It's the Spending, Stupid!
"The following graphs relate to the November forecast. They lend support to the position that the state has a spending problem, not a revenue problem.
The first graph shows that General Fund Revenue and Expenditure growth has exceeded the consumer price index, CPI. The graph uses FY ’02-’03 as a base, and projects through the upcoming FY ’10-’11 biennium using the November Forecast. Actual Revenues have risen 26.02%, which is above the 22.22% increase in CPI. General Fund expenditures are projected to increase by 36.62% over that time.
The second graph builds on the first. It simply shows total GF revenues and spending from the end of the FY’02-’03 biennium through the FY’10-’11 biennium (November Forecast). If spending had been and would be held to the CPI for that time period there would be a budget surplus of over $7.9 billion for the FY’10-11 biennium given actual revenues raised during that time.
That $7.9 billion represents the tax cut foregone by the state having spent over and above CPI. The $7.9 billion is the total potential cut, over that 8 year period.
The third graph shows that for the current FY’08-’09 biennium (the first biennium under renewed House DFL control) spending vastly exceeded revenues coming in. In fact, over $2 billion more was spent than raised! That level of over-spending could only be enacted due to the large budget surplus the GOP left the DFL.
This spending of over $2 billion more than raised in the current biennium, combined with projected further increased spending and nearly flatline revenues raised leads directly to the November forecast of a $4.8 billion shortfall for the upcoming biennium and a $4.6 billion deficit in the out biennium.
Finally, it should be noted that the adoption of the constitutional amendment dedicating MVST revenues to roads and transit has had a significant impact on the general fund. This was not unexpected, but those responsible for the dedication – and the voters – should understand that a portion of any budget reductions for the current and upcoming biennium can be attributed to this dedication.
For the current biennium, the amendment took $625.8 million out of the GF, which would have solved the deficit in the November Forecast.
For the upcoming biennium, the amendment will divert $798 million from the GF, which is 16% of the shortfall.
State government spending out of control and way beyond increases in the consumer price index. Who'd a thunk it? The fact that we could be sitting on a 7 billion dollar surplus instead of a 5+ billion dollar deficit speaks volumes.
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