How to Cut State Spending: Increase It (Ohio Edition, But Fill In Your State's Name Here)
Like most states, Ohio is in a jam, what with a budget deficit, high unemployment, and slumping economy. It operates on a two-year budget cycle and in fiscal years 2008-9, the state spent $49.8 billion. Now, they've just signed a new budget. A tough budget that reflects a lot of tough decisions, hard choices, and yadda yadda yadda.
The result? In fiscal 2010-11, the state will spend an estimated $50.5 billion. How does that happen? Read on, McDuff:
[Gov.] Strickland said the budget he and lawmakers passed makes education a priority and tries to protect children, the elderly, and the disabled at a time when many state programs have sustained deep cuts.
The final bill, which missed its June 30 deadline for the first time in 18 years, ultimately cut state aid to public education slightly, from $8 billion this year to $7.5 billion next year and $7.2 billion in fiscal year 2011. Authors of the new school funding formula say it will eventually allow the state to take on a bigger share of school costs, leaving less to be paid by local levies.
When you count one-time federal economic stimulus dollars, public education funding rises by $502 million over the two-year budget cycle.
What with all that cutting going on, you'd think that spending might actually, you know, drop. This is the fakest cutting seen outside Angelina Jolie's performance in Girl, Interrupted. But go Buckeyes.
Prepare for, oh, about 49 other versions of this story, some already published and some still in production. The one thing you will not find anywhere is a story about a state that actually cuts (as in decreases year-to-year) spending.
All of those responsible should immediately read Reason's senses-shattering saga, "Failed States: After a long spending binge, governors go begging for a handout. It won't be their last."
Times are tough, but the real reason why state finances are in the Johnny-on-the-Spot?
In the five years between 2002 and 2007, combined state general-fund revenue increased twice as fast as the rate of inflation, producing an excess $600 billion. If legislatures had chosen to be responsible, they could have maintained all current state services, increased spending to compensate for inflation and population growth, and still enacted a $500 billion tax cut.
Instead, lawmakers spent the windfall. From 2002 to 2007, overall spending rose 50 percent faster than inflation. Education spending increased almost 70 percent faster than inflation, even though the relative school-age population was falling. Medicaid and salaries for state workers rose almost twice as fast as inflation.
And if you want to understand more fully the pressures exerted on increased spending, check out Reason.tv's "Hasta La Vista, Arnold: What California's Economic Mess Means for America," the biggest Schwarzenegger disaster flick ever (go here for embed code, HD, iPod, etc. versions).
