Government spending per capita is surging across the United States, but the states with the biggest budgets are seeing people leave rather than stay. New data reveals a stark political and fiscal divide: seven of the ten states that spend the most per resident have lost population to other states since 2020, and eight of those ten voted Democratic in the last presidential election.
In contrast, all ten states with the lowest per capita spending gained population from other states, and nine of them voted Republican. This pattern underscores a growing mismatch between government outlays and citizen satisfaction.
Runaway Spending in Blue States
California, Illinois, and Minnesota have seen particularly dramatic spending growth over the past decade. California’s population grew by just 0.4 percent, yet the number of state employees increased by 24.5 percent, and inflation-adjusted state spending rose by 48 percent. The results have been underwhelming: California’s highways rank 47th and 48th in rural and urban pavement conditions, and only 25 percent of 8th graders scored at or above math proficiency on the latest national report card.
The state has poured $37 billion into homelessness programs since 2019, yet homelessness has increased by about 20 percent. A $15 billion high-speed rail project has laid no track. Meanwhile, California has experienced negative net interstate migration every year since 2001, losing a net 3 million residents to other states over the last 15 years.
Low-Spending States Attract Residents
Florida and Texas, which have the lowest state spending per capita, are among the five fastest-growing states. Their fiscal restraint appears to be a draw for Americans seeking lower taxes and more efficient services. The contrast raises questions about where the money in high-spending states actually goes.
Medicaid spending has nearly doubled in the last decade, with per-enrollee costs up over 40 percent, yet life expectancy has stagnated. Education spending per student, adjusted for inflation, rose 12 percent from 2015 to 2024—twice the rate of population growth—but reading scores for 4th and 8th graders have declined. Only 35 percent of 12th graders are proficient in reading on the National Assessment of Educational Progress.
Government employee costs have also ballooned. Salaries, benefits, and pension contributions have risen faster than inflation, and unfunded state pension liabilities now exceed $1 trillion nationally. California alone has $265 billion in unfunded pension obligations, forcing higher annual contributions that crowd out other services.
Fraud and Waste
The Government Accountability Office estimates improper federal payments total $186 billion annually. In California, recent reports suggest at least $180 billion has been stolen from taxpayers since 2019. As spending grows, it becomes harder to reverse course due to concentrated benefits and diffuse harm—more people have a financial stake in the status quo.
Some spending increases were unavoidable due to the pandemic and an aging population, but the gap between spending growth and results is too wide to ignore. Solutions include zero-based budgeting, sunset clauses for government programs, and pension reforms that cap taxpayer exposure while preserving baseline retirement guarantees. These ideas have bipartisan roots: President Jimmy Carter used zero-based budgeting in Georgia, Democratic governors Richard Lamm and Dolph Briscoe signed early sunset laws, and Democrat Gina Raimondo overhauled Rhode Island’s pension system. Republican states like Michigan, Texas, and Oklahoma later adopted similar reforms.
Every budget line needs justification. Taxpayers deserve no less.
