“there have been rapid increases in state spending across all categories in the last 10 years.”

The typical budget discussion in North Carolina centers around what’s called the General Fund. But the reality is, the full state budget is much larger than the $20 billion or so that makes up the General Fund. In this story, Sarah Curry, JLF’s director of fiscal policy studies, explains why policymakers should focus on a discussion of the full state budget — which has been growing rapidly for a decade. Fiscal conservatives who worry about the size and scope of government should take heed as well since a huge portion of the overall budget is essentially hidden from view and from debate.

The report urges policymakers to focus on total state spending, which reached more than $51 billion, an average of $5,348 per person, in 2012. Since 1980, inflation-adjusted state spending has grown by more than 150 percent.

“Regardless of competing political platforms and campaign speeches about the state budget, one thing is clear: North Carolina’s inflation-adjusted per-person budget expenditures increased significantly over the last 30 years,”said report author Sarah Curry, JLF Director of Fiscal Policy Studies. “In particular, there have been rapid increases in state spending across all categories in the last 10 years. That’s a dangerous precedent when one considers that the financial stability of state and federal governments is not at its strongest.”

State government reached its highest General Fund appropriation in 2009, with an inflation-adjusted amount of $22.5 billion, Curry reports. “Since that time, General Fund spending has been slowly decreasing, but total state expenditures have increased, as more and more state spending moves outside the General Fund.”

The shift away from the highly publicized General Fund has created a lack of transparency in North Carolina’s budget process, Curry said. “Government budgets have a reputation for being difficult for the typical citizen to understand, and North Carolina is no exception,” she said. “For many, the persistent growth in state spending is not easily visible because of the undue focus on the General Fund, particularly within the media.”

Media reports often label North Carolina’s General Fund as “the state budget.” Curry’s report explains that state spending also includes federal dollars, along with spending on non-General Fund items such as transportation and debt service.

“North Carolina has received about 45 percent of its total budget from the federal government over the past 10 years,” Curry said. “The number was even higher in 2010 and 2011, when the so-called federal stimulus package boosted federal funding to a historic high of 56 percent of North Carolina’s total budget.”

State government officials should be “wary” of allowing such a large part of the state’s expenditures to be dependent on federal funding, Curry said. “In reality, the federal government borrows all of this money before sending it to North Carolina state government,” she said. “This funding source suffers from the same uncertainty that plagues all of Washington’s deficit spending.”