The Iowa legislature is currently considering three major property tax reform measures. Each of the proposed measures contains a provision that would cap the growth of property taxes at or around 2%. In response, local governments are sounding the alarm that placing a 2% property tax cap would endanger vital services such as police and fire.
This argument is nothing new, and the familiar chorus has been repeated by local governments numerous times as a way to prevent any attempt to control their spending. Further, many local governments argue that they cannot limit their spending because they are already operating on “bare bones” budgets.
Limiting government spending may be one of the most difficult policy challenges confronting government at all levels (local, state, and federal). Government bureaucracies and special interests clamor for more spending and fight ruthlessly to protect and extend their budget line items. Former President Herbert Hoover correctly described government as having “the instincts of a vegetable” which keep spreading and growing. This is why the national debt is $39 trillion and rising. Whether it is the property tax situation in Iowa or the national debt, the problem centers on the inability and outright refusal to limit spending. Even efforts to slow the growth of spending, such as the 2% property tax cap, are viewed as a “cut.”
Historically, the battle over government spending has always been an aspect of American politics. For fiscal conservatives or “budget hawks” limiting spending has unfortunately become next to impossible. With demands from government continuing to accelerate, the lack of political will from both political parties to address spending, and even the fault of Americans who expect lower taxes but still expect government to do “all of the above” are all contributing problems. It seems like the best outcome is no longer limited government, which has become unfortunately an empty slogan, but rather hoping to just slow the growth of government.
The battle to limit government has never been easy, but it can be accomplished. It will require a renewed sense of principles and leadership. Policymakers can look to history as a guide to learn from past leaders who truly championed fiscal conservative policies that limited government.
One example at the state level was Minnesota Governor Theodore Christianson, who served as governor from 1925 until he left office in January 1931. During his time as a state legislator and as governor, Christianson made fiscal conservatism, or “economy in government,” a priority. He campaigned on slogans such as “More Ted, Less Taxes” and was given the nickname “Tightwad Ted.” The Farmer’s Independent, which was no supporter of Christianson, sarcastically referred to him as “Watch Dog Ted.”
As a conservative, Christianson was especially concerned about preventing the socialist agenda from advancing in Minnesota. He realized that the socialist policies of the Nonpartisan League had advanced and taken root in North Dakota, and the Farmer-Labor Party was now trying to accomplish similar policy goals. In 1924, Christianson was “appealing to the voters to save the state from socialism threatened by the Farmer-Labor Party.”
Christianson’s fiscal policies reflected those of Presidents Warren G. Harding and Calvin Coolidge. During the presidential campaign of 1924, Christianson described Coolidge as extolling “the ancient and time-tested virtues.” While Coolidge was cutting tax rates, reducing spending, and paying down the national debt at the federal level, Christianson was doing the same in Minnesota. In 1924, Christianson argued that the “demand for a halting of the increase in taxation and public indebtedness is making itself felt, not only in Minnesota, but throughout the nation.”
As a former legislator and chair of the Appropriations Committee, Christianson understood the budget and also the numerous special interests that were clamoring for more spending. He believed that the most urgent economic policy problems consisted of reducing the tax burden, cutting spending, and eliminating debt. As Governor, Christianson even believed that it was a realistic goal that that Minnesota would be “a bondless state in 1935,” that is debt free.
Christianson later reflected that it was his time as chair of the House Appropriations Committee “that he began to warn the people of the social and economic consequences of excessive taxation.”
Both Harding and Coolidge placed a priority on limiting spending, lowering tax rates, and paying down debt. In 1921, President Harding reformed the federal budget process with the Budget and Accounting Act, which created Bureau of the Budget with Charles G. Dawes and Herbert Lord serving as the first Directors.
Both Harding and Coolidge required their administration to attend regular meetings of the Business Organization of the Government, which were orchestrated by both Dawes and Lord. Harding and Coolidge would often attend and even address these meetings. The objective was to get the entire administration aligned with the fiscal policy objectives, which included limiting spending. Dawes would compare the task of cutting spending to having a “toothpick with which to tunnel Pike’s Peak.”
Christianson was supportive of the fiscal policies of the Harding and Coolidge administrations. He believed that their budget reform efforts should be replicated at the state level to reduce spending. “I said that the states and their municipal subdivisions have been the principal offenders, and that whereas the cost of federal government in this country has been reduced the cost of state government has continued to increase during the last few years,” noted Christianson.
“Why is it that the federal government can reduce its expenditures or at least keep them from increasing and the states cannot,” asked Christianson? The answer according to Christianson was following the example of Harding and Coolidge.
In reference to the Budget and Accounting Act, the Bureau of the Budget, and the regular meetings of the Business organization of Government, Christianson argued that governors should follow a similar example. “President Coolidge,” stated Christianson, “stands for a policy of economy he can, by handing his orders down through the members of his cabinet, reach every agency of the government and compel economy.”
Governor Christianson described his policy as an “economy program,” which would center on reforming state government, lowering spending, reducing taxes, and debt reduction.
One of the major government reform initiatives that occurred under his watch was the 1925 Reorganization Act, which made the state government more efficient by limiting bureaucracy. The Act created the “Big Three,” which was a three-person commission of Administration and Finance, which centered on reforming statewide accounting systems, reviewing agency and department budget requests, the approval or denial of state funds. Christianson and the “Big Three” also encouraged the use of the veto to limit spending.[1]
The 1925 Reorganization Act “adopted a new scheme of organization of the government of Minnesota.” However, Christianson argued that consolidating departments and agencies was not enough to limit government or spending. “We consolidated a few departments but don’t believe that the mere consolidation of state departments is going to produce very much economy in itself because all that such consolidation does is to make a regrouping of the activity and all the activity is still there,” noted Christianson.
To add “teeth” to reorganization, Christianson created a budget system to review spending. Christianson argued that Minnesota’s budget system was “sufficiently unique,” and that the “budget system is not a mere compilation of departmental requests, it isn’t merely an attempt to scale down the departmental requests for legislature. It goes farther than that.”
Christianson described the process of the Budget Bureau once the legislature had given approval. Once the legislature had approved appropriations the Budget Bureau did not just allow agencies and departments to spend at will. Christianson stated that “we have a string on that money so that before the head of the Bureau or Department that enjoys that appropriation can spend a dollar of it, he must get specific approval for the expenditure from the Budget Board.”
This provided additional oversight into spending. “In other words, every three months the head of a state department must file with the Budget Board a requisition for the part of its appropriation that it desires to spend during the next three months,” stated Christianson. Also, agencies or departments could not use those dollars until they received approval from the Budget Board.
Christianson argued that the new budget system would finally elevate the interest of the taxpayers. “Under the new budget system, stated Governor Christianson, “taxpayers will be represented before the legislature when it considers requests for appropriations.”
“In the past, no one but those wanting to spend the money have been heard,” argued Governor Christianson. As a result, “the tax spenders have been getting judgement against the taxpayers by default.” The new budget system would provide additional oversight to help limit spending and achieve “economy in government.” Thus, giving taxpayers a “seat at the table.”
In reviewing spending, Christianson stated that the Budget Board could either approve, allow, or reduce the spending. To illustrate, Christianson described a hypothetical if a department requested to purchase ten new automobiles and specifically requested that they be Cadillacs.
This request would come before the Budget Board, and it would scrutinize whether the ten Cadillacs were necessary. Christianson stated that after the review the Board would inform the department that the “only business we have is to watch you fellows and we have decided that you will get along with six new automobiles for the present.”
In addition, Christianson stated that the Board would “have made a survey of the relative efficiency and economy of operation for various motor cars for your inspectors to go around the state with and have concluded they don’t need Cadillacs. We have been standardizing on a cheaper car. Instead of getting ten Cadillacs, we are going to buy six Fords. And you will get six Fords. And you will like it, after a while.”
Christianson admitted that the Budget Board did not win many friends and the budget system causes friction. This was positive for both government and taxpayers. Christianson argued that “any budget system that is worth the paper the law which created it is written on will cause friction, because if there is no friction between the people who want to spend the taxpayers’ money and those who are charged with the responsibility of saving it, it is a pretty sure thing that it is the tax-spenders and not the taxpayers interests which are being taken care of.”
In validating his argument, Christianson argued that federal Bureau of the Budget “caused friction in Washington.” Limiting spending in the Harding and Coolidge administrations was not an easy process. “A great many people down there don’t like General Lord. Some of them don’t like Coolidge,” stated Christianson.
Having friction in a budget system was a sign of good governance according to Christianson. “There is friction in the operation of any budget system that is effective, because the budget is a brake,” noted Christianson.
The Reorganization Act, Christianson argued, granted the Governor and the “Big Three,” the ability to “exercise an absolute control over the spending of state funds.” This provided Christianson with additional oversight and what he referred to as a “continuing veto on expenditures.”
Governor Christianson and the “Big Three” were successful in their objective of providing greater oversight of spending. As an example, during the “first year they reduced the state’s printing bill more than $75,000 and its telephone bill $9,000.” The “Big Three” also saved $17,000 by changing the way the state purchased coal and $4,000 in savings by switching from buying “writing paper by the ton instead by the ream.” By negotiating new fuel contracts for state vehicles, the “Big Three” was able to save another $20,000. In addition, the “Department of Agriculture and that of dairy and food together managed to get along on $25,000 less than they had spent the previous year…”
After the first year, Governor Christianson noted that the “Big Three” Commission “had saved the taxpayers more than $680,000 of the $14,700,000 appropriated for the departments and activities directly under its financial supervision.” Later Christianson would reflect that both the new budget system and the reorganization of state government were the “outstanding achievements” of the legislature.
As Governor, Christianson was unafraid to exercise his executive power, especially regarding the use of the veto. Christianson was the first executive to use the veto power extensively to limit spending. The Mahnomen Pioneer noted that during the 1925 legislative session the “Governor vetoed 12 bills, many of which would have created new state boards or would have involved future expense.”
During his 1926 campaign, he celebrated his use of the veto that in one year — 1925 — saved taxpayers over $1.8 million. During his time in office, Governor Christianson would use the veto 76 times, which accounted for almost $18 million in savings. The veto was instrumental in helping Christianson limit spending. As a result, the legislature in 1925 “appropriated $41.6 million, the 1927 legislature, $40.6 million; and the 1929 legislature, $42.2 million.” Christianson’s overall budget goal for the legislature was to hold appropriations to the “amounts for the prior biennium.”
Christianson was even mocked by his political opponents for his fiscal conservatism. This was especially true of those allied with the Farmer-Labor Party and Nonpartisan League. The Organized Farmer, a socialist newspaper, compared the Governor to a pouting child if he did not get his way on fiscal matters. “Ted is known to stamp both feet when he can’t get what he wants, just like a three-year old…,” editorialized The Organized Farmer.
When The Organized Farmer learned that Christianson had read from their paper at a campaign rally, they applauded themselves for provoking the governor in his direct response. “It, of course, is gratifying to the local weekly paper to have the governor of this state carry a real progressive newspaper in his pocket, in order to give him something more to talk about besides the 13 cents that he saved per ton in purchasing coal for the state in his campaign speeches,” noted the sarcastic Organized Farmer.
The Organized Farmer’s lampooning of Christianson’s efforts to limit government failed to win converts. Minimizing the coal savings did not project the accuracy of what Christianson was able to accomplish. “While nearly every state in 1925 showed increases in appropriations…Minnesota appropriations were held down to the level of 1923…,” stated The Redwood Gazette.
The Redwood Gazette reported that “Minnesota is one of the few states where the mounting cost of state government has been checked.” Representative Ray J. Quinlivan stated that “Mr. Christianson has redeemed the pledges he made in the 1924 campaign and has not only checked the rising tide of state expenditures but has effected a reorganization which is bringing greater economy.”
During the 1929 legislative session, Christianson vetoed three appropriations in a budget bill that accounted for over $15 million. In his veto message, Governor Christianson argued that “every additional dollar must come from increased exactions from the owners of real and personal property.” In other words, the increased spending would result in a property tax increase.
Another significant veto occurred when Governor Christianson received a $21 million school aid and university maintenance bill from the legislature. The Governor believed that this was too extravagant and “struct out the appropriations for school aid and university maintenance, aggregating $18,000,000…”
In his Farewell Address, Governor Christianson stated that the use of the veto helped in the reduction of state spending. “The reduction of state spending was accomplished by the veto of appropriation items…,”argued Christianson.
Just as with Presidents Harding and Coolidge, conservative budgeting and limiting spending were not easy policies for Christianson. “Governor Christianson has not had an easy course, but he has kept the faith with the people of the state,” noted the Kanabec County Times.
As an example, his exercise of the veto power resulted in conflicts with the legislature. During the 1929 session the legislature passed a $5,000 appropriation for the Hospital for Crippled Children. Christianson believed that the amount was too high and instead of vetoing the entire appropriation he used executive power to lower the amount to $4,000.
It merits consideration to understand why Governor Christianson would even consider lowering an appropriation directed toward caring for crippled children. Christianson was not cold hearted, but rather the money was directed toward the improvement of the grounds. “Ordinarily, I would not object to appropriations for the Hospital for Crippled Children, for this institution not only is doing much practical good, but has strong sentimental appeal,” stated Governor Christianson in his veto message, which also reflected his ability to review appropriations.
As Governor, he argued that he should have the ability to reduce appropriations rather than using the veto. Christianson believed he should not just have the power of veto on even line-item veto, but actually be able to lower a specific appropriation if he disagreed. The lowering of the Children’s hospital appropriation is just one example of the conflict that he had with the legislature over his use of the veto.
The Kanabec County Times described Christianson as being “fearless and independent.” “This course may have made some enemies, but it has also made thousands of new friends who admire a man of his uncompromising type.” Certainly, his use of the veto, which often struck down appropriations for public education, was not viewed with popularity. The Mahnomen Pioneer stated that “Governor Christianson by his action set a record for making slashes in appropriations…He also acquired a record for vetoes.”
Finally, Christianson argued that “economy in government” was not just a responsibility for state government. He argued that it was also imperative that localities also practice fiscal conservatism by limiting spending, lowering tax rates, and paying down debt. The responsibility of the state government was to set an example for local governments. “Economy in state government should set an example for communities,” as Governor Christianson argued.
At the close of one legislative session, Governor Christianson even lamented the legislature’s failure to enact legislation to force local governments to pay down their debts. “In my opinion the most serious mistake of the session was the failure to enact legislation compelling local units of government to provide definite and irrevocable means for the liquidation of their bonded indebtedness,” stated Governor Christianson.
Christianson was not always satisfied with the progress of his “economy in government” agenda. He praised the reorganization of government and the budget reforms but also argued that they could have been strengthened. He even lamented that at times the “legislature appropriated too much money.”
Overall, Governor Christianson would leave a record of fiscal conservatism. He described his six years in office as “eventful, and several distinct trends had been established in state policy:
The New York Times noted that “Minnesota has been making a sincere effort to reduce tax burdens for the last six years” under the leadership of Governor Christianson. Tax reduction was “the chief undertaking of his administration,” reported The New York Times.
In our current era we clearly need more policymakers who share the fiscal conservatism of Governor Christianson. Christianson would not accept “slowing the growth” as an option nor would he entertain the notion that limiting spending will result in the loss of services.
Fundamentally, Christianson understood the root cause of the problem was not necessarily with politicians or their spending, but rather it was a cultural problem. “So I suspect if we want to stop this increase in the cost of government the first thing that we will have to decide to do is get along with less government or at least to put a stop to it when somebody tries to increase its functions and activities unduly,” argued Christianson.
“Now what are we going to do about it? Is there any way in which this increase in public expenditures can be halted or must we face complacently a constant increase in this burden of government,” asked Christianson? Unfortunately, we have become complacent or even numb to the increase in government spending.
Complacency is dangerous, which is why the national debt is $39 trillion and many state and localities are confronted with a fiscal crisis. Christianson argued that “there are forces and factors over which the government does have control,” to limit spending. These fiscal tools included reforming and reducing the size and scope of government, budget reforms to scrutinize spending, and limit government debt. Policies such as a 2% cap to limit spending at the local level is just one example. Today, at all levels of government, we need the spirit of “More Ted, and less Taxes.”
[1]The “Big Three” included Herbert W. Austin, who formerly served as State Treasurer, Albert J. Peterson, and Herbert W. Austin. They served on the Commission of Administration and Finance and helped Governor Christianson to provide oversight on spending and reduce expenditures.
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