Balancing Maine’s state budget? Follow the money…

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Two years ago, the Maine Heritage Policy Center released a report titled “Where the Money Is: The Fastest-Growing Programs in Maine Government, FY 2000—FY 2009.For that report, we used data from the legislature’s Office of Fiscal and Program Review to identify the 40 state programs funded by the General Fund which had seen the largest budget growth over the previous ten years.  We found that those 40 programs were responsible for almost all of the growth of state General Fund spending over the ten years studied.

Today, as lawmakers confront yet another state budget shortfall, we released an updated version of the same paper, this time studying the period from the FY 02-03 biennium to the current FY 10-11 biennium. We again used OFPR data to identify the 40 fastest growing General Fund programs, and again found that this relative handful of programs has driven the bulk of state general fund spending increases over the past five biennia.

Over this period, total General Fund spending rose 8.8 percent, from $5.1 billion to $5.5 billion.  Total spending by the Top 40 fastest-growing General Fund programs, however, rose from just over $2 billion to $2.7 billion, an increase of 35 percent.  In contrast to this, spending by the remaining, non-Top 40 General Fund programs actually fell 8.5 percent, from $3 billion to $2.8 billion. Slowly but surely, the Top 40 fastest-growing programs are becoming an ever-larger slice of the General Fund pie.

What are the fastest growing General Fund programs?  Thirteen of the Top 40 programs are in the state’s largest department, the Department of Health and Human Services. While General Fund spending for DHHS is actually down from where it was 10 years ago, spending by a handful of DHHS programs has grown at dramatic rates, including 4 programs that have grown at triple digit rates.

The other state department that is home to a large number of the 40 fastest-growing programs is the Department of Corrections. Nine of the fastest-growing General Fund programs are in that department, where administrative spending alone is up 90 percent over ten years.  The Attorney General’s office and the Department of Public Safety are home to three other fast-growing programs, which means that in total, 25 of the 40 fastest-growing General Fund programs are in human services or public safety and criminal justice.

The remaining 15 programs on the list are scattered across a number of state agencies and departments. There are four fast-growing programs in the state’s natural resources agencies, and four in the Department of Administrative and Financial Services. In that department, spending on debt service payments by the Government Facilities Authority is up 130 percent.

Spending on General Purpose Aid for Local Schools, the largest single General Fund account, rose 25 percent over the last ten years, but spending on Retired Teachers’ Health Insurance shot up nearly 140 percent.

The budget for the Governor’s office rose and then fell over the past ten years, though it is still up 33 percent overall, but the Legislature’s budget has steadily increased, each and every year, despite dramatic cuts to other areas of state government, at a rate of about $1 million in additional spending each year.

We first conducted this study two years ago because at that time, there were suggestions from many quarters that the fairest way to balance the state budget was to make flat, across-the-board cuts to each and every state program. The problem with this fair-sounding solution is that not all state programs are created equal. Many state programs have been essentially flat funded over the past decade, and many are spending less now than they did a decade ago. Spending by the Department of Economic and Community Development, for instance, which is responsible for job creation and economic development, is down an astonishing 41 percent from where it was during the FY02-03 biennium.

Our finding in this report, as it was in the report we did two years ago, is that a small handful of state programs, most of which are in human services or corrections, are driving the growth of state spending. State lawmakers will continue to struggle with budget shortfall after budget shortfall unless they deal in a comprehensive and thoughtful manner with the spending that is done by this handful of programs. No amount of across-the-board cutting will get us to a sustainably balanced state budget unless those programs and their spending are dealt with.