The truth about North Carolina's state budget

by Brian Balfour, Civitas Institute, January 16, 2018.

• As focus turns to the state budget this spring, liberals will predictably claim that the state budget has been “slashed” or “cut to the bone”
• Reality, however, shows that the state budget has grown at a rate three times as fast as population – even after adjusting for inflation – over the last three and a half decades

North Carolina’s 2018 “short” legislative session will get into full swing later this spring – after the brief special sessions begun last week conclude.

The main point of business will be adjusting the second year of the two-year state budget plan approved in 2017. Last year, Gov. Roy Cooper vetoed the budget proposal, calling it “short sighted and small minded.” Cooper’s main objections were that the budget didn’t spend enough and it included tax cuts.

We should expect similar disagreements this year as well. Big-government liberals will trot out their well-worn, predictable slogans like “government has been cut to the bone” and the state budget has been “slashed.”

When placed into context, however, such claims simply don’t square with the reality of North Carolina’s long-term budgetary trends.

The chart[i] below shows the trend lines for the state’s inflation-adjusted General Fund budget, compared to population growth, for the past 35 years.

As you can see, even after adjusting for inflation, North Carolina’s state budget is now three times as large as it was in the early 1980s. But isn’t that just a reflection of a rapidly growing state? No. Compare that growth rate to the state’s population growth rate during that time of 73 percent.

In short, inflation-adjusted spending has exploded at a rate nearly three times as fast as population since 1982.

As a result, North Carolina’s spending per person — even after adjusting for inflation — has ballooned by more than 70 percent. Put differently, North Carolina’s state budget now spends $821 more for every man, woman and child than it did in in 1982 – not due to inflation but in real, inflation-adjusted terms. That comes to an increase of more than $3,200 for every family of four.

Sure, state spending leveled off a bit after the great recession, but there is no denying the massive increment of state government spending over the last three and a half decades.

[i] Sources for chart include: North Carolina Legislative Fiscal Research Division, annual Post-Legislative summaries; North Carolina Office of State Budget & Management for population data; and Federal Reserve Bank of St. Louis, Federal Reserve Economic data for price deflator (spending adjusted to 2009 dollars): https://fred.stlouisfed.org

https://www.nccivitas.org/2018/truth-north-carolinas-state-budget/