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The
Numbers Are In!
Here
are the official statistics -- straight from the Warner
administration -- documenting how the state budget has
increased in the face of a "$6 billion budget
shortfall."
Faithful
readers of Bacon's Rebellion may recall that I have
persistently voiced skepticism regarding the need for
tax increases in Virginia, most notably in my column
"Paper Cuts"
(March 1, 2004). There I published budget tables
indicating that, for all the hyperbole about a "$6
billion budget shortfall", state spending
actually increased $3.7 billion during the first
two budget years of the Warner administration compared
to the last two years of the Gilmore administration.
The
Warner administration took me to task for citing proposed
budget numbers, not actual budget numbers. Now,
thanks to figures supplied by Secretary of Finance's
office, I can report the most authoritative and
up-to-date statistics. Biennial state spending did not
increase $3.7 billion. It increased $4.2 billion!
I
regret the error and apologize to the Warner
administration for understating the extent to
which state spending continues to inflate in the face of
the worst budgetary crisis in Virginia's history,
including, presumably, the Great Depression, the
collapse of the Confederacy and the war for
independence.
OK,
I'm being flippant. And I'm oversimplifying -- a little.
There are sub-currents within the numbers which buttress
the Warner administration's contention that the state
has endured a time of significant budgetary stress. But
the fact remains, for all the pain and angst, state
spending continues to increase without let-up.
The
authoritative numbers come from Pam Currey, the deputy
secretary of finance and luckless soul within the Warner
administration tasked with responding to inquiries from
Bacon's Rebellion. I appreciate her diligence and good
nature. And, in gratitude, I reproduce here
her spreadsheets and accompanying commentary for the
benefit of anyone who would prefer to get information
straight from the Warner administration, not filtered
through a notorious anti-tax zealot like myself.
Now,
freshly armed with authoritative numbers, let's see what
has happened to state spending since fiscal 2000. We'll
start with the General Fund, the reservoir of
discretionary spending often associated with the term
"the budget."
General
Fund Spending
(Fiscal
years, in billions)
|
2000 |
2001 |
2002 |
2003 |
2004 |
Gilmore |
Gilmore |
Gil./War. |
Warner |
Warner |
$11.09 |
$12.28 |
$12.01 |
$12.10 |
$12.26 |
|
+
10.7 % |
(2.2
%) |
+0.7
% |
+1.3
% |
As
you can see, state spending was cruising along merrily
during the boom years of the Gilmore administration,
then slammed into a recession. When Gov. Mark R. Warner
took office in January 2002 halfway through fiscal 2002,
he was forced to enact significant administrative cuts
to keep the budget balanced. But spending resumed its
upward path in fiscal 2003 and 2004, reaching a level
just shy of where it had been back during the happy days
of the dot.com bubble.
The
General Fund looks a bit more dire if we take into
account the fact that a major source of
"spending" increases was the escalating cost
of providing relief for local car taxes -- from roughly
$400 million in 2000 to $920 million in 2004. Most
people would classify the rebate to payers of local car
taxes differently than typical state programs, so, in
the chart below, I have deducted car tax spending to
produce a fairer picture of state spending.
General
Fund Spending
(in
billions, adjusted for car tax relief)
|
2000 |
2001 |
2002 |
2003 |
2004 |
Gilmore |
Gilmore |
Gil./War. |
Warner |
Warner |
$10.70 |
$11.71 |
$11.20 |
$11.23 |
$11.34 |
|
+9.4% |
(4.4%) |
+0.3% |
+1.0% |
Yes,
indeedy, we can see real budget cuts here (though
nothing approaching the "$6 billion budget
shortfall" cited as justification for increasing
taxes). Also, it's only fair to note that spending
pressures did not diminish over this period. Currey
cites the following:
OK, now that I've made every
effort to be fair and balanced, let me tell you the rest
of the story. The General Fund accounts for only half of
state government spending. The "Non General
Fund" encompasses a wide variety of dedicated
revenues and expenditures whose use is restricted.
The following chart shows
General Fund plus Non General Fund spending. The numbers
below cover all state spending, excepting car-tax relief
and a rag-tag group of expenditures which, for an
assortment of reasons, are classified as
"other".
General
Fund + Non General Fund
(in
billions, adjusted for car tax relief)
|
2000 |
2001 |
2002 |
2003 |
2004
|
Gilmore |
Gilmore |
Gil./War. |
Warner |
Warner |
$20.97 |
$22.75 |
$22.67 |
$24.11 |
$25.12 |
|
8.5% |
-0.3% |
6.3% |
4.2% |
In other words, while General
Fund expenditures have remained stagnant, Non General
Fund spending has been chugging right along!
Currey doesn't think it's fair
to compare Non General Fund revenues. "Non-general
funds come from very specific and generally dedicated
sources such as higher education tuition and fees,
federal funds for highways and Medicaid and such,
unemployment trust fund monies, the collection of
support payments for children, and the like," she
says. "...We don't control how much we get from the
unemployment trust fund, and I doubt that anyone would
argue that the almost 30 percent increase in those funds
should be defined as 'bloat in state government'. Nor
would one suggest that it is a bad thing that our
collections from non-custodial parents ... have
increased almost 65 percent during this time period.
Those funds are collected and then go directly for the
benefit of individual Virginia citizens."
All true. Comparisons can be
deceiving. However, it would be even more deceptive not
to include Non General Fund revenues. Look, for example,
at higher education. If we compared only General Fund
revenues, we'd gasp with horror: Higher ed spending
declined $281 million from 2001 to 2004. Only by
comparing Non General Fund spending, however, do we
realize that colleges and universities managed to
increase revenues by $725 million -- mostly through
increased tuitions -- over the same time. That's a net
gain of $444 million! Virginia has experienced not a
decline in spending on higher education but a shift in
the burden of paying for it from the general taxpayer to
the students.
Likewise, transportation
spending has increased $435 million from fiscal 2001 to
fiscal 2004, or about 15 percent. I see no justification
for omitting this core state function from calculations
of state spending trends.
-- April 12, 2004
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