The closer you get, the smaller it looks: Washington’s budget is shrinking

02/14/12 4:08 p.m. Updated to clarify the distinction between the state “general fund” and “operating budget”.

Yesterday’s post illustrated how to get comparable state budget numbers by accounting for inflation and population growth. Today I’ll look at three other ways we can put state spending in context.

The first is to compare the general fund budget to the state’s gross domestic product (GDP), to see whether spending is increasing or decreasing as a portion of the overall state economy. To do that, we’ll divide yearly general fund expenditures* by the state’s GDP for that year, after adjusting for inflation using the appropriate Implicit Price Deflator (IPD):

By this measure, state spending has declined from 6.0% of the state’s economy in 1997 to 5.3% of GDP in 1999, then climbed to 6.0% in 2002 before declining and leveling off at about 5.0% of GDP from 2005-09, then declining again to 4.1% of GDP in 2011.**

Of course, economic output is just one way to measure economic prosperity; another is income. So let’s also take a look at state spending versus personal income. As with the previous chart, we’ll get inflation-adjusted numbers first; then we’ll divide per-capita state general fund spending by per-capita income for each year to get the percentage:

The trends are very similar to the state GDP comparison; the general fund is trending downward overall, from 8.3% to 4.9% of personal income between 1991 and 2011, with similar (but less pronounced ups and downs) along the way.

So let’s go a different direction, and take a look at state employment. We’ll compare the number of residents per state employee over time using state government employment and population data.

First, the raw numbers. In 2001 (the first year data for which I have data available), there were 99,439 FTEs (full-time equivalent positions) employed in state government and 5,974,910 people living in Washington. In 2011, there were 103,996 FTEs and Washington residents.

That works out to 16.6 FTEs per 1,000 Washingtonians in 2001, and 15.4 FTEs in 2011. So relative to a decade ago, today there are 1.1 fewer state employees for every thousand people living in the state:

The take-home point: Whether you use economic growth or personal income as your yardstick, Washington’s general fund budget is smaller than it’s been in 20 years. If state government employment is your measure, it’s at a decade-plus low relative to the state’s population.

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*The general fund is the principal state fund supporting the operation of state government. All major state tax revenues are deposited into the general fund, making it the largest single fund in the state operating budget. The operating budget constitutes the majority of all state spending and pays for most of the day-to-day operations of state government. Total operating budget revenue comes from a variety of taxes and fees, as well as federal funding, such as Medicaid and the Social Services Block Grant. Capital projects and transportation are not part of the state’s operations budget. Learn more in the Citizen’s Guide to the Washington State Budget.

**Comparable state GDP data available only from 1997-2010; 2011 state GDP is author’s estimate based on national GDP figures.

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