Denver-based National Conference of State Legislatures, cautions against using per-capita spending data to measure efficiency, saying, “No two states are identical in their spending or program structures.”
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