BTC Brief: State investments in public services at 40-year low despite increased demand

A new BTC Brief released this morning demonstrates that, by any reasonable measure, state funding for core services like education, health and human services, public safety, and other general government services is historically low.

For nearly four decades, state funding for core General Fund services like public schools, community colleges, universities, mental and physical health, and public safety typically hovered between 6 and 6.5 percent of the combined total of all North Carolina residents’ annual incomes.  As shown in the chart at right, the new state budget represents a major departure from recent historical precedent.

The consequences of this reduced commitment to state public investments have already started to become clear: fewer teachers and teacher-assistants in the classroom, longer waiting lists for child-care subsidies, higher tuition and fewer classes for university and community college students, and the potential elimination of vital health services for elderly, disabled, and indigent North Carolinians.

By another measure — cost-adjusted, per capita funding — state support is set to fall to a 25-year low.  Yet because demand for state-funded services like education, health, and corrections has outpaced the state’s population growth (see chart below), even if per capita state funding had remained constant instead of declining in recent years, funding would still fall short of the level necessary to sustain the quality and availability of key public services .

In the coming decade and beyond, an aging population, rising health-care costs, and a growing gap between workers’ skills and the demands of the job market are going to put enormous pressure on funding for core services.

Of course, efforts to find efficiencies in public programs and target scarce public resources to the most cost-effective solutions must continue be an important part of providing adequate funding for core public services in the years to come. Yet for the state to thrive economically and meet its commitments to seniors and other vulnerable populations, policymakers will need to reverse course and strengthen the state’s financial commitment to vital public services and investments.

2 Comments

  1. Jimmy

    December 15, 2011 at 7:22 pm

    Question : Why is Texas doing so well, and North Carolina is going downhill ? Six of the top 10 cities doing well are in Texas ,yet they spend less per capita on the core services.

  2. Ed McLenaghan

    December 16, 2011 at 8:55 am

    I’d avoid reading too much into a single state’s economic performance during the recession, but here’s a good break-down of the factors behind the ‘Texas Miracle’.

    http://www.washingtonpost.com/blogs/ezra-klein/post/breaking-down-rick-perrys-texas-miracle/2011/08/15/gIQAzRHFHJ_blog.html

    Plus, Texas isn’t quite as stingy on all core public services as you suggest. For example, Texas outspent North Carolina per pupil last year.

    (http://www.nea.org/assets/docs/HE/NEA_Rankings_and_Estimates010711.pdf – p.67)

    Furthermore, most of the value of public investments occurs in the long term. As TNR’s Ed Kilgore wrote, “if Perry’s low-tax, low-services, corporate-subsidizing policies really were an economic cure-all, similar conditions should have made states like Alabama and Mississippi world-beating dynamos years ago.”