State spending has skyrocketed — but where has the money gone?

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State spending has skyrocketed — but where has the money gone?

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by Maria Davidson, opinion contributor - 04/23/26 8:00 AM ET

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by Maria Davidson, opinion contributor - 04/23/26 8:00 AM ET

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Government spending per capita is skyrocketing. And interestingly, Americans aren’t moving to the states that spend the most — they’re leaving them.

Seven of the 10 states that spend the most per capita have lost population to other states since 2020. And eight of these ten voted Democrat in the last election.

On the other hand, 10 out of the 10 states that spend the least per resident gained population from other states. Nine of those 10 voted Republican in the last presidential election.

On a federal level, the U.S. population grew by 6 percent in the last decade. But inflation-adjusted federal spending grew by 40 percent.

Meanwhile, states like Illinois, California, and Minnesota have had runaway spending growth over the last decade.

California is a clear example. Its population grew by only 0.4 percent, whereas the number of state employees grew by 24.5 percent, and inflation adjusted state spending grew by 48 percent. Where is the money going? Good question.

California highways rank 47th and 48th in rural and urban pavement conditions, respectively. When it comes to education, only 25 percent of 8th graders performed at or above the math proficiency level on the last national report card.

California has spent $37 billion on homelessness since 2019, but homelessness has increased by about 20 percent during that period. California has also spent $15 billion on a high speed rail project but has laid no track.

Meanwhile, California has experienced negative net interstate migration every year since 2001. The state has lost a net of 3 million people to other states in the last 15 years.

Florida and Texas stand in stark contrast. They have the lowest state spending per person in the U.S. They are also two of the five states with the highest population growth in the last decade.

If the increased spending hasn’t led residents to stay, something isn’t adding up. We have to ask — where did all the money go?

A lot of it went to health care. Medicaid spending nearly doubled in the last decade, and spending per enrollee grew by more than 40 percent. But life expectancy stayed flat.

A lot of the money went to education. Adjusted for inflation, the average spend per student increased by 12 percent from 2015 to 2024 — twice as fast as the rate of population growth. Despite this, both fourth and eighth grade reading scores are now worse than they were a decade ago. Only 35 percent of 12th graders were at or above the national proficiency level in the last NAEP report card.

A lot of the money went to government employees. Salaries, benefits, and pension contributions per worker have all risen much faster than inflation. Unfunded state pension liabilities now exceed $1 trillion nationally. California alone has more than $265 billion in unfunded pension liabilities. To plug the gap, states have to keep increasing their annual contributions, and pension obligations crowd out funding for other services.

A lot of the money went to fraud, waste, and abuse. The Government Accountability Office estimates that improper payments across federal programs account for $186 billion a year. In California, recent reports suggest that at least $180 billion has been stolen from taxpayers since 2019.

As government spending keeps increasing, it becomes harder to reverse course. It is a problem of concentrated benefits and diffuse harm. More and more people have a personal financial incentive to keep the spending machine growing, while the majority continues to foot the bill.

Some of this spending growth was unavoidable. The pandemic and an aging population both drove costs up. But the gap between spending growth and results is too wide to explain away.

There are solutions. We could implement zero-based budgeting instead of having automatic baselines. We could put sunset clauses into our laws that force each government program to justify its existence on a schedule. We could introduce pension reforms that cap taxpayer exposure while preserving a baseline retirement guarantee for government employees.

None of these ideas are partisan. President Jimmy Carter implemented zero-based budgeting in Georgia in 1971. Two Democratic governors — Richard Lamm in Colorado and Dolph Briscoe in Texas — signed the nation’s first sunset laws in the late 1970s. Gina Raimondo, a Democrat, overhauled Rhode Island’s pension system in 2011. Republican states like Michigan, Texas, and Oklahoma later adopted versions of these reforms.

We need every budget line to have a justification. Taxpayers deserve no less.

Maria