In mid-April there was an article that appeared in the Charleston Gazette Mail entitled “Tomblin: No special session until there’s a budget agreement”. The article said that Governor Tomblin doesn’t plan to call the West Virginia Legislature into special session to pass the 2016-17 state budget until there’s agreement on how to close a $270 million budget shortfall. There are those that say that in so doing he is risking a state government shut down.

To close the budget gap, the governor has proposed raising taxes. So far, the House of Delegates hasn’t gone along. According to the article, “A key sticking point is in the House of Delegates, which rejected a number of tax increase proposals during the regular session…” and that’s a good thing. In my humble opinion, West Virginia does not have a revenue problem, it has a spending problem.

In the landmark book published approximately a decade ago: “Unleashing Capitalism: Why Prosperity Stops at the West Virginia Border and How to Fix It”, edited by then West Virginia University economics professor Russell Sobel, there are chapters that deal with government growth and the harm it can inflict on the economy. In Chapter 14, “Of all 50 U.S. states, West Virginia has the largest government sector and government intervention, and the prosperity of West Virginia’s citizens suffers dramatically as a result of this excessive government spending and control of the state economy”.

It goes on to say that as of the publication of the book there were 30 states (West Virginia wasn’t one of them then and isn’t one of them now) that had enacted some form of constitutional constraint on the growth of government. According to the book, the best benchmark for government growth would be to constitutionally constrain growth to an index that combined population growth and inflation - referred to as “popflation”.

So let’s crunch some numbers. Since 1992, the population of West Virginia hasn’t changed much - hardly at all. Back then it was 1.81 million. According to the Census’ most recent estimate (2016), it is currently 1.84 million - down from 1.85 million five years ago. Regarding inflation, it would take $171.51 to buy today what $100.00 would have bought in 1992. So if we add the gain in population to the rate of inflation, government spending in West Virginia should have grown by 71.53%.

But it hasn’t — not by a long shot. According to usgovernmentspending.com, taking its data from the US Census, state and local spending in West Virginia has increased from $6.8 Billion in 1992 to $18.8 Billion for fiscal 2016. An increase of more than 176%. And, as a percentage of its economy, there are only 3 states that spend more than West Virginia - Mississippi, Alaska and Vermont. That doesn’t include federal spending - just state and local. In other words, over the last 25 years or so, the West Virginia state government grew at a rate almost two and a half times greater than the rate of inflation plus population growth with the latter remaining essentially stagnant.

To give you an idea of how outsized West Virginia’s state government is relative to the size of its economy and relative to the size of other state governments here are more startling statistics. In 2014, according to KFF.org, the website for the Henry J. Kaiser Family Foundation, the per capita state spending for the US as a whole was $5,457. At the low end were Florida and Nevada at $3,420 and $3,314 respectively. In West Virginia per capita state spending was $12,910, around 2.4 times the national average. Wow.

According to Wikipedia, in 2014, West Virginia ranked 49th in the nation with regard to per capita income at $22,714 per person beating out Mississippi for the bottom spot. Economist Russell Sobel will tell you that there is a correlation between a government that is so big and a per capita income that is so small. West Virginia, with a per capita income of under $23,000, spends almost $12,910 per capita. That cannot go on indefinitely. The spending must decrease in order for the per capita income to increase.

According to WalletHub.com, West Virginia ranks 50th in taxes paid per capita. So where does the additional money come from? Well, according to them, West Virginia ranks in the top quintile of states with regard to dependence on the federal government. Dependence is ranked based on a formula of the state’s residents’ and the state’s government’s dependence on the federal government. Additional consideration is made with regard to federal spending through contracts both in the private and public sector and funds expended to pay federal employees, but that has a lower weighting in determining the ranking. As it turns out, when it comes to getting funds through federal grants, West Virginia ranks number one.

The Wallet Hub report led John Tierney, writing in the Atlantic to ask “which states are givers and which are takers?” and to suggest that dependence on the federal government has allowed some states to keep their taxes “artificially low”. West Virginia receives approximately two dollars from the federal government for every dollar paid in federal taxes. In effect, West Virginia is subsidized by taxpayers in other states.

Yet the same data show that when it comes to the burden on taxpayers, West Virginia ranks 26th, right in the middle of the pack. Delaware and Wyoming were the two best states to be a taxpayer, New York and Connecticut were the worst with regard to the percentage of income paid in taxes. So, in spite of the fact that West Virginia is a relatively poor state, it has a relatively high tax burden.

Over the last 25 years, the West Virginia state government has grown at a pace far beyond its population growth and the rate of inflation. That growth rate is unsustainable. Equally unsustainable is the rate of the growth of the state’s debt. According to usgovernmentspending.com, while the local debt obligations of municipalities and counties have remained fairly constant, actually decreasing from $3.8 Billion in 1992 to $3.6 Billion in 2016, the state government’s debt has ballooned from $2.6 Billion to $7.9 Million. In other words, it has tripled. Something has to give.

Governor Tomblin’s proposal to raise taxes is the wrong approach and will continue the policy mistake of allowing excessive government spending to be a drag on economic growth. Growth of government never leads to prosperity - ask the suffering citizens of Venezuela. In order for economic growth to be possible, the size of the public sector in relation to the private sector must be brought into proper balance. That means that in West Virginia, spending cuts are inevitable and unavoidable. Then going forward, the state constitution must be amended to provide for limits on the growth of state government and state government spending.

The House of Delegates is to be commended for taking a stand against a lame duck governor that is committed to making the mistakes of the past. A decade ago, economist Russell Sobel provided us with an excellent framework on which to build a plan for sustainable economic growth. It’s time we finally act on it.