When putting together a budget, the debate typically entails where funding has expanded, what new initiatives have been introduced, and how much funding has been cut. However as North Carolinians are learning, when the baseline for comparison changes, spending that was once guaranteed may go away and new initiatives may only serve to undercut other important public investments that drive the state forward.
The base budget, or continuation budget, has traditionally been the starting point estimate of what North Carolina’s policymakers needed to invest to maintain current service levels. As we have written about before, recent changes to what is included in the base budget— removing enrollment growth, for example —has meant a shifting foundation upon which assessments are based. Rather than increasing transparency, this change masks just how little improvement there is in the Governor’s budget proposal.
Better information about what is in and what is now out of the base budget is needed so that the public can better understand whether so-called expansions are truly that or are just keeping up, and whether new initiatives are financed sustainably or through cuts to core programming. The Department of Public Instruction submitted a request that included a greater amount of investments than were ultimately funded as did the courts. As an example, DPI requested $69.9 million in added investment to their base budget but got a cut of $56.3 million in their base budget. Specific details for all areas of the budget are needed to understand what is in and out of the base funding.
In a preliminary look at the Governor’s budget, it is telling that the continuation budget (or base budget) for FY 15-16 falls $235 million below the current fiscal year budget spending. Moreover, as my colleague noted in a post yesterday, the proposed appropriation level by the Governor covers nearly exactly the enrollment growth costs forK-12 education, universities and Medicaid. In previous budgets, these enrollment growth costs would have been part of the base budget. Expansion items, such as further pay raises or increased foster care payments, are the result of shuffling the deck—moving dollars around without meaningfully reinvesting overall.
Pre-recession levels can also be used as a point of comparison in this budget debate to demonstrate the lack of reinvestment. Looking in this way, the Governors recommended appropriations remains $1.4 billion lower than the spending level at FY 07-08 despite a growing population and the state surpassing the fifth year of the economic recovery.
Changes to the base budget make clear that very little progress can be made by state policymakers as long as revenues come in under projections as a result of the costly tax plan since revenue growth is not keeping up with growth in enrollment and other program costs.