If every state had
where tax revenues grew more slowly than
expansion that began in early 1992. The
population and inflation from 1992 to 1998:
answer is provided in Figure 4. If every state
strictly adhered
Alaska, Wyoming, Hawaii, and New
had strictly adhered to such a revenue cap
to a revenue cap
Hampshire.16
from 1992 through 1998, taxpayers would
from 1992
have saved a combined total of $75 billion, or
$278 per capita, in 1998 alone. In other
through 1998,
Whatever Happened to the
words, even if states had passed $75 billion in
taxpayers would
Taxpayers' Surplus?
tax cuts in 1998, their revenues still would
have saved a com-
have grown by about 22 percent, or 3.4 per-
cent per year--the level of inflation and pop-
One of the most contentious issues in
bined total of $75
ulation growth. Instead, state tax collections
state capitals today is what to do with the
billion.
climbed by 45 percent (6.4 percent per year).
huge revenue surpluses. As Figure 8 shows,
As Table 8 shows, the size of the revenue
year-end balances in the states are at their
windfall varies substantially from state to
highest levels in nearly two decades. The
state. Taxpayers in five states would have
states closed their books on FY98 with a
saved more than $500 per capita in 1998:
combined surplus of $36 billion, or 9 per-
cent of expenditures.17
Michigan ($787), New Mexico ($661),
Minnesota ($573), Connecticut ($535), and
Many budget experts believe that those
Wisconsin ($520). There were only four states
reserves are larger than is fiscally necessary.
Figure 8
State Budget Surpluses, 197998
10%
9.0%
8.8%
9%
8.7%
7.9%
8%
6.8%
7%
5.8%
6%
5.2%
5.1%
4.8%
5%
4.4%
4.2%
4.2%
3.8%
4%
3.5%
3.4%
3.1%
2.9%
3%
1.8%
2%
1.5%
1.1%
1%
0%
1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
Source: National Governors' Association and National Association of State Budget Officers, The Fiscal Survey
of the uSca:tes, Deceombneorr s1A s98caanidnpreviaoiusaeditioonsi.o n o f S t a t e B u d g e t O f f i c e r s , The Fiscal Survey of States: December
S o r te
' 9 so i t o and N t on l Ass ciat
G ver
National
1998 and previous editions.
16