Bacon's Rebellion

James A. Bacon




The Numbers Are In!


Here are the official statistics -- straight from the Warner administration -- documenting how the state budget has increased in the face of a "$6 billion budget shortfall."


Faithful readers of Bacon's Rebellion may recall that I have persistently voiced skepticism regarding the need for tax increases in Virginia, most notably in my column "Paper Cuts" (March 1, 2004). There I published budget tables indicating that, for all the hyperbole about a "$6 billion budget shortfall", state spending actually increased $3.7 billion during the first two budget years of the Warner administration compared to the last two years of the Gilmore administration.


The Warner administration took me to task for citing proposed budget numbers, not actual budget numbers. Now, thanks to figures supplied by Secretary of Finance's office, I can report the most authoritative and up-to-date statistics. Biennial state spending did not increase $3.7 billion. It increased $4.2 billion!


I regret the error and apologize to the Warner administration for understating the extent to which state spending continues to inflate in the face of the worst budgetary crisis in Virginia's history, including, presumably, the Great Depression, the collapse of the Confederacy and the war for independence.


OK, I'm being flippant. And I'm oversimplifying -- a little. There are sub-currents within the numbers which buttress the Warner administration's contention that the state has endured a time of significant budgetary stress. But the fact remains, for all the pain and angst, state spending continues to increase without let-up.


The authoritative numbers come from Pam Currey, the deputy secretary of finance and luckless soul within the Warner administration tasked with responding to inquiries from Bacon's Rebellion. I appreciate her diligence and good nature. And, in gratitude, I reproduce here her spreadsheets and accompanying commentary for the benefit of anyone who would prefer to get information straight from the Warner administration, not filtered through a notorious anti-tax zealot like myself.


Now, freshly armed with authoritative numbers, let's see what has happened to state spending since fiscal 2000. We'll start with the General Fund, the reservoir of discretionary spending often associated with the term "the budget."


General Fund Spending

(Fiscal years, in billions)

2000 2001 2002 2003 2004
Gilmore Gilmore Gil./War. Warner Warner
$11.09 $12.28 $12.01 $12.10 $12.26
  + 10.7 % (2.2 %) +0.7 % +1.3 %


As you can see, state spending was cruising along merrily during the boom years of the Gilmore administration, then slammed into a recession. When Gov. Mark R. Warner took office in January 2002 halfway through fiscal 2002, he was forced to enact significant administrative cuts to keep the budget balanced. But spending resumed its upward path in fiscal 2003 and 2004, reaching a level just shy of where it had been back during the happy days of the bubble.


The General Fund looks a bit more dire if we take into account the fact that a major source of "spending" increases was the escalating cost of providing relief for local car taxes -- from roughly $400 million in 2000 to $920 million in 2004. Most people would classify the rebate to payers of local car taxes differently than typical state programs, so, in the chart below, I have deducted car tax spending to produce a fairer picture of state spending.


General Fund Spending

(in billions, adjusted for car tax relief)

2000 2001 2002 2003 2004
Gilmore Gilmore Gil./War. Warner Warner
$10.70 $11.71 $11.20 $11.23 $11.34
  +9.4% (4.4%) +0.3% +1.0%


Yes, indeedy, we can see real budget cuts here (though nothing approaching the "$6 billion budget shortfall" cited as justification for increasing taxes). Also, it's only fair to note that spending pressures did not diminish over this period. Currey cites the following:

  • 47,400 more children enrolled in public schools;

  • 5,367 more prison inmates;

  • 17,550 more Virginians enrolled in state colleges;

  • 62,106 more Medicaid recipients;

  • 39,086 more children enrolled in the state-federal child health insurance programs;

  • more than 7,500 more children in Special Education

OK, now that I've made every effort to be fair and balanced, let me tell you the rest of the story. The General Fund accounts for only half of state government spending. The "Non General Fund" encompasses a wide variety of dedicated revenues and expenditures whose use is restricted.

The following chart shows General Fund plus Non General Fund spending. The numbers below cover all state spending, excepting car-tax relief and a rag-tag group of expenditures which, for an assortment of reasons, are classified as "other".

General Fund + Non General Fund

(in billions, adjusted for car tax relief)

2000 2001 2002 2003


Gilmore Gilmore Gil./War. Warner Warner
$20.97 $22.75 $22.67 $24.11 $25.12
  8.5% -0.3% 6.3% 4.2%

In other words, while General Fund expenditures have remained stagnant, Non General Fund spending has been chugging right along!

Currey doesn't think it's fair to compare Non General Fund revenues. "Non-general funds come from very specific and generally dedicated sources such as higher education tuition and fees, federal funds for highways and Medicaid and such, unemployment trust fund monies, the collection of support payments for children, and the like," she says. "...We don't control how much we get from the unemployment trust fund, and I doubt that anyone would argue that the almost 30 percent increase in those funds should be defined as 'bloat in state government'. Nor would one suggest that it is a bad thing that our collections from non-custodial parents ... have increased almost 65 percent during this time period. Those funds are collected and then go directly for the benefit of individual Virginia citizens."

All true. Comparisons can be deceiving. However, it would be even more deceptive not to include Non General Fund revenues. Look, for example, at higher education. If we compared only General Fund revenues, we'd gasp with horror: Higher ed spending declined $281 million from 2001 to 2004. Only by comparing Non General Fund spending, however, do we realize that colleges and universities managed to increase revenues by $725 million -- mostly through increased tuitions -- over the same time. That's a net gain of $444 million! Virginia has experienced not a decline in spending on higher education but a shift in the burden of paying for it from the general taxpayer to the students.

Likewise, transportation spending has increased $435 million from fiscal 2001 to fiscal 2004, or about 15 percent. I see no justification for omitting this core state function from calculations of state spending trends.

-- April 12, 2004




























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Piercing the Veil

Bacon Scrutinizes the Warner Administration's Case for Tax Hikes


Paper Cuts. The politicians in Richmond still cite the "$6 billion shortfall" in the last budget to justify raising taxes for the next. But their spending "cuts" barely went skin deep. (March 1, 2004)


Bacon Chided but Unrepentant (March 15, 2004)


What’s a “Budget Shortfall? Gov. Warner has cited the existence of a “$6 Billion Budget Shortfall” as justification for higher taxes. Just what is a “budget shortfall"? Your intrepid correspondent digs for answers. (March 29, 2004)


The Numbers Are In! Here are the official statistics -- straight from the Warner administration -- documenting how the state budget has increased in the face of a "$6 billion budget shortfall." (April 12, 2004)