Hard lessons learned in budget process

The governor's proposed budget reveals the need for spending limits.

By Steven Miller
  • Friday, April 13, 2007

It turns out that being fiscally responsible, in an age when runaway government expansion is in vogue, is much easier said than done.

Just ask Jim Gibbons.

The governor, who campaigned for the job as a fiscal conservative, assured Nevada voters that his commitment to responsible stewardship over our tax dollars would make proposed constitutional restraints on spending unnecessary. Hence his opposition to the Tax and Spending Control (TASC) initiative, which would have constitutionally barred government spending from increasing at a pace greater than the combined rate of population growth and inflation.

Gibbons argued that there was no need to tie his hands when it came to budgeting since he, a devotee of limited government, had no intention of increasing spending beyond reasonable amounts anyway.

Yet here we are.

As the Las Vegas Review-Journal reported on March 27, the upstart organization Take Back Nevada, through a study conducted by the Beacon Hill Institute at Boston’s Suffolk University, has revealed that Gibbons’ .8 billion budget exceeds TASC’s limits by 68 million.

This episode speaks volumes about the fundamentally insatiable nature of government. It is, of course, common in contemporary politics for elected leaders to attempt to grow government beyond its means. But it’s particularly troubling when it is the self-proclaimed champions of limited government themselves who are doing so.

Over the last five years Nevadans suffered the second highest rate of per capita tax increases in the nation. That was the legacy of Kenny Guinn, who got through the Republican primary in 1998 by assuring GOP voters that he was a Ronald Reagan fiscal conservative. Whereupon, he proceeded to spend his next eight years in office incessantly plumping for higher taxes and for huge gobs of objectively unnecessary spending.

The Guinn years, however, were merely re-run of a pattern already chronic with Nevada legislators and governors. That pattern is: During the boom years, spend all the tax revenue available. Then when the business cycle turns down and you’ve no reserves, holler “Crisis!” and “Dire need!” and how absolutely necessary it is that government again expand the proportion it takes out of Nevada private sector income.

Gibbons appeared clear-eyed on this when Guinn was the perpetrator. Indeed, by speaking candidly, he earned Guinn’s undying enmity. Yet the evidence of Gibbons’ own budget now suggests that his opposition to TASC reflected some degree of naiveté regarding the actual realities he would soon face.

Defending the budget proposal, Gibbons’ chief of staff, Mike Dayton, told the Review-Journal that the governor is “being criticized both from the left and from the right for the amount of spending.” So, says Dayton, “that probably means he's doing a pretty good job of governing from the middle."

Dayton’s spin is no doubt intended to equate the word “middle” with “fair” or “reasonable.” But today’s “middle” is anything but. Rather, it has come to mean continuous government expansion at a rate beyond what population growth justifies. We’ve become so used to out-of-control government growth that irresponsible spending levels are treated as normal and even sensible. That’s how we’ve arrived at our present situation, where a bloated budget is defended as reasonable by a self-described fiscally conservative governor and denounced as stingy by those on the left.

Our current budget process was not created by Jim Gibbons. Earlier administrations regularly failed to confront the politically powerful greed driving Nevada’s rapid spending increases. They failed to implement zero-based or priority-based budgeting. They created a framework where the deck was stacked in favor of government largesse. As an incoming governor, Gibbons’ hands were largely tied. But it was not by TASC.

The lesson here is that despite their best intentions, elected officials, absent hard, legally binding restrictions on spending, more often than not are unable to overcome the institutional momentum behind rapid government growth. Nevadans have been burned every two years by this phenomenon for quite some time now.

It was mounting frustration over the continuing inability of politicians to be responsible with taxpayer money that led to the birth of the TASC initiative in the first place. With the governor’s proposed budget serving as yet another reminder of what passes for “fiscal responsibility” these days, the case for TASC seems stronger than ever.

Candidate Gibbons thought he didn’t need TASC in place to lead Nevada in a fiscally responsible way.

Governor Gibbons, trying to swim against the relentless current of government growth, is discovering just how difficult that is.

Steven Miller is policy director at the Nevada Policy Research Institute. For a new NPRI study on the likely economic benefits of TASC, visit npri.org.

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