Governor Huntsman's Proposed 2008 Budget
Governor Huntsman released his 2008 budget proposal this morning. We'll be posting our analysis of the proposed budget over the next several days. Each day we'll focus on a different item:
- total spending growth (today)
- education spending growth (tomorrow)
- tax cut and tax reform (a starting point)
- rainy day fund and working rainy day fund (good news)
- state spending limit
Total Spending Growth
Except for last year, we can't remember the last time state spending was projected to grow so fast. Here are the details:
Total state budget growth: 6.7% (includes federal funds, dedicated credits, etc.)
General/education fund growth: 15.0%
General/education fund revenue growth: 15.3%
General/education fund revenue growth: $761.8 million
Surplus for 2007: $498.2 million
Surplus for 2006: $308.4 million (was $380 million before transfers)
Total new revenue: $1.57 billion
The governor is also proposing $114 million in supplemental appropriations for 2007. If approved, the 2007 post-supplemental budget will officially be 19.7% higher than the 2006 post-supplemental budget.
Are growth rates correctly stated?
To its credit, the governor's office -- unlike the Legislature --has always calculated budget growth rate by taking the difference in the proposed budget for the next fiscal year with the original, pre-supplemental budget for the current year.
The Legislature's approach, on the other hand, understates eventual budget growth because it includes supplemental appropriations in the current year but excludes supplemental appropriations for the next year (because next year's supplemental appropriations won't be known for twelve months).
However, the governor's office -- like the Legislature -- excludes earmarked general fund revenues when calculating general/education fund growth rates. Since the amount of earmarked general fund revenues continues to increase -- from $102 million in 2006 to $215 million in 2007 and maybe even more in 2008 -- total general/education fund growth rate is understated. Huntsman's budget projects earmarked general fund revenues of $222.7 million in 2008, but the Legislature may increase that again.
Obviously, these are exceptionally high growth rates, and taxpayers should be concerned that government is growing at an unsustainable rate. Fortunately, the governor has budgeted a lot of ongoing and one-time cash for capital projects. We'll discuss this issue later this week.