Earlier this year I wrote about one of the major factors which led to state government’s recent “day of fiscal reckoning.” I described the decades of financial malfeasance by state officials such as their action of giving away retirement system benefits with no way to pay for them.
I also described the subsequent reaction by the new generation of more austere-minded officials, who are trying to make up ground and fund these liabilities. This increased funding will create an ongoing toll upon the budget which will last many years into the future.
Since writing that article, I have intended to write a follow-up to explain a second major factor for the state’s current appropriations deficit. There is no doubt that a significant component of the current malaise is due to past budget irresponsibility of state officials from long ago; however, this year’s budget shortfall was the perfect storm: a coalescence of numerous factors, some of which are due to a series of very poor fiscal decisions by officials in today’s government.
The worst of these bad decisions was last year’s move to fund ongoing budget expenses with one-time funding sources.
Here’s just one example: in order to make ends meet, the Legislature raided $50 million from county road transportation funds. That money has been spent, but the ongoing expenses kept on the books by the raided funds will continue to re-occur year after year after year.
This practice of using one-time money to fund ongoing expenses has occurred during the last three budget years.
The result was easy to predict: a cumulative shortfall built up, much like a tsunami wave, one year’s recurring expense piled on top of the next, and this year the wave hit the shore with devastating effect.
This explanation didn’t fit into the media soundbytes regarding the budget shortfall, and it is rarely discussed in public, but make no mistake, a large percent of this year’s budget shortfall wasn’t really this year’s revenue shortfall — it is the accumulated liability of the two previous years in which the shortfall can was kicked down the road until another day.
As they approved this year’s budget, the Legislature once again rolled the accumulated liability over to the next fiscal year. Thus, when legislators start next year’s budget process they will start with an approximate 600 million dollar budget deficit from the year previous.
I hope the next generation of legislators will learn from these mistakes. They must downsize this ongoing deficit and never again repeat the mistake of financing recurring expenses with one-time revenues.
And they must stop the terrible habit of raiding funds that have been designated for transportation!
Thank you for reading this article. Your interest and input are much appreciated. Please do not hesitate to email Jason.Murphey@hd31.org with your thoughts and suggestions.