March 25, 2015

Since Term Limits Took Effect, State Government Has Shrunk

Randall G. Holcombe

DeVoe Moore Professor of Economics, Florida State University
Summary

Since Floridians voted to term-limit the state's legislature in 1992, Florida's state government has shrunk. Though the numbers associated with this decrease in government does not prove causation, they do provide some evidence against the hypothesis that term limits result in a shift of power toward legislative staff and/or lobbyists.

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When Floridians voted to term-limit Florida's state legislators in 1992, one of the commonly heard objections was that it would shift the power in state government from elected legislators toward legislative staff, lobbyists or both. Those groups would benefit from a growing state government, so one might have predicted that the size of Florida's state government would have increased as a result of term limits. However, my new research shows this isn't the case at all.

In fact, by several measures, Florida's state government has actually shrunk since the imposition of term limits.

Critics of term limits make several thoughtful arguments. One theory holds that they deprive the Legislature of the benefits of experienced leadership, and that legislators are forced out before they can really learn the ropes. (Interestingly, I haven't heard this argument made about term limits for governor.) One consequence of an inexperienced legislature is that legislators rely more on their staffs, and are more easily swayed by lobbyists. Legislative staffs have more power, and lobbyists have more clout, following this line of reasoning.

As government employees, legislative staff tend to favor government spending and government programs, but because staffers work for legislators, they do defer to the preferences of their employers. The turnover in the legislature, with no term limits for staff, could shift the balance of power. Staff members can — and often do — remain in their jobs for decades, even as term limits push their bosses out of office on a regular and predetermined schedule.

According to this reasoning, lobbyists, whose job is to ask their government to do (or not do) specific things for them, also fill part of the vacuum created by an inexperienced legislature. While many advocate for government cutbacks, overall, they are viewed as a force for larger government. If lobbyists have more power due to an inexperienced legislature, they should get their way more often, and government should grow.

This argument makes sense in theory, but a look at the data tells a story of shrinking, rather than expanding, state government since Florida's term limits took effect.

State government appropriations as a percentage of gross state product continually grew through the 1980s and '90s, reaching a peak of 11.86 percent of GSP in the 1994-95 budget, shortly after the passage of term limits. By 2000, state appropriations fell to 10.38 percent of GSP, by 2007 to 9.24 percent, and by 2014 to 9.26 percent of GSP. In an era of government growth, Florida's state budget is 22 percent less, as a share of state income, than it was 20 years ago.

State government employment shows a similar trend, peaking at 1.25 percent of the state's population in 1997, and falling to 0.95 percent by 2012. Measuring the size of government by either spending or employment, there has been a remarkable downsizing of Florida's state government since term limits were enacted — even while nationwide, the trend has been toward bigger government.

Florida was hit harder than most states after the 2008 downturn because of the bursting housing-market bubble and the state's heavy reliance on tourism. The state's fiscal conservatism and fiscal responsibility were especially evident then, as it maintained a balanced budget and cut expenditures to match the fall in tax revenues while holding the line on taxes. State government appropriations for the 2006-07 fiscal year were $73.9 billion, and fell to $66.2 billion in 2008-09 — a decline of more than 10 percent.

These numbers certainly don't prove that Florida's state government has been shrinking because of term limits. But they do provide some evidence against the hypothesis that term limits result in a shift of power toward legislative staff and/or lobbyists. Before the implementation of term limits, the trends in state spending and state government employment were up. Afterward, the trend has been down, consistent with the views of the fiscally responsible Legislature that Floridians have elected.

Some Floridians will applaud their state government for its fiscal conservatism; others will criticize it for shortchanging public services. But Floridians have consistently elected fiscally conservative governors and legislators, and an examination of Florida's budget history since term limits were passed makes it difficult to argue that term limits have eroded the Legislature's power.