North Dakota's Government Is Twice As Large As Minnesota's In Terms Of Gross State Product

Yesterday Governor Jack Dalrymple signed into law and praised income tax cuts that were twice as large as what he called for in his executive budget. In fact, had Dalrymple not budgeted for such tiny cuts to state income taxes, the state Senate wouldn’t have had the leverage to bully the House into slashing the half-billion in income tax cuts they passed down to $250 million, a paltry number in terms of state revenues.

So it was a little aggravating to see Dalrymple praising tax cuts he undermined during the legislative session.

But more amazing than that were Dalrymple’s comments on spending.

“When your economy is twice as big as it was 10 years ago,” he said by way of excusing a general fund budget that’s 62% larger for the coming biennium than it is in the current biennium, “it stands to reason that your government will be twice as big.”

Advocates of limited government wish North Dakota’s state budget had merely doubled over the last decade, but that’s just not so. North Dakota’s Gross State Product – the size of the state’s economy – has increased by a remarkable 110% from 2001 to 2011 (the latest ten years worth of data available):

But spending has increased by a whopping 277% over the last decade through the coming biennium:

Those timelines don’t match up exactly, and we’re sure to see strong growth in the state’s economy in the coming biennium, but Dalrymple is suggesting that state spending is growing in line with the state’s economy. That’s simply not true. Spending is growing much faster than the state’s economy. So much so that, according to the reporting in the Grand Forks Herald, the size of North Dakota’s government is more than twice that of Minnesota’s in terms of the states’ economies:

In North Dakota, state and local spending for the 2013 fiscal year was 4.8 percent of the state’s gross state product, according to usgovernmentspending.com.

That compared to 2 percent for South Dakota and 2.2 percent for Minnesota, according to the website’s figures.

And then there’s the rate of growth in per-capita state spending, which has increased 171% over the last decade:

That’s a big increase in government per-capita.

Again, proponents of limited government might wish the size of North Dakota’s government had merely doubled over the last decade. If only our state leaders had been that frugal.