Which party is the big spender?

by: Thurman Hart

Fri Sep 05, 2008 at 11:33:25 AM EDT

"The Republicans are going to have a very good case to present to the people that things could be better in the state," said Christie Whitman. "We are going to be in a very competitive position."

Now, honestly, everyone can always claim that things could be better.  They could also be worse.  But if we are going to examine the Republican claim that they can actually do better and not worse, then the best predictor of future activity is past performance.  The good thing about my not having lived her for decades is that I actually have to research past performance, I can't go on gut-check remembrances.

The first thing you may realize is that the amount of state and local taxes we pay in New Jersey are more than five and a half times what they were in 1980.  You may also note that exactly twice we have seen total taxes go down - in 1997 under Whitman and in 2002 under McGreevey.  Other than that, the variance lies in how much of an increase we have faced.

A comparison of Governors, without taking time in office under consideration:
Byrne - 6.57% increase
Kean - 111.0% increase
Florio - 30.5% increase
Whitman - 32.8% increase
McGreevey - 10.8% increase
Codey - 6.75% increase
Corzine - 20.3% increase

Florio, who is remembered as being tossed from office because of tax increases, did actually have a fairly high percentage increase of spending - but it is actually lower than the rate of increase over the Whitman  years.  It certainly doesn't come anywhere close to the incredible spending jump during the Kean years.  The increases under the McGreevey and Corzine Administrations look positively anemic by comparison - Whitman's increase was more than half-again larger than Corzine's, whose increase has been almost half-again as large as McGreevey's.

But Whitman and Kean also spent more time in office than anyone else in this study.  A more fair computation would average the increase per year.  That looks like this:

Byrne: 6.6% per year
Kean: 13.8% per year
Florio: 7.6% per year
Whitman: 4.1% per year
McGreevey: 3.6% per year
Codey: 6.75% per year
Corzine: 6.8% per year

The results are interesting.  Kean is still a huge outlier, with a rate of increase that more than eighty percent higher than the next highest one, which is Florio.  

The difference between the McGreevey Administration - which was excoriated for its "millionaire's tax" and the Whitman Administration - which is remembered as having cut state taxes - is negligible.  If any notice is taken, then it has to be said that McGreevey's average increase was actually ten percent smaller than Whitman's average increase.  The difference in single-year reduction of spending seen by both administrations is also statistically insignificant, but if one is pushed to find some pattern, then McGreevey's reduction was also larger.

It may also surprise some to find that the single lowest positive growth year was in 1993 - the third year of the Florio Administration.  The single largest growth occurred in 1987 - the sixth year of the Kean Administration.  While the second lowest growth rate then goes to the Whitman Administration in 1995, the next largest single-year increases are also in the Kean Administration - 1984 (Kean's second year in office).  In fact, of five double-digit growth-rate years, the Kean Administration accounts for all but one.

The overall pattern is fairly clear, though.  Byrne, Florio, Codey, and Corzine all have annual growth rates between six and eight percent per year.  Kean's high growth rates have already been discussed.  Whitman and McGreevey's low growth rates also look like outliers.  We know that a significant amount of state funding during this time was done through debt and one-shot funding schemes, though.  Since this study doesn't look at debt accumulation, we can't capture that effect, but we don't have to pretend as if it isn't there.  It, at every least, has to be mentioned as a potential explanation for how these two governors managed to cut the growth rate for total state and local taxation in half.

The use of a three-year rolling average is often used to smooth out single-year spikes.  If we use that method, then state and local spending increased by 395% over the entire timespan.  The only time that the rate of increase rose into double digits was in 1984, when it was 10.7% under the Kean Administration. The total rates of increase are:

Kean - 96.9%
Florio - 33.3%
Whitman - 31.0%
McGreevey - 9.4%
Codey - 6.32%
Corzine - 23.6%

Codey really shouldn't be considered since he held office for only a single year, but he is included for the sake of completeness.  Again it is Kean who reigns under total state and local tax increases.  The growth rate during his Administration is nearly three times what it was during Florio's Administration.  Florio's and Whitman's spending increases are now statistically insignificant.

At this point, we can shorten the timeframe and compare the seven years under Whitman to the seven years under McGreevey-Codey-Corzine.  Over Whitman's seven years, we have already noted a 32.8% increase in total state and local taxes.  Over the seven years of Democratic control, we have an increase in total taxation of 42.3%.  The annual growth rate is (as has been noted) 4.1% for Whitman and 6.0% for McGreevey-Codey-Corzine.  

These are statistically significant differences.  However, it should be noted that the three year rolling average during the Whitman Administration was showing upward movement - from 4.36 to 6.0 to 4.92.  During the current administration it is trending downward - from 7.9 to 7.85 to 6.22.  Corzine's ability to push the growth rate down seems all the more interesting because it has been done while moving out of the rather low growth rates of the McGreevey years.  Whitman was also moving out of a period of low tax growth, but it was during her own Administration.  So while Corzine can claim - more or less correctly - that he is changing direction from Jim McGreevey, Christie Whitman could not claim to be changing direction because of policy changes - only that her own policies were catching up with her.

This doesn't really give us a complete pciture of our taxation, though.  I'd like to add in data concerning the money returned to NJ from our federal tax dollars and the growth in state and local debt over the years.  It also lacks an important component in that I haven't tracked changes in average and median income as compared to the growth in taxes.  If income grows by ten percent and taxes by only nine percent, you're still one percent better off after all is said and done (well, it's not that direct, but you get the idea).

But I have to disagree with Christie Whitman - it doesn't look like Republicans have that much of a case to make that they can do better than Democrats.  Governor Corzine has done at least as good a job as she did at controlling the cost of state and local government.  His total tax growth rate per year is higher than hers, but it is also declining.

The problem, of course, is that we have the proverbial camel already staggering under the weight of total taxation.  Slowing the growth rate is a good step in the right direction, but you can drown in a bathtub that is filled with drops of water as surely as you can in the ocean during a hurricane.  The answer is to either bale out some of the water (get more federal funding to ease state and local finances) or to pull the plug in the bathtub (actually cut state and local taxes - which means service cuts).  Or we can just get a bigger bathtub (raise income levels).