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Has Transparency of State Spending Helped Slow Its Growth?

Virginia’s Joint Legislative Audit and Review Commission (JLARC) released a draft of its annual report (2014 Update) on state Spending (Number 462; November 20, 2014; draft version). Virginia's budget for FY 2014 totaled $43.3 billion, and included 155 agencies and 204 programs.

The report is required by the Code of Virginia, and reviews the “growth in state spending over the prior five biennia.” It identifies “the largest and fastest growing functions and programs in the budget, and analyze long-term trends and causes of spending in these programs (Appendix A),” and “is the 14th in the series” and “covers the 10 years from FY 2005 through FY 2014.”

Here’s the verbatim summary of what JLARC found, as reported in the commission’s draft report:

  • Over the past decade, Virginia’s operating budget increased by $14.1 billion (48%)—a 28% increase in general funds and a 66% increase in non-general funds. When controlling for growth in population and inflation, the total budget grew by 11%, the non-general fund budget increased by 24%, and the general fund budget decreased by 4%, over the 10-year period. (emphasis added)
  • A variety of economic factors and policies contributed to this growth. With population growth of 9% from 2005 to 2013 (2014 data is not available), Virginia had approximately 683,300 more residents. The personal income of Vir- ginians increased by 34% over the period while inflation increased by 23%.
  • When general funds declined during the past decade, the total budget continued to increase due to the growth in non- general funds. However, non-general fund increases have slowed in recent years as a result of slower growth in higher education operating appropriations (largely tuition and fees) and declining federal stimulus funds.
  • The 10 largest state agencies (out of 155) accounted for 68% of the total state budget in FY 2014 and 70% of all budget growth between FY 2005 and FY 2014.
  • Growth in general fund appropriations is concentrated in a few large state agencies. Several agencies experienced substantial growth in general and non-general fund appropriations over the past 10 years.
  • The general fund appropriations for 37 agencies either grew more slowly than inflation or declined.
  • Budget growth was concentrated in a few large programs: eight (of 204) in health care, education, and transportation accounted for 80% of total budget growth.

The report is filled with numerous charts and appendices, including several that are online here.

We growled about this topic on December 20, 2012 after JLARC issued their FY 2012 update.

The report emphasizes that "Virginia’s budget growth has slowed in the past decade," as described in the commission's draft report:

"Virginia’s budget has been growing for many years. As noted, in JLARC’s first report on state spending in 2002, Virginia’s total operating appropriations grew by an aver- age of 7.9% annually from FY 1981 to FY 2000. Even in years of national recession and decline in the state general fund, total state budget appropriations continued to increase due to growth in non-general funds.

"This trend continued over the past decade. Total annual budget growth from FY 2005 to FY 2014 averaged 4.5% despite reduced general fund appropriations be- tween FY 2008 and FY 2010. Growth in the total budget continued during these pe- riods due to growth in non-general funds. The nearly 10% growth in total appropria- tions in FY 2006 and FY 2007 resulted not only from a healthy economy but also from state tax policy changes adopted in 2004, which contributed to several years of above-average budget growth.

"State general funds have experienced more variability during the 10-year period un- der review. The long-term upward trend in state general fund appropriations, which was continuing in FY 2005, ceased after FY 2007. From FY 2008 through FY 2010 general fund appropriations declined by $2.2 billion, or 13%, an average decline of more than 4% per year. The general fund returned to positive growth from FY 2011 to FY 2014, though growth slowed somewhat in FY 2014.

"Non-general fund appropriations continued to grow over the past decade as non- general funds sources increased for various reasons. Federal funds increased, as did revenue from tuition payments at colleges and universities and child support en- forcement payments. Some of these increases were expressly to offset declining gen- eral funds. For example, the federal government provided an infusion of funds to states in FY 2010 to offset declines in state funding for education, health care, and other activities. FY 2014 represents the smallest year of growth in non-general funds over the past decade, mainly due to slower growth in higher education operating ap- propriations (largely tuition and fees) and reduced unemployment insurance."

Although we saw no mention in the report about the role that transparency played in slowing the growth of government spending, we believe that when citizens are armed with good information about what their government is doing, then their representatives are more likely to do the right thing.

Readers of Growls are urged to express their budget concerns to their members of the Virginia General Assembly. Use the "quick links" at the "Members and Session" webpage here. We'll update this Growls if there are any significant changes when the final report is issued.

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