FY 2010-11 State Budget Sets Spending at Its Lowest Level in 14 Years

The state General Fund budget provides the funding for important public programs and services such as public schools, community colleges, universities, health care for children and low-income adults, and various public safety programs such as courts, prisons and the highway patrol. For the past several years, the gradual erosion of the tax base followed by a deep and prolonged recession have reduced the resources available for these public systems. Last year the Budget and Tax Center pointed out that state spending in the FY 2009-10 budget represented the lowest level of spending in thirteen years. With the passage of the FY 2010-11 General Fund budget, state spending has now dropped to its lowest level of in fourteen years.

State Spending Per Capita

Fourteen years ago in FY 1996-97, state General Fund appropriations per capita was $1,866 in today's dollars. State spending peaked a few years later in FY 1999-00 when per-person spending hit $2,156. The recession of the early 2000s reduced per-capita spending to a low of $1960 in FY 2002-03 before it peaked again at $2,257 in FY 2007-08, right as the current economic troubles began. Since that peak, spending has dropped $311 per person, and in FY 2010-11 General Fund appropriations per capita is approximately $1,946, the lowest it has been since 1996-97.

State Spending as a Share of Total Personal Income

Another way to measure the relative size of state government is to examine General Fund appropriations as a share of Total Personal Income (TPI), a measure of the state's aggregate income that is tracked by the Bureau of Economic Analysis. In FY 1998-99, General Fund appropriations represented 8.3% of North Carolina's TPI. In FY 2010-11 state spending represents only 5.9% of TPI.

Conclusion

In the past two years, lawmakers have enacted deep and damaging cuts to the public systems that undergird the state's economy by training the workforce of tomorrow and keeping the state's population safe and healthy. As the economy continues its slow recovery, public funding for these important investments must be maintained, and even increased, in order to push North Carolina forward. With state spending per person at its lowest level in more than a decade and predictions of budget shortfalls for the foreseeable future, North Carolina leaders must consider how further deterioration of public investments will impact the future of the state and its people.

You can find a full copy of the NC Justice Center's Budget & Tax Center Brief here.