This article first appeared in the St. Louis Beacon, March 13, 2011 - A question that is often broached in the media, the halls of the state capitol, and in the business community is "where does Missouri stand, how does it stack up relative to the U.S. and to other states." Often numbers are thrown out with no context or empirical support. This is too important a question to leave to ad hoc, off the cuff speculation.
To provide a base for sound answers to this question a study was recently completed that looked at Missouri's status compared to the national average and how it ranks against all 50 states for 58 key factors. The analysis was done over time, in many instances going back to 1970, so that a single year aberration could not influence what the long term trend has been. The report, "Missouri's Economic and Governmental Status Across States and Over Time: A Comparison Guide," was prepared by this author and distributed by the Public Policy Research Center at the University of Missouri-St. Louis.
The collective empirical findings are disturbing as is the long-term trend. Missouri ranks in the mid to upper 30s to the 40s, and for all but a handful of areas is below, often well below, the national average.
Some examples help to make the point. The report contains full detail on all 58 factors.
- Missouri's population has fallen from a high of 13th to 18th. It has grown but only slightly since 1970. It is not attracting new residents.
- The state's gross domestic product, the state's economic output, has fallen to 36th from 18th at its highest. This does not bode well for the future of the Missouri economy.
- The rank of median family income has fallen dramatically to 37th from 17th, twenty positions. This bodes poorly for the status of state residents.
- Value added in manufacturing fares somewhat better but still has slipped to 23rd from 13th. The trend is definitely going in the wrong direction and raises questions about Missouri's status as a manufacturing state.
Turning attention to the state's finances, revenues and spending, the picture is "dismal." Overall all of the factors that depict the state's revenue raising rank in the 40s usually the high 40s. They are, in every instance, below -- often well below -- the national average. As examples (in per capita terms):
- total government revenues (state and local ) - 47
- total state revenues - 46
- total state and local taxes - 43
- state taxes - 47
Per capita, Missouri is one of the lowest revenue-raising states in the nation, only a handful are lower, and has been for some time.
This leads directly to the other side of the budget -- spending. As one might anticipate based on revenues the state's expenditures rank very low, again in the high 30s into the 40s for most categories. As examples:
- total state and local expenditures - 45
- state expenditures - 45
- K-12 spending - 38
- higher education spending - 45
This low revenue raising and spending contribute to the state's relatively deteriorating status economically vis-a-vis other states and the U.S. -- falling gross domestic product, declining median household income, declining value added in manufacturing, and declining net earnings to mention a few.
The numbers portray a state headed in the wrong direction. Public sector programs do contribute to a positive environment for residents and the business sector. A status such as Missouri's places it at a comparative disadvantage for attracting new, and keeping existing, residents and businesses.
The report also addressed what Missouri's revenue-raising potential would be were it just at the national average, not a high government revenue and spending state but "average."
The additional dollar amounts are:
- state and local taxes - $5.0 billion
- state taxes - $3.7 billion
- state expenditures - $6.1 billion
- higher education - $0.7 billion
Even a part of this new revenue might work to offset the long-term downward trend in the status of Missouri's residents and improve the business climate to promote keeping and attracting economic activity.
Maintaining the present trend, a long-term trend, will produce an environment that might become irreversible, if it isn't already. Low revenues and low spending produce an environment that is not conducive to producing a milieu that will attract rather than one that will repel.
Don Phares is professor emeritus of economics and public policy at the University of Missouri-St. Louis.