The Budget Blog

What’s normal spending growth?

By Duane Goossen

February 3, 2012

The governor’s proposed State General Fund (SGF) budget for fiscal year 2013 is lower than the amount that the state actually spent five years earlier. How unusual is that? By historical standards, it’s very unusual. The Kansas budget, along with the other 49 state budgets, normally grows, and to realistically plan for the future we should consider the historic trend.

Let’s look deeper. Over the last five years, the nationwide recession dramatically affected the Kansas SGF budget. In FY 2008, spending reached a high point. Then the recession hit. Spending dropped slightly in FY 2009 but dropped a whopping 13.1 percent in FY 2010. As the recession eased, SGF spending began growing again, up 7.6 percent in FY 2011 and up 6.6 percent in FY 2012. But even with the slightly increased spending proposed in Gov. Sam Brownback’s FY 2013 budget, overall expenditure levels are still lower than they were in FY 2008.

Fiscal Year

However, looking back over the last 30 years, Kansas SGF spending has increased an average of 5.3 percent each year. Across all 50 states, the average budget increase for that same period has been a slightly smaller 5.0 percent see chart below. So we might say that the Kansas “normal” is 5.3 percent growth, and the national “normal” is 5.0 percent.

Annual Budget Increases

Over time, state budgets go up for a variety of reasons. Inflation makes routine costs higher. Medical inflation pushes up Medicaid and other health costs. State employee salaries generally rise to maintain a fair and competitive wage scale. Populations increase, requiring more services. Sometimes new services and programs are added. Sometimes states take over costs once paid by local governments.

It’s not surprising that the normal Kansas increase is slightly above the national average. Especially over the last 20 years, Kansas has deliberately shifted responsibility for school finance away from local property taxes to the State General Fund in a way most states have not.

If the Kansas “normal” is 5.3 percent, the state should be cautious about long-range forecasts that project less. Forecasts that assume lower growth may not be realistic, given the state’s spending history, or may be ignoring costs that cannot easily be controlled.