BTC BRIEF: See for yourself: State General Fund spending over the past two decades

Key Findings:
•    After a precipitous decline during and following the 2001 recession, General Fund spending per capita peaked in fiscal year 2007-08 at $2,318 per person. This amount is similar to the peak reached immediately prior to the 2001 recession, when state spending per person rose to $2,231. Per capita spending for the current fiscal year (2008-09) is projected to be $1,984, or $334 less than the peak spending year.
•    Assuming a General Fund budget were adopted for fiscal year 2009-10 that set spending at the projected baseline revenue forecast of $17.6 billion, state spending per person would drop to $1,880 – a level not experienced since fiscal year 1995-96.
•    Moreover, General Fund spending as a share of Total Personal Income (TPI), an alternative way to assess spending levels over time, shows that spending for the current year (5.85% of TPI) is lower than any year during the period from 1990 to 2010.

Overview
Much of the debate surrounding the various budget proposals for the upcoming biennium has to do with assessments of the extent to which state spending has increased or decreased over time. It is widely recognized that making such assessments requires using an adequate number of years so that at least one full business cycle is included and interpreting the data based on population (inflation-adjusted) or relative to the state’s Total Personal Income. Making these adjustments allows for fair and reasonable comparisons.

The following tables show General Fund actual spending since 1990 and estimates for fiscal years 2008-09 and 2009-10, adjusted for inflation and population growth (Table 1) and as a share of Total Personal Income (Table 2).

[Tables available in attached PDF]

Conclusion

State General Fund spending ebbs and flows with business cycles, but reasonable comparisons of the data over time clearly show that spending per person and spending relative to the state’s collective income has not increased in the past two decades. Moreover, if taxes are not increased as part of the current budget negotiations, spending will decline substantially by any measure.
 

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