• The state’s General Fund gets most of the attention, but doesn’t tell the whole story
• Total state spending has increased nearly four-fold since 1984 – even after adjusting for inflation
• Per capita, inflation-adjusted spending has grown nearly two and a half times during that time
Each year as state legislators congregate in Raleigh, the biggest debate typically centers on the state budget. Specifically, debate and media coverage focus almost exclusively on the state’s General Fund budget.
The state’s General Fund budget is the primary source of financing the state’s general operations, funded by state taxes and fees. The current year (2018-19) General Fund budget totals $23.9 billion.
Progressives in North Carolina feel that this amount “falls short,” while conservatives criticize the long-term growth rate of the state budget as unsustainable.
But focusing just on the General Fund paints a very incomplete picture, because the true total state budget now exceeds $54 billion. Yes, I said $54 billion.
The total state budget includes not just the General Fund, but also North Carolina’s transportation spending via the Highway Fund and the Highway Trust Fund, as well as federal dollars that pass through to state programs.
The bulk of such federal funds consist of Medicaid spending and education dollars, which total roughly $10 billion and $1.4 billion, respectively.
While General Fund long-term spending trends are indeed alarming, trends in total state spending are even more so.
As the following charts illustrate, total state spending since 1984:
• Increased roughly four-fold (295 percent) – even after adjusting for inflation
• Grew at a rate more than four times as fast as the population, after adjusting for inflation
• Ballooned by nearly two and a half times (136 percent) on a per capita basis, adjusting for inflation
In 2017, total annual state spending in North Carolina totaled roughly $5,000 for every man, woman and child in the state – or about $20,000 for every family of four.
While spending trends leveled off after the Great Recession, there is no mistaking the long-term trends indicate a decades-long massive increase in the size and reach of government into the lives of North Carolinians. The recession merely exposed the unsustainable nature of the massive spending spree.
SOURCES:
Population Source: population taken from July at the beginning of each Fiscal Year, figures from State Budget Office of State Budget & Management
Total Budget figures from Office of State Budget and Management, Governor Roy Cooper’s Recommended Budget, 2017-19; Appendix Table 5a, pg. 180. Available online at: https://files.nc.gov/ncosbm/documents/files/BudgetBook_2017_web.pdf
Inflation calculations used GDP Deflator figures from: FRED Graph Observations; Federal Reserve Economic Data, Link: https://fred.stlouisfed.org, Economic Research Division, Federal Reserve Bank of St. Louis
