NC state govt spending at A RECORD HIGH

Political campaigns do a nice job of keeping pesky things like facts out of election year debates.  The North Carolina Democrat Party’s 2012 campaign effort — spearheaded by gubernatorial nominee Walter Dalton — has been claiming that the GOP majority that took power on Jones Street in 2010 has been slashing the budget to the bone.

Well — as I’ve said — facts can be such inconvenient things.  Financial analyst Fergus Hodgson with The John Locke Foundation has put together an insightful study showing that — through fiscal year 2012 — total state spending per capita has more than TRIPLED since 1970.

Well, it looks like the folks who thought we could change Raleigh’s spending problem by simply switching parties-in-power were wrong.  It’s not about changing parties.  It’s about changing the mindset on Jones Street. 

All over Europe, economies are going belly up.  European leaders are finally realizing that you can’t spend more than you take in.  They are cutting back on government services in order to balance their budgets.

Our leaders are watching all of that happening, and — apparently — are not learning a thing from it.

Here are some of the insights gleaned from Hodgson’s study:

• Total state spending per capita is at its highest level ever in the 2012 fiscal year and has more than tripled since 1970—from $1,701 to an authorized $5,247.

• Over the past four decades, state spending has grown much faster than personal income, rising as a percentage from 10.9 in 1970 to 14.4 in 2012.

• A simple cap on state spending at inflation and population growth since 2000 would have restrained spending to $38.5 billion, 75 percent of the current $51.5 billion.

In real, per capita terms, spending on all reported categories has more than doubled since the mid-1970s. That includes education, corrections, health and human services, transportation, and debt servicing.

• General fund spending per capita has declined by 16 percent since 2009, but per capita spending outside of the general fund increased by 26 percent and more than compensated for the general fund’s decline.

• General fund spending comprises 38 percent of total state spending in 2012, down from 53 percent in 1970 and 59 percent in 2000.

• Federal aid continues to comprise an ever-larger portion of the state budget. In 2012, 36 percent of state revenue is from federal aid, up from 21 percent in 1975 and 24 percent in 2000.

• North Carolina’s cash-basis accounting conceals spending and is generating unfunded liabilities—obligations to pay without sufficient funds set aside. The state’s largest is for employee retirement health benefits, unfunded by at least $34.2 billion at the end of 2010. The $4.4 billion growth of this specific liability over 2009 and 2010, constituted 4.8 percent of total state spending for that period.