Severe government spending cuts across all states in wake of Great Recession. If only.

The latest Liberty Bullhorn, from Sven Larson of the Wyoming Liberty Group, highlights how doomsday descriptions of slashed state budgets have proved to be nothing of the sort. In fact, Larson notes that since 2008 total state spending has increased by 14.1 percent or 4.5 percent per year. (The data is from the 2011 State Expenditure Report of the National Association of State Budget Officers.)

Spending numbers obviously vary between states, but overall, these numbers make it difficult to see any fiscal crisis… [At least not in terms of spending. Debts and unfunded liabilities are another matter.] Six states went on a virtual spending spree in 2011 and increased their total spending by more than ten percent in one year: Alaska (42.1 percent), South Carolina (26.5), Florida (13.6), Nevada (10.4), and California and Idaho (10.3).

Another key insight from his report is that the general fund does not equate to total state spending.

It is easy to be misled into focusing on the General Fund. When state legislators say they cut spending, they often refer to the General Fund. A look at the NASBO data confirms this: the states’ total General Fund spending in 2011 was $636 billion, which is 6.3 percent or $42.7 billion less than in 2008.

That applies to North Carolina in particular, since general fund cuts have gained plenty of press. It is true, between 2009 and 2011 fiscal years, the general fund decreased by 9.3 percent, accounting for inflation (although it is set to increase by 6.4 percent in 2012). However, the state’s total spending actually increased during that same period, by 4.1 percent—also accounting for inflation. So much for cuts.

North Carolina, like other states, has also become more dependent on federal (debt-enabled) funds. And this graphic from the NASBO shows how state general funds, across the nation, have been more than replaced by increased federal aid.

Larson’s report expands further on the impact of federal funds, including in South Carolina, where they now make up more than half the budget. He also ranks all of the states in terms of total spending changes across years.

The one bright spot is that 12 states have managed to cut total spending and lead by example. They’re listed here, with the change between 2010 and 2011 fiscal years:
New Hampshire -0.60%, South Dakota -1.00%, Maine -1.00%, Kentucky -1.60%, New Mexico -2.70%, Missouri -3.10%, Georgia -3.20%, Delaware -3.50%, Washington -3.70%, Illinois -7.30%, Colorado -8.40%, Utah -10.80%.

You can follow Sven on Twitter @Larsen4Liberty, and I encourage people to sign up for his Liberty Bullhorn updates, which go out approximately once per month.

Fergus Hodgson

Director of fiscal policy studies at the John Locke Foundation, policy advisor with The Future of Freedom Foundation, and host of The Sta...

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