Honey, I shrunk the budget: An honest look at Washington state’s spending

02/14/12 4:10 p.m. This post edited to clarify the distinction between the state “general fund” and “operating budget”.

Policy issues like marriage equality, paid sick days and the minimum wage have dominated the news from Olympia so far – but with the next state revenue forecast due on Thursday and cutoff dates looming, it’s time to get some perspective on Washington’s budget.

You can download state expenditures over the past decade on the state’s ever-handy fiscal website. But to get the long view, let’s go back even further and look at the state general fund* since 1991. Here’s a chart showing the raw numbers:

This chart is very pretty – but it has some problems, like the fact that it doesn’t account for inflation.

Inflation means that when prices go up, budget numbers look bigger even if you’re just buying the same stuff – or in Washington’s case, providing the same public services – as you did the year before. (If you happen to encounter these budget numbers in the wild,  remember that you’re not getting an honest comparison.)

So how do we get numbers we can compare year to year? One way is to use a price index like the implicit price deflator (IPD). The IPD is calculated yearly by the Bureau of Economic Analysis – there’s even a price deflator specifically for state and local governments, which I’ve used here to get inflation-adjusted spending figures:

Now we can see that in comparable dollars, state spending increased from $13.1 billion in 1991 to $17.4 billion in 2002, declined to $16.3 billion in 2005, increased and leveled off at just over $17 billion from 2006-09, and since then has been in a steep decline, to $14.8 billion in 2011.

By this measure, state general fund spending hasn’t been this low since around 1997. But this chart is still missing something: population.

Washington’s population is growing, and that cuts both ways in the state budget. On the one hand, more people can mean more public services are required (more kids in schools, more public safety officials, more health inspectors, etc.) which can equate to increased costs. On the other, new residents are in some cases new taxpayers who will contribute to increased revenue.

The state uses caseload forecasts and demographic studies to anticipate expenditures for agencies and departments (and economic projections to account for increased revenue). But since we’re looking at total general fund expenditures here, for now I’ll just keep things simple and use overall population as a proxy.

According to the state Office of Financial Management, Washington’s population grew by more than 1.74 million between 1991 and 2011 (from 5,025,624 to an estimated 6,767,900). If you divide the inflation-adjusted numbers above by Washington’s population for the corresponding year, you’ll get this:

In inflation-adjusted per-capita dollars, general fund spending was more or less flat from 1991 to 1999 (at around $2610 per capita), then increased by about 10% to $2,869 per capita in 2002. Four straight years of declines followed, taking spending back to pre-1999 levels; after a small (4.2%) upturn in 2006, spending declined slightly every year, then fell more precipitously to $2,181 per capita in 2011.

By this measure, the general fund budget has declined by 24% since 2002, and by 16% since 1991 – in other words, it hasn’t been this low in at least 20 years. Tomorrow we’ll look at three other ways to get context for Washington’s budget.

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*The general fund is the principal state fund supporting the operation of state government. All major state tax revenues are deposited into the general fund, making it the largest single fund in the state operating budget. The operating budget constitutes the majority of all state spending and pays for most of the day-to-day operations of state government. Total operating budget revenue comes from a variety of taxes and fees, as well as federal funding, such as Medicaid and the Social Services Block Grant. Capital projects and transportation are not part of the state’s operations budget. Learn more in the Citizen’s Guide to the Washington State Budget.

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2 Pings/Trackbacks for "Honey, I shrunk the budget: An honest look at Washington state’s spending"
  1. […] Honey, I shrunk the budget: An honest look at Washington state’s spending […]

  2. […] often hear conservatives complain about the (allegedly) increasing budget. But as this article from Washington Policy Watch explains, the increase disappears if you adjust for inflation and […]

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