Back in April, we looked at a report on the long-term impact of the Senate’s proposed tax cut and concluded that there was no budget crisis on the horizon. A new look at the budget over the next five years means we need to reiterate the same points.

A new analysis from the General Assembly’s Fiscal Research Division requested by Democratic legislators finds that current policies, population growth, and inflation, would result in spending increases of 4 percent to 5 percent each year. Gary Robertson of the AP found, “The [Fiscal Research Division’s] report estimated a $1.19 billion difference between revenues and expenditures in the 2019-20 fiscal year, growing to $1.37 billion in 2020-21 and $1.43 billion in 2021-22.” Such projections are why the General Assembly changed baseline budgets to continue spending levels instead of programs.

Actual spending increases are 3.8 percent this fiscal year and 3.1 percent in FY2018-19, well below the automatic pilot version in the report. Spending growth since 2011 has been slower than the combined rate of population growth and inflation. We have repeatedly cautioned legislators this year on the need to continue their record of spending restraint. Policy and process improvements have made this restraint possible. There is little reason to think the current General Assembly will change course as dramatically as the report suggests.

UPDATE: The projection from Fiscal Research Division had an attachment that addressed some of the points from our posts on the purpose, importance, and methods of budget projections.