Playing with Numbers

Friday, February 23, 2007

Yesterday, Mike N left an interesting comment regarding my post on the debate that Texas is having over whether to sell its state lottery to a private company.

We are having the same debate in Michigan. Gov. Jennifer Granholm was considering selling the state lottery. The numbers involved are staggering. Last year the lottery had 2.2 billion dollars in ticket sales. $688 million went to Michigan schools. The remainder was paid out in prizes and overhead. The state expects to get $10 billion over the next 75 years and hopes to invest it and get about $750 milion a year in return which I suppose would make up for the missing $688m that went to schools.

I have no clue if these numbers are even realistic. But the number that took me by surprise is the fact that the $688 million that went to schools is only 5% of the state school budget. That means the total school budget is $13,760,000,000 per year. That seems like way too much for a school system in one state.
This made me curious, so I simply googled something like "Texas state budget" last night, not really expecting to find anything. But I did find something. And that "something" was pretty eye-opening: an 801-page PDF document from whose sixth page I pulled the below numbers off a table called "Summary -- All Articles (All Funds)" (Note: My row numbers are not the same as the "Article" numbers used in the document.):

RowCategory2007 Budget, Dollars
1General Government 1,868,962,841
2Health and Human Services 25,168,886,971
3Agencies of Education 31,045,826,173
4The Judiciary 275,971,134
5Public Safety and Criminal Justice 4,576,834,755
6Natural Resources 1,318,576,490
7Business and Economic Development 9,990,102,292
8Regulatory 274,024,494
9The Legislature 182,706,257
10GRAND TOTAL 74,701,891,407

Texas is a larger state than Michigan, but it would appear that Mike's figures for Michigan's bloated education budget are not only correct, but typical for a state.

Several things become apparent from this table. (1) Education is somewhere between a third and a half of the state budget! (2) As with Michigan, the lottery is barely a drop in the bucket. Our lottery provided $1 billion for education in 2006. (3) As I suspected yesterday, the welfare state is the lion's share of the budget.

For the sake of simplicity, assume along the same lines I cited yesterday, that the budgets for items pertinent to the proper function of a government represent an upper ceiling for how much it should take to run Texas. Those would be lines 1, 4, 5, and 9. And let's toss in 8 as a fudge factor to account for some legitimate functions of government which are already "covered" by unwarranted government intrusion. (e.g., The government has no business forcing businesses to abide by current environmental regulations to prevent them from dumping raw sewage into rivers, but if property rights extended through river beds, there might be some means for the government to monitor for such violations of property rights.)

These five items together amount to about 8 billion. (I'm rounding numbers and adding them in my head here.) Although the Texas lottery is but a drop in the bucket (about 3 %) towards our current educational budget, it represents a significant portion (about an eighth) of the ceiling for what it ought to cost to run a fully free State of Texas.

I will close by reiterating my main point from yesterday.
Rather than complaining that greater personal freedom might make "the ignorant" more able to choose foolishly, Casey would do far more good using his regular column to point out what less freedom -- in the form of mandatory public education funded with stolen money [that dumbs down our children] -- forces everyone to endure.

... And yet there is not one peep from him about abolishing the public schools -- and with them, the need for high taxes or a huge state lottery.
Until we shift our public debate from how we are going to waste even more money on public education to how we are going to make it truly possible for parents to send their children to good schools, we have much worse to worry about than a few people paying "too much" in "idiot taxes". As it stands, we're paying enormous buy-ins so our kids can play high-stakes Russian roulette with fully-loaded revolvers. Rick Casey is far from the only one with the wrong priorities.

-- CAV


Today: (1) By calculator, the "upper ceiling" for the state budget I guesstimated above is actually about $7.2 billion. (2) Made some minor corrections.


madmax said...

But imagine taking that 66 billion dollars and putting it back into the pockets and bank accounts of those that earned it. Imagine the growth of the overall Texas economy. Legitimate government would represent an even smaller fraction of that total pie. The numbers you provided prove that even today (let alone some future capitalist world), legitimate government could be funded by a small sales tax and then ultimately by some form of lottery.

Thanks so much for this post.

Gus Van Horn said...

"The numbers you provided prove that even today (let alone some future capitalist world), legitimate government could be funded by a small sales tax and then ultimately by some form of lottery."

Exactly my point -- except that we can and should have no taxes at all. I am glad I did this, too, because I was slightly surprised to see the lottery come to within the same order of magnitude of what is certainly an upper limit of government expense.

I guess that growing up with state budgets in the tens of billions will stunt your imagination a bit!

David, The Machine said...

The state budget shows only a tiny part of the picture. Every jurisdictional entity has to publish what is called a Comprehensive Annual Financial Report, which shows all—in this case—the state’s assets and liabilities.

CAFRMan has an article summarizing some of the juiciest tidbits on the Texas budget, and while he does not share the Objectivist ideas underlying the purpose of government, he shows, not only for Texas, but for most states, localities, and even the Federal government, that according to their own statements, taxation is largely not necessary to maintain the current level of government activity.

Gus Van Horn said...

Once again, I learn valuable information from a comment....

Thank you for the link! Very interesting.

1. A quick reaction to the Calvin Coolidge quote, which I like nevertheless: It isn't just running surpluses that is stealing. It is taking our property without out our consent that is stealing.

2. A teaser for other readers: "Total Potential Surpluses: 53,769,136 (Per Capita: 2,417)" And this is even with government bloat.

3. Money quote: "If you want to know the financial condition of your government(s), do not look at the budget. Get the CAFR [i.e.,Comprehensive Annual Financial Report]."