State spending rebounds after hitting a 26-year low

November 24, 2013

(Credit: Scott Eells/Bloomberg)

Depending on your politics, there’s either good or bad news in a new report on state spending.

Total state spending is projected to have grown during the last fiscal year, a return to normalcy after shrinking for the first time in more than a quarter-century. If you support most state spending, that’s a good thing—spending is back on track after an unfortunate contraction. If you’re more of a free-market type, states are unfortunately back to their old ways.

State spending grew 4.7 percent in the fiscal year that ended in June after shrinking 1.7 percent in the year prior, according to a report from the National Association of State Budget Officers, a professional membership organization for state budget and finance officers. The group has issued an annual report since 1987, with 2012 being the only year total state spending shrank, thanks mostly to the continued winding down of federal stimulus money and the slow recovery in the states.

As the total amount of state spending has fluctuated over the past few years, so too has what states are spending on. In FY2008, Medicaid accounted for 20.5 percent of state spending. That rose to 24.5 percent of FY2013 spending. Education spending, meanwhile, shrank from 22 percent to 20 percent over the same period.

Total public assistance also shrank in the last two fiscal years—by 10.9 percent from fiscal 2011 to 2012 and by 2 percent between the 2012 and 2013 fiscal years. That steep 2012 drop is due in part to California shifting responsibility for assistance to its counties.

Compare the various components of state spending over the last few fiscal years below.

Niraj Chokshi reports for GovBeat, The Post's state and local policy blog.
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