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State budgets can increase total state spending but still fall far short of what’s needed

Posted By Tazra Mitchell On July 31, 2013 @ 9:39 am In Falling Behind in NC,NC Budget and Tax Center | Comments Disabled

It is true that the final budget reinvests in some programs and services to achieve an overall slight increase in General Fund appropriations. This reinvestment was made possible by using unspent dollars from last year’s budget, budget gimmicks [1], the reliance on tuition increases and fees, as well as reductions in other areas of the budget. However, state investments in most areas of the budget—including education—are failing to keep up after years of budget cuts.

There are two primary vantage points for analyzing the final budget and making comparisons over time.  One method is to measure the final budget against the actual dollars that were appropriated last year in the 2013 budget.  The other method measures the final budget against the continuation—or base—budget, which reflects the dollars needed in the next year to maintain current service levels.  The Governor’s Office of State Budget and Management, which is headed by Art Pope, collaborates [2] with the various departments and agencies to determine the continuation requirements.

So, which vantage point makes for the best comparison?

Hands down, the continuation budget provides a better baseline because it indicates what is necessary to maintain residents’ current experience of public service. It does this by accounting for the changing costs required to deliver the same level of services approved by the previous General Assembly. For example, the continuation budget covers education enrollment growth as well as inflation on mandatory expenses such as gas and electricity for state-owned cars and buildings.

The chart below contrasts the final budget to each of these vantage points.

Final_falling behind_Baseline_TWO_July30_NoFY08Comparison [3]

The final budget may invest more than last year’s budget in pure dollars but it still falls short of what is needed to maintain current service levels for several major areas in the budget. The reality is that with a diminished baseline, comes diminished expectations. In no area of the final budget is this clearer than in the education budget where adequacy can make or break a child’s ticket to economic mobility.

Even though the budget increases overall K-12 spending compared to last year’s budget, it is noticeably not enough of an increase to meet the overall continuation needs for the K-12 system. We all should be concerned about adequacy because adequate investments can help build economic opportunity for all students. Adequacy matters because class room size matters; every teacher assistant matters; the quality of a textbook matters; professional development for teachers matters. A budget that falls short of what is needed truly matters for students’ classroom experience.

Both of the vantage points discussed above, however, are limited in a historical context. Nearly four years into the economic recovery, the final budget falls far short of restoring the damaging cuts from the Great Recession and rebuilding the foundation for sustained economic growth. Deep cuts on top of a growing population—i.e. more children to educate, more seniors to take care of, and more citizens to serve and protect—means that state spending is farther behind than where it should be. K-12 spending alone is below pre-recession levels (FY2008, adjusted) by approximately 6.4 percent, or $534 million.

We all want to put the budget on a sustainable path but this budget puts the state on a path to mediocrity. And let’s not forget that there would have been hundreds of millions of dollars to help address this gap if legislators had not pursued a series of ill-advised tax cuts that drained available revenues [4].


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URL to article: http://pulse.ncpolicywatch.org/2013/07/31/state-budgets-can-increase-total-state-spending-but-still-fall-far-short-of-whats-needed/

URLs in this post:

[1] unspent dollars from last year’s budget, budget gimmicks: http://pulse.ncpolicywatch.org/2013/07/24/follow-the-money-how-legislative-leadership-pays-for-its-final-budget/

[2] collaborates: http://www.osbm.state.nc.us/files/pdf_files/BudgetInstructions1315_Part2.pdf

[3] Image: http://pulse.ncpolicywatch.org/wp-content/uploads/2013/07/Final_falling-behind_Baseline_TWO_July30_NoFY08Comparison.jpg

[4] drained available revenues: http://pulse.ncpolicywatch.org/2013/07/21/statement-on-final-budget/

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