Government Spending

The Issue

Many states face looming fiscal challenges as tax revenues are insufficient to keep pace with growing government spending. Reforming pensions, welfare programs, and other entitlement program is the most promising solution to these fiscal challenges. Those reforms can help states become more competitive, strengthen state economies, and improve the employment outlook for all of a state’s residents.

Some government pension programs have become too generous. State and local government workers routinely are able to retire in their 50s - a decade or more earlier than most people in the private sector can - with pension benefits that exceed the retirement benefits persons in the private sector receive. The burden on taxpayers to fund public-sector retirement programs has been skyrocketing, forcing elected officials to consider raising taxes, more borrowing, cuts in other government services, or a combination of those strategies.

Entitlement programs, too, have become increasingly expensive for taxpayers, and they rarely work well for persons most in need. Most states can improve the effectiveness of their efforts to help those in poverty. Successful welfare reform can save lives and produce positive effects on multiple generations. It can save taxpayers billions of dollars and help address serious social maladies, such as crime, alcoholism, and teenage pregnancy.

Our Stance

In order to stop tax hikes and compel elected officials to control spending, free-market advocates must first prove that lower taxes, privatization of public services, and tax and spending limitations yield stronger economic growth and prosperity. We also must convince elected officials that lowering taxes and reducing government spending is good policy and good politics. Legislators armed with good information can win debates and get their legislation passed, persuade constituents, and mobilize interest groups that benefit from good policy choices.

Featured Subtopics

Budgeting Techniques

States are beginning to turn away from baseline budgeting, a method that has proven ineffective in keeping the size of government to a responsible level. They are moving toward zero-based and performance-based budgeting, which has proven effective in cutting deficits.

Caps and Limits

States across the country continue to struggle with balancing their year to year budgets as a result of increasing spending and a lagging economy. Many state legislatures have also accumulated massive amounts of debt which taxpayers will have to pay due to years of overspending combined with state employee pensions and benefits.

Pensions: Public

States across the country are continuing to face structural budget deficits as they try to cope with too-generous pension promises made to their employees. Mandatory payments into pension funds divert money away from essential government services and create pressure for tax increases.

Sports Stadium Subsidies

Sports stadium subsidies are a poor use of taxpayer dollars. They rarely realize the benefits their supporters claim and shift tax revenue away from where it is better utilized. Cities seeking to improve their competitiveness would be better served reducing their taxes or investing in more cost effective improvements like new and improved infrastructure.

Additional Subtopics

• Deficits
• Federal
• Federalism
• Gambling and Lotteries

• Local
• Privatization
• State

• Taxes
• Unfunded Mandates
• Unions: Public
• Waste and Pork

Videos

Government Spending Experts Team

The Heartland Institute's experts on government spending are available for legislative testimony, speaking engagements, and media interviews.

Staff & Fellows Policy Experts