Bacon's Rebellion

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After a Decade of Hardship, State Spending Still Up

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by

James A. Bacon
in

As Virginians ponder the amendments to Virginia’s two-year budget proposed this morning by Governor Bob McDonnell, it is worth remembering the extent to which state government spending has increased over the past 10 years despite three years of hardship occasioned by the 2008 recession.

Over the last decade, Virginia’s operating budget increased by $15.4 billion (62%) — a 35% increase in general funds and an 86% increase in non-general funds. When controlling for growth in population and inflation, total budget growth was 18% over the ten-year period.

So says “The Review of State Spending: 2012 Update” released November by the Joint Legislative Audit and Review Commission (JLARC). After adjustments, General Fund spending actually declined 1% over the decade but non-general fund spending more than made up the difference.

Nine of 196 programs — including health care, education and transportation — accounted for 78% of the total budget growth over the 10-year period. Interesting… health care, education and transportation are three of the most dysfunctional sectors of Virginia’s (and the United States’) economy. All three sectors are exempt from market discipline, and all three are resistant to  fundamental re-thinking or reform. While tinkering on the margins, Virginia’s political establishment continues to pump more money into these broken institutions.

— JAB

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6 responses to “After a Decade of Hardship, State Spending Still Up”

  1. larryg Avatar
    larryg

    when you say you account for inflation – do you account for the increases in health care costs – independent from inflation?

    also.. if you look at places like NoVa – cost of living plays into education. I note that NoVa receives cost-of-living stipends for teachers.

    also – transportation – that seems odd given then we are told are VDOT is broke and the gas tax has lost 50% of it’s spending power.

  2. Breckinridge Avatar
    Breckinridge

    Slow down, Jimbo. General Fund spending has been under tight, tight control through this period of hard times, and the state is to be commended for it. The report includes a list of agencies spending less, in dollars adjusted for inflation and populatoin growth, than they did a decade ago. Others are getting less state dollars (but are spending plenty from other sources — example, UVA.)

    Non-general fund spending is through the roof in part because it includes all the federal share of Medicaid, all the revenue from whatever source (patient pay, private insurace, Medicare) at the state hospitals, and the skyrocketing tuition at the higher education institutions. .

    Transportation funding is mostly non general funds as well because the state budget recognizes the motor fuels tax as a fee — just like higher ed tuition. But indeed it is a fixed fee (unlike hospital costs or college tuitions) so it is not the reason for rapid NGF growth. Frankly, I’m not sure how bond revenues are treated in all this — when the state sells bonds to build roads, how is that incoming cash booked? Federal funds for transportation — also NGF. There is nothing in that report to refute the need for additional dollars for maintenance, for example.

    It is fair to point to the General Assembly for some of the NGF growth (higher tuitions are at least in part due to shrinking state funding, cost shifting with a vengance), but not really fair to point to the GA as responsible for Medicaid and other medical related hyper inflation. The core functions supported by the sales, income and corporate income taxes – the General Fund — has been restrained.

    1. James A. Bacon Avatar
      James A. Bacon

      Do you deny that the state has pumped more money into health care, education and (through borrowed money) transportation? Do you deny that those sectors are exempt from market discipline? Do you deny that those sectors are dysfunctional?

  3. larryg Avatar
    larryg

    so.. how about a short table showing the budget for the last 5-10 years?

  4. cigarunner Avatar
    cigarunner

    The JIARC website has very good info on general and non general fund spending. GF is less than 2003 when adjusted for population and inflation. Non GF includes debt for roads etc.

  5. larryg Avatar
    larryg

    FYI – up again for consideration:

    Retail Sales and Use Tax; increases amount of revenue dedicated to Transportation Trust Fund. (HB1403)
    Sales and use tax revenue dedicated to the Transportation Trust Fund. Increases the amount of sales and use tax revenue dedicated to the Transportation Trust Fund from an amount generated by a 0.5 percent tax rate under current law to an amount generated by a one percent tax rate, phased in by a 0.1 percent increase each year for five years, or over a longer period of time if there is a lack of growth in general fund revenues.

    so Jim’s premise that we keep spending more – seems to have some merit as McDonnell is essentially offering to allocated a bigger share of GF revenues to transportation – contingent on revenue growth.
    So.. he’s counting on spending more…. if we collect more

    which is ODD for a fiscal conservative these days because the tea bagger types say that when revenues exceed prior years, the money should go back to taxpayers.

    but here we have McDonnell behaving just like the tax&spend types but in a bit of a stealthy way.

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