What can state spending tell us about a state’s economic future?

Quite a lot.

Between 2016 and 2025, state-funded spending grew 65.8%, more than twice the 32.4% increase in population growth plus inflation. Had every state followed that sustainable benchmark, taxpayers could have retained an estimated $1.8 trillion.

In this episode of This Week’s Economy, I explain why sustainable budgeting is the foundation of sustainable tax relief, highlight the strongest and weakest states, and show why spending restraint matters for families, businesses, and future prosperity.

Colorado, North Dakota, and Texas emerged as the gold-standard states. California, Illinois, Minnesota, New Jersey, and New York ranked among the largest overspenders.

The central question is one every taxpayer should ask:

Is government growing faster than the people paying for it?

Listen to the full episode and see where your state stands.

​Watch the full episode, subscribe, and visit VanceGinn.com for more economic insights, and get show notes and subscribe to my newsletter at vanceginn.substack.com.

Originally published on Substack.

​​Texas leaders are finally talking about spending restraint. That is welcome. But Texans should not confuse a smaller agency request with a smaller government.
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Governor Greg Abbott, Lt. Governor Dan Patrick, and Speaker Dustin Burrows recently directed most state agencies⁠ to reduce their base budget requests by 3% for the 2028–29 biennium.

Abbott promised “strict standards of efficiency and accountability,” Patrick said the guidance would keep Texas on a “fiscally conservative path,” and Burrows called it the baseline for a conservative budget focused on affordability and property tax relief. Those are worthy goals.

Now comes the hard part: proving it.

Three Percent of What?

A 3% reduction sounds substantial until taxpayers ask the obvious question: 3% below what?

Is the “base” last session’s agency request, the amount lawmakers appropriated, actual spending, or some administratively adjusted figure? The announcement does not make that comparison clear enough.

That matters because agencies are not being ordered to cut state spending by 3%. They are being asked to request 3% less from a baseline, while retaining the ability to seek additional money through exceptional items. Public education, Medicaid caseload growth, debt service, employee benefits, and education savings accounts are among the major exemptions.

Without clear accounting, agencies and lawmakers could maneuver around the target, increase total appropriations, and still claim a fiscal victory during an election year.

Texans deserve transparent budgeting that shows, side by side, the last appropriation, current estimated spending, the proposed appropriation, and the population-growth-plus-inflation benchmark.

Compare Apples to Apples

The correct comparison is appropriations to appropriations, not spending in one period against appropriations in another. Mixing those measures is an apples-to-oranges comparison that can disguise government growth.

On an apples-to-apples basis, state funds appropriations increased 42% over the last two budget cycles, while population growth plus inflation increased about 25%.

As I said in our joint statement from fiscal conservatives⁠, spending has substantially outpaced the average taxpayer’s ability to pay. Without actual appropriations cuts, the 3% request policy risks becoming “window dressing for political points in an election year.”

Jeramy Kitchen put it well: the goal should not merely be a smaller request but “restoring a culture of fiscal responsibility.” Bill Peacock noted that state funds appropriations have risen $110 billion, or 78%, over ten years, feeding a system organized around special interests. JoAnn Fleming was even more direct: conservatives did not fight merely to slow government growth. “We fought to shrink government.”

Property Taxes Still Rise

State leaders also cite $51 billion in property tax relief. But policymakers should explain exactly how that figure is calculated.

It is not all school district maintenance and operations rate compression. It also includes homestead exemptions and other tax preferences. Those are not economically equivalent.

Broad-based compression lowers rates for everyone. Exemptions narrow the tax base, shift burdens among property owners, and require more state tax revenue to finance the same level of government.

Meanwhile, total local property tax levies reached $89.4 billion in 2025, up roughly 22% since 2021. Historic “relief” alongside rising total levies tells us the underlying problem remains: excessive state and local spending.

Cut the Budget, Then the Tax

Texas can eliminate school district M&O property taxes through recurring surpluses dedicated to permanent rate compression. But those surpluses should come from disciplined budgeting, not temporary revenue windfalls or larger tax collections elsewhere.

Lawmakers should cut appropriations, keep future growth below population growth plus inflation, eliminate lower-priority programs, and strengthen state and local spending limits.

Real fiscal conservatism is not measured by press releases or shifting baselines. It is measured by a smaller government, lower tax burdens, and more freedom for Texans.

Spend less. Tax less. Let Texans prosper.

Originally published at the Kansas Policy Institute.

The latest bad idea from the global policy class is dressed up as compassion: the world needs less growth. That may sell at international conferences. It should not sell in Kansas.

In a recent piece for the American Institute for Economic Research’s The Daily Economy,“The Poverty of the UN’s Degrowth Agenda,” I explained why the push to move “beyond growth” would leave people poorer, more dependent, and less free. Advocates talk about fairness and sustainability. The result is fewer jobs, less innovation, higher costs, and a smaller future for families trying to get ahead. Kansas does not need that mindset. It has already seen what slow growth does.

The 2026 Kansas Green Book shows Kansas has ranked near the bottom since 1998 in private-sector job growth, private-sector wage growth, GDP growth, and domestic migration. That is not just a data problem. It is a dinner-table problem. When opportunity fades, people leave. Young workers look elsewhere. Businesses expand in states with lower costs and fewer barriers. Families stay only if the numbers still work.

Kansas has real strengths: productive land, capable workers, strong communities, energy resources, manufacturers, logistics advantages, and entrepreneurs who know how to create value. But those strengths can be wasted when the government makes it too expensive to live, hire, invest, and build. 

Recent data show both promise and caution.

The Bureau of Economic Analysis reported that Kansas had the fastest real GDP growth in the nation in the third quarter of 2025 at 6.5 percent annualized. Personal income grew 6.3 percent, also the fastest in the country. Production led the way, with agriculture playing a major role.

That was encouraging. But one strong quarter does not fix a long-term weakness.

The latest BEA first-quarter 2026 report shows U.S. real GDP grew 2.1 percent annualized, while Kansas grew only 1.0 percent. Real GDP increased in 46 states and the District of Columbia. Kansas grew, but it trailed the national pace and remained far from the top performers.

Kansas can grow when people produce more. But it will not sustain growth if policymakers keep accepting high costs, weak competitiveness, and too much government.

Farmers need lower costs and fewer policy shocks. Manufacturers need reliable energy and a better tax climate. Small businesses need less red tape. Families need property taxes that do not punish them for staying in their homes.

As I wrote in “Kansas Has a Cost Problem,” the state collects and spends too much for the results it delivers. Every dollar spent by the government first comes from someone who earned it. There is no free lunch in Topeka. There is only a bill shifted to taxpayers, consumers, property owners, or future generations.

Kansas should start with a responsible budget that grows no faster than population growth plus inflation. Americans for Tax Reform’s Sustainable Budget Project shows how much room Kansas could have created for lasting tax relief if spending had followed that simple limit over the last decade.

That is not austerity. It is discipline.

Kansas should also stop mistaking subsidies for strategy. Ribbon cuttings make good headlines, but favored deals rarely make good economics. As I argued in “Subsidies Cost Kansans Even When Revenues Rise,” every special deal has an opportunity cost. Money used to privilege one company cannot be used to lower rates for everyone.

That matters for agriculture, energy, housing, manufacturing, and technology. Kansas should welcome investment, but with a clear rule: pay your way. Do not ask families and existing businesses to subsidize politically connected projects.

Growth built on favoritism is fragile. Growth “planned” by a policymaker from any political party is no growth at all. Growth built on freedom lasts.

The poverty of the degrowth agenda is that it treats prosperity as something to ration instead of something to unleash. Kansas should reject that error in every form.

Kansas can drift, or Kansas can lead. But it will not lead by producing less, taxing more, subsidizing favorites, or accepting average results.

Originally published on Substack.

​Inflation is heating up again, and Washington is already searching for someone else to blame. Where should the blame be directed, and how can we solve it?

The latest inflation data show prices continuing to rise too fast, with energy costs getting much of the attention amid conflict in the Middle East. But policymakers should not confuse the spark with the fuel.

The fuel is a Federal Reserve that never truly returned to normal after the 2008 financial crisis, combined with a federal government that continues to spend beyond what taxpayers can sustainably support.

The four charts below tell the story.

Key Points for Policymakers

Problem: The Federal Reserve’s balance sheet and federal debt have exploded since 2007 while prices measured by the Consumer Price Index⁠, Producer Price Index⁠, and PCE Price Index⁠ have steadily climbed. Inflation is not primarily the result of corporate greed, foreign conflicts, or isolated supply shocks. It is the predictable result of excessive monetary expansion enabling chronic fiscal irresponsibility.

Tradeoff: Every dollar spent by Washington must first be taken from taxpayers today or borrowed from taxpayers tomorrow. Government spending does not create new wealth. It reallocates resources from productive uses in the private sector, often reducing investment, innovation, and economic growth.

Solution: Reduce federal spending, cap budget growth below population growth plus inflation, reduce deficits, normalize the Federal Reserve’s balance sheet, and allow markets—not politicians and central bankers—to allocate capital.

The Post-2020 Surge Was Historic

Charts: Cumulative Changes Since 2020

The first two charts compare cumulative changes since 2020 in the Federal Reserve’s balance sheet⁠, federal debt⁠, and major price indexes.

The pattern is difficult to ignore.
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During the pandemic response, Congress approved trillions of dollars in deficit spending while the Federal Reserve dramatically expanded its balance sheet through asset purchases and emergency lending programs. Fed assets surged from roughly $4 trillion before the pandemic to nearly $9 trillion by 2022. Meanwhile, federal debt climbed above $36 trillion.

Prices followed.

Although inflation has cooled from its peak, cumulative price increases remain substantial. Families continue paying more for groceries, housing, transportation, energy, and other necessities because the overall price level moved higher and never came back down.

Higher interest rates helped slow inflation, but they never solved the underlying problem. The Fed only partially reduced its balance sheet, and Washington never stopped borrowing.

The Real Story Started Before COVID

Charts: Cumulative Change Since 2007

The second set of charts places recent events in a broader context.

Before the 2008 financial crisis, the Federal Reserve’s balance sheet was less than $1 trillion and represented roughly 6% of GDP. Today it remains near $6.7 trillion despite years of so-called quantitative tightening. Federal debt has increased even more dramatically.

Repeated rounds of quantitative easing changed expectations throughout the economy. Markets increasingly assume the Fed will intervene during periods of stress. Congress increasingly assumes borrowing can continue without consequence.

Both assumptions weaken fiscal discipline and encourage larger government.

As Milton Friedman famously argued, inflation is “always and everywhere a monetary phenomenon.” Monetary policy does not operate in isolation, however. Persistent deficit spending creates pressure for monetary accommodation, making inflation more likely and more damaging.

This matters because affordability has become the defining economic challenge for many Americans. Housing, food, health care, and energy costs consume a growing share of household budgets. Policymakers who focus only on temporary price pressures miss the deeper structural problem.

A Better Path Forward

Washington cannot subsidize, regulate, or borrow its way to affordability.

The better path is straightforward: spend less, simplify the tax code, and restore sound money.

The Federal Reserve should continue shrinking its balance sheet toward pre-crisis norms. Congress should cut spending and adopt a sustainable spending limit that grows more slowly than population growth plus inflation, similar to reforms highlighted in the Sustainable Budget Project⁠.

Inflation was never really gone because the policies that created it never truly ended.
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If policymakers want lasting affordability, they must address the source of the problem—not merely its symptoms.

Originally published on Substack. 

California should be one of the most prosperous places on earth. It has world-class universities, abundant natural resources, extraordinary entrepreneurs, and some of the most talented workers anywhere.

For generations, California represented opportunity. People moved there to build businesses, buy homes, raise families, and pursue the American Dream.

Today, many are leaving.

Housing costs are among the highest in America. Businesses continue relocating. Budget deficits return despite enormous tax collections. And many Californians feel they’re paying more and getting less.

What happened?

California didn’t become unaffordable because it lacked resources. It became unaffordable because government grew faster than the people paying for it.

That’s the lesson from the latest data in my work on the Sustainable Budget Project⁠ for Americans for Tax Reform, which evaluates whether government spending grows faster than population growth plus inflation—the best measure of average taxpayer’s ability to support government over time.

California isn’t slightly above that benchmark. It’s far above it.

When Spending Grows Faster Than Families Can Afford

Politicians often talk as though budget problems are revenue problems. They aren’t.

Government can only spend what it first takes from the productive economy through taxes, fees, borrowing, or inflation.

Spending is the burden. Taxes are simply the bill.

Figure 1: California Budget Comparison

Figure 1. California’s spending has dramatically outpaced a Sustainable Budget path for more than a decade.

According to the California Sustainable Budget Project report⁠, California’s all-funds budget more than doubled over the last decade, rising from roughly $250 billion to more than $500 billion annually.

Meanwhile, a Sustainable Budget path based on population growth plus inflation would have grown far more slowly. The result is stunning.

California accumulated nearly $1 trillion in excess all-funds spending above a Sustainable Budget path over the last decade. That’s not a one-year anomaly. That’s a decade-long pattern.

Government Grew Three Times Faster Than Californians

The second chart tells policymakers everything they need to know.
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Figure 2: Average Budget Growth Per Period

Figure 2. California government spending grew roughly three times faster than population growth plus inflation.
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From 2016 through 2025:

• State-funds spending grew 7.9% annually.
• All-funds spending grew 8.2% annually.
• Population growth plus inflation grew just 2.7% annually.

Think about that.

Government grew about three times faster than the taxpayers and economy supporting it. No family can sustainably increase spending three times faster than its income forever. Neither can government.

Eventually, the costs show up somewhere. Higher taxes. Higher housing costs. More regulation. Less affordability. Slower economic growth.

California’s affordability crisis wasn’t created overnight. It was built one budget at a time.

People Are Responding Exactly As Economics Predicts

The consequences extend far beyond the budget.

As I’ve written before in my analysis of Responsible State Budgets Across the United States⁠, states that consistently allow government to grow faster than their economies eventually weaken the conditions that create prosperity.

California now ranks near the bottom nationally in economic freedom, fiscal policy, and regulatory competitiveness. That’s not a coincidence.

When government expands faster than the private economy, economic freedom declines. When regulations multiply, housing becomes harder to build. When spending rises, taxes eventually follow. When affordability disappears, families and businesses look elsewhere.

People vote with their feet. And increasingly, they are.

California Can Still Be Great Again

The good news is that California’s future does not have to look like its recent past. The state still possesses enormous advantages. Its people remain innovative. Its businesses remain productive. Its universities remain world-class. Its potential remains extraordinary.

But prosperity will not return by expanding the same policies that created today’s challenges. It starts with restoring spending discipline.

Figure 3: California Budget Limits

Figure 3. A Sustainable Budget still allows spending growth while protecting taxpayers and economic growth.
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One of the biggest misconceptions about spending restraint is that it requires budget cuts. It doesn’t. Under the Sustainable Budget framework, California’s budget would still increase, though it would decrease given overspending.

State-funds spending could grow from approximately $348 billion to $359 billion in FY2027. That’s not austerity. That’s sustainability.

A Better Path Forward

California doesn’t need more government programs. It needs more opportunity. That means limiting spending growth to less than population growth plus inflation. It means reducing barriers to housing construction so families can afford to live where they work. It means reforming regulations that make it harder to start businesses, hire workers, and invest. It means keeping more resources in the productive private sector where entrepreneurs, workers, and investors create prosperity.

Most importantly, it means trusting people more than politicians.

California became an economic powerhouse because people were free to build, innovate, invest, and create. The path forward is rediscovering those principles.

The Choice Is Between More Government and More Opportunity

California still has everything it needs to succeed. The question is whether policymakers will allow it. The Sustainable Budget Project offers a simple framework: Allow government to grow. Just don’t let it grow faster than taxpayers can afford.

That’s not radical. It’s responsible.

And it’s exactly the kind of fiscal discipline that helped make California the land of opportunity in the first place. California didn’t lose the plot overnight. But it can start writing a better chapter today.

What Do You Think?

Should states constitutionally limit spending growth to population growth plus inflation?

Leave a comment below and join the conversation.

If you found this analysis valuable, please share it, restack it, and subscribe for future installments in this 50-state Sustainable Budget Project series.

And if you’d like to support my work researching, writing, speaking, podcasting, and advancing policies that let people prosper, please consider becoming a paid subscriber.

Together, we can advance economic freedom, fiscal responsibility, and human flourishing.

Originally published on Substack. 

​I’ve lived in Texas for 43 of my 44 years. I was born near Houston in November 1981. I grew up in South Houston. I earned my doctorate in Lubbock. I’m raising my family near Austin.
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The only year I lived outside of Texas was during my service in the Trump 45 White House, when my family and I lived in McLean, Virginia.

I’ve spent my life watching Texas become the economic envy of America. People and businesses didn’t move here because government was bigger. They came because taxes were lower, regulations were lighter, housing was more affordable, and opportunity was greater.

The Texas model worked. But success can create complacency. And that’s what concerns me today.
Texas remains one of the strongest economies in America. Yet recent budget decisions suggest policymakers are beginning to drift away from the principles that made Texas successful in the first place.

That’s why the new Sustainable Budget Project⁠ by Americans for Tax Reform⁠ is so important. The project evaluates every state using a simple benchmark: government spending should generally grow no faster than population growth plus inflation. That reflects the average taxpayer’s ability to pay for government without sacrificing economic growth and opportunity.

Texas performs better than many states. But the trend lines deserve attention.

The Good News: Texas Hasn’t Lost Its Fiscal Foundation Completely

One of the most surprising findings from the Texas data in the Sustainable Budget Project⁠ is that Texas remains relatively close to a Sustainable Budget path over the last decade.

Chart 1: Texas Budget Comparison

In fact, ATR’s data show Texas spent less than a Sustainable Budget path on a cumulative basis over the last decade. For state funds, the cumulative amount was about $10,000 less per family of four than the Sustainable Budget benchmark.

That’s worth celebrating. It reflects reforms enacted over many years and the benefits of a growing economy. But it would be a mistake to stop the analysis there.

The Warning Sign Policymakers Shouldn’t Ignore

The decade-long trend looks better than what happened recently. Much better. Over the last two budget cycles, Texas lawmakers had a once-in-a-generation opportunity.

The state collected more than $50 billion in budget surpluses.

Those funds could have been used to permanently reduce the tax burden, accelerate the elimination of school district M&O property taxes, strengthen reserves, or return more money to taxpayers.

Instead, state appropriations surged.

The final 2026-27 budget reached approximately $338 billion in all funds, the largest budget in Texas history. State funds increased by 42% over the last two budget cycles, far exceeding population growth plus inflation.
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Table 1. Texas State Appropriations Comparison

This is where the Sustainable Budget Project becomes so valuable. It doesn’t merely tell us where we’ve been. It helps us see where we’re headed.

Success Is Not a Permanent Condition

One reason Texas has prospered is because it consistently outperformed states that expanded government faster than their economies.

California provides the obvious example.

High taxes. High spending. High housing costs. Heavy regulation. People and businesses voted with their feet. Many came to Texas. But there is no guarantee that advantage lasts forever.
Economic freedom is not self-executing. It must be protected.

As I’ve written before in both my work on sustainable budgets and in “Texas Is Budgeting Like California,” states that allow government spending to grow faster than taxpayers’ ability to support it eventually lose their competitive edge.

Texas is still winning.
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The danger is assuming that means it always will.

What a Sustainable Budget Looks Like

The goal isn’t necessarily austerity. It’s sustainability.

Chart 2: FY2027 Texas Budget Limit

According to ATR’s calculations, Texas could increase state-funds spending from approximately $98.2 billion in FY2026 to about $102.8 billion in FY2027 and remain within a Sustainable Budget framework.

Government can grow. It simply shouldn’t grow faster than population growth plus inflation.

That’s the formula I’ve advocated for more than a decade because it aligns government growth with taxpayers’ ability to pay. It leaves more resources in the productive private sector where innovation, investment, job creation, and rising incomes occur. (GINN ECONOMIC CONSULTING⁠)

Three Lessons for Texas Policymakers

First, don’t mistake past success for future success.

Texas remains a national leader, but recent spending trends should concern anyone who values limited government.

Second, surpluses should buy down taxes through lower tax rates, not grow government.

The best use of surplus revenue is permanent tax relief, particularly the state should reduce and ultimately eliminate school district M&O property taxes, considering the state doesn’t have a personal income tax.

Third, Texas needs stronger spending limits.

Recent reforms improved the state’s expenditure limit, but additional reforms are needed. The strongest path forward is a constitutional spending limit based on population growth plus inflation that covers the broadest possible share of the budget at the state and local levels with surpluses towards lowering taxes. (GINN ECONOMIC CONSULTING⁠)

Closing Thoughts

Texas became the Texas model because policymakers generally trusted people more than government. They restrained spending. They kept taxes relatively low. They allowed entrepreneurs, workers, and families to build prosperity. That formula worked.

The Sustainable Budget Project shows Texas remains in a stronger position than many states. But it also highlights a critical warning. Recent budget growth is moving in the wrong direction.

If Texas continues allowing government spending to grow faster than population growth plus inflation, the advantages that attracted millions of Americans here can fade surprisingly quickly.

Texas doesn’t need bigger government. Texas needs to recommit to the principles that made it successful. Economic freedom. Fiscal responsibility. Sustainable budgeting. And the belief that prosperity comes from people, not politicians.

What Do You Think?
​
Should Texas constitutionally limit spending growth to population growth plus inflation

​In Episode 198 of the Let People Prosper Show, I sit down with Jack Salmon of the Mercatus Center to discuss one of the most important lessons in state policy: people respond to incentives.

Politicians often claim they can raise taxes only on “the rich” without consequences. But high earners, entrepreneurs, and capital are increasingly mobile. When states raise taxes too aggressively, they risk driving away investment, weakening their tax base, and creating deeper fiscal problems over time.

This episode covers tax migration, wealth taxes, Washington State’s new high-income tax, state competitiveness, and why spending restraint is the foundation of sustainable fiscal policy.

The better path is clear: lower and flatter taxes, disciplined spending, economic freedom, and policies that attract people rather than punish productivity.

Watch or listen to Episode 198 on YouTube, Apple, or Spotify, and get show notes at vanceginn.substack.com.