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Washington state’s budget: My how you’ve grown

Gov. Chris Gregoire. Credit: Flickr

When Attorney General Rob McKenna announced his candidacy for governor, he indicated that state government has become too large in some areas, citing the growth of the state budget over the past 40 years. In an interview with TVW’s Austin Jenkins, McKenna said:

“…if you look at state budgets going back to 1970, and if you adjust both for inflation and population growth, what you’ll see is that spending on state government has more than doubled.”

McKenna states a fact: state government spending has grown in real terms in the last four decades, but not “more than doubled.”

Now that the state is apparently facing another round of budget cuts this fall, owing to the national economic problems, it is important to have a basic view of how much, and in what ways, our state budget has grown. A short primer follows.

Let’s start with McKenna’s assessment. In the 1971-73 biennium the state’s General Fund operating budget was $2.36 billion. The 2011-13 operating budget signed by Gov. Chris Gregoire this year is $32.2 billion. If the 1971 budget amount is Washinadjusted for population growth and inflation (CPI), the current budget would be $26 billion.

Another comparison is the “total expenditures” budget which includes capital improvements — state facilities and transportation systems — and non-tax payments such as tuition. In 1971-73 the total budgeted expenditure was $4.42 billion. In 2011-13 it was $76.2 billion. Again, adjusting the earlier amount for population and inflation would put the current budget at $48.6 billion.

While not doubling, real budget growth in both cases has been substantial. How come?

Other factors beyond the general growth drivers of population and inflation, such as demographic and societal changes, have obviously pushed up state spending. The Office of Financial Management tracks some of these. For example, adult prison population has grown considerably faster than population.

Better policy choices can help control demographic drivers. OFM projects that the population over age 85, which is growing rapidly, could increase the need for state-supported nursing beds. But in-home and community-based programs offer less expensive alternatives.

Another obvious driver is federal program support over a broad range of national priorities. In 1970, when federal revenue sharing kicked in, federal, state, and local governments had already established “partnership programs” based on federal assistance. Revenue sharing continued until the Reagan administration shifted to bloc grants.

Federal assistance increased in subsequent administrations. Federal grants to our state rose from a low of 16 percent of state general fund revenue in 1984 to 39 percent in 2009, when the state received $8.3 billion from the other Washington. Federal funds are projected to be 47 percent of the 2011-13 operating budget, and 25 percent of all budgeted expenditures.

Yet another factor is the belief that state government has a role to play in improving the quality of life for its citizens. That sensibility is reflected in the biennial budgets since 1970, even when major cuts were made.

All these factors mean that budgets have grown through both periods of economic distress and prosperity. Since 1970, the state has experienced seven recessions of varying magnitudes, counting the recent “Great Recession.”

And budgets have grown even in periods of divided government. It’s often said that Democrats are responsible for spending creep. Yet for most of the past 40 years Washington state government has been politically divided. Rarely did a governor (only Democrats since 1984) have majorities of his or her party in both legislative bodies. So it’s clear that budget growth occurred on the watch of both parties.

In 1971, Dan Evans was half way through his second (of three) terms as governor. Unemployment was growing rapidly and spiked to 10 percent. The Republican governor had to deal with a split legislature. Senate Democrats held a strong majority while Republicans narrowly controlled the House. Passing the operating budget bill was contentious and after several rejections it was sent to a conference committee of both bodies to iron out differences. Even then, Evans used his veto pen 33 times, and rebuked legislators for cutting funds to higher education and not increasing aid for needy students while raising tuition.

Although Gregoire has governed with Democrats in control of both legislative bodies in her two terms, reaching a budget compromise has been difficult. The Senate’s ideological divisions did not equate to a dependable Democratic majority, and passing the 2011-13 budget required bipartisan agreement on the many program cuts.

Growth in spending also reflects the public’s expectations for state government services in spite of numerous ballot tax measures to limit taxes and spending. We seem to be of two minds — we like the services but we don’t like to pay for them. For legislators, this is a tough balancing act. But over time spending has indeed grown, perhaps in part because it has essentially kept even with personal income growth. And per capita state and local taxes have long been at about the national average.

So where has most of the growth occurred?

One way to map the changes is to compare the state operating budgets for the 1971-73 (HB 151) and 2011-13 (HB 1087) biennia. When placed side by side, both the patterns of change and some important incremental changes over 40 years become apparent. The patterns seem to be: 1) new programs reflecting changing demographics and needs; 2) expansion of existing programs reflecting shifting priorities and emphasis; and 3) response to the increasing complexity of modern society.

Here are just a few examples of new and refocused programs established by legislative action in the past 40 years, not all of which have large budget impacts:

  • In 1971 all categories of criminal offenders, the mentally ill, and the developmentally disabled were housed and served by the Department of Health and Social Services’ Division of Institutions. Now, there is a Department of Corrections overseeing prisons; separate DSHS divisions handle juvenile offenders (rehabilitation) and special (sexual and mentally ill) offenders. And new individually funded programs are responsible for children and family services, developmental disabilities, aging and adult services, alcohol and substance abuse, and mental health. Most developmentally disabled people have moved from state institutions to community residency.

  • The Office of the Superintendent of Public Instruction has taken on a broad range of new responsibilities including levy equalization, No Child Left Behind, highly capable student programs, and transitional-bilingual teaching.

  • Discrimination and social issues involving minority populations were broadly addressed in 1971 by the Board Against Discrimination. Now, in addition to the Human Rights Commission, there are separate commissions on African–American Affairs, Hispanic Affairs, and Asian Pacific American Affairs.

  • Spending on the Military Department (National Guard) appears to reflect the current dependence on the state guards as a central pillar in the US defense posture. In 2011-13 the Guard’s budget will be $308 million, which is 9 times in real terms the level of 1971.

  • Recognizing the importance of bolstering the state’s economy and community development, we now have an Economic and Revenue Forecast Council that tracks economic activity. And efforts to stimulate economic growth and jobs are undertaken by the Economic Development Commission, Work Force Training and Education Coordinating Board, Office of Minority and Women’s Business Enterprises, Innovate Washington, and a number of other public-private initiatives.

  • New stand-alone departments and agencies address archeology and historic preservation, public health, services for the blind, conservation, and pollution.

  • In 1971 The Evergreen State College was just getting started. To provide broader access to higher education, several UW and WSU branch campuses have since been established in Tacoma, Bothell, Tri-Cities, Vancouver, and (with the 2011-13 budget) Everett.

  • TVW, which went on cable in 1995, now broadcasts governmental affairs programming 24/7. It’s an independent organization but depends heavily on the state budget for its financing.

Some folks will dispute the need for one or more of these programs and expenditures, and that’s fair. There have been many program eliminations and consolidations over the years in response to public concern.

Yet state government’s wide-ranging responsibilities haven’t been diminished. Just the length of the two budget documents makes a statement. The 1971 budget ran 50 pages. The 2011 budget 271 pages. Actual line item appropriations required only a few pages in both documents. Most of the length is taken up by provisos with directions as to how the funds must be used, which speaks to the increased complexity of society and state government’s role.

Finally, it should also be noted that citizens, through the initiative process., have occasionally indicated their budget priorities. In 2000 voters supported by initiatives decreased K-12 class size and increased teacher’s salaries. However, the legislature has declined to provide the funding in recent years.

Bottom line: Absolute budget growth percentages are useful indicators, but they can mask the specific programs and services that reflect societal values and changing voter priorities.

More information about the state budgeting process is available from the Legislative Evaluation & Accountability Program Committee (LEAP). Their Citizen’s guide to the budget is available online here and their budget calculator here.

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