Expenditures at all levels of government have increased dramatically in the last decade. In 1971, for example, the· Gross National Product was at $1,047 billion and total government purchases of goods and services had risen to $233 billion a year,(*1) indicating that government in that year claimed almost 25% of the GNP. In the same year, state governments spent $66.2 billion--approximately three times the total net income of the 500 largest industrial corporations in the nation ($23.4 billion).

While per capita income roughly doubled from $2,219 in 1960, to $4,918 in 1973, federal government expenditures, excluding national defense and international affairs and finance, increased fourfold, from $40 billion to $164 billion.

In Virginia alone, though per capita income has more than doubled from the 1960 level of $1,841 to the 1973 level of $4,715, total state expenditures have increased almost fourfold, from $656 million in 1960 to $2,447 million in 1973.(*2)

At the same time, employment in federal, state, and local governments has increased to l4.5 million, so that now 1 out of every 6 workers is on the public payroll, as opposed to 1 out of 7 a decade ago. As U.S. News and World Report recently noted: "In terms of numbers, most of the recent growth in bureaucracies has taken place in state and local governments, which account for more than four-fifths of all civil servants."(*3)

While government took 1 out of every 4 new jobs created in the past decade, only 5 of every 100 government jobs created were federal.(*4) In Virginia state government, employment has risen from 49,628 in January 1966 to 79,814 in January 1974. Over 16,000 of these new employees were in higher education alone.

Along with the general growth of government in all areas, and particularly in state and local governments, there has also been increasing financial dependence of state and local governments on federal monies. In 1949, Virginia received $21.3 million in federal aid, as opposed to $108.9 million in 1959 and $571.9 million in 1971.

The following study is an analysis of the growth in operating expenditures by the executive branch of Virginia state government. Its purpose is to illustrate and explain growth trends not only in the executive branch as a whole, but also by area of expenditure, i.e., Administration, Transportation, Education, Human Affairs, Public Safety, and Commerce and Resources.

The report consists of three sections: First, a summary table illustrating gross expenditure changes in each functional area from 1966 to 1973. The second part of the analysis is a series of graphic presentations of expenditure trends first for the executive branch as a whole, and then by functional area, with descriptive notes. The third section illustrates trends in legislative operating expenditures.

All figures are expressed in both current dollars and constant dollars, with inflationary bias removed. Both numbers are shown to enable the reader to trace changes in cost to the citizens of Virginia for the various types of programs (current dollars) and also to see the change in the value of goods and services that these expenditures purchased (constant dollars).(*5)

It should be noted that all expenditure information has been drawn from the Report of Comptroller to the Governor of Virginia for the appropriate years, and is subject to those errors included in these reports. There are a number of sizeable contradictions in the earlier reports of the Comptroller, especially in administrative accounts, with no way to determine which figures are correct. For example, in some cases the general fund operating expenditure for an account is greater than the total expenditure figure given for the same account. In all such cases our report assumes that the more specific figure is correct. This feature of the reports caused particular difficulty in figures for the 1973 fiscal year, as in this instance, the totaled, detailed expenditures in the Report exceed the total reported expenditures by $2,959,621.

Further problems arose from the fact that in a number of cases the same account number is listed to designate several different account names over the years under study, with nothing to alert the researcher that a change has occurred. By checking the expenditures to the organizational units attached to each number year-by-year, we have corrected for these changes whenever possible.

In addition, some expenditure accounts for recent years, especially 1971 through 1973, show credit balances. As these were impossible to correct, they were credited as indicated.

In some instances, particularly in the Commerce and Resources area, expenditures for operation as noted in the Comptroller's Report are not in agreement with appropriations, or with expenditure statements in the Budget Document. It appears that this distortion may be a result of a procedure which allows monies appropriated for capital outlay to be expended through operating accounts when these monies are granted to localities for capital purposes, e.g., acquisition of parks and park land.

In all, however, the greatest difficulty resulted from the fact that the Comptroller's office has a primitive data retrieval system. For this reason, any study of expenditure trends must begin with the plodding process of copying data by hand from a series of yearly Comptroller's reports, account-by-account, for each functional area. With approximately 300 major account codes, this becomes extremely time-consuming. This situation can and should be corrected by yearly storage of fiscal information in an automated data bank from which it could be readily recalled, in any form, at any time. Until that is done, information of considerable importance to the Commonwealth's decisionmakers will not be available to them. What the unavailability of such data has cost Virginia already is impossible to calculate.

Finally, there is no means to determine what portion of special fund expenditures consist of federal monies. The Commission strongly recommends that this situation be corrected in light of the impact of federal funding, especially in the areas of transportation, education, and human affairs.

The principal staff effort in producing this expenditure report was provided by Jane S. Cromartie, Ph.D., and Joanne Palmore.
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(*l) Unless otherwise noted, numerical data in this introduction came from the U.S. Department of Commerce, Bureau of the Census, Statistical Abstract of the United States, selected editions, and the Tax Foundation, Inc., Facts and Figures on Government Finance, 1969 and 1973.
(*2) Report of the Comptroller to Governor of Virginia, 1960 and 1973.
(*3) U.S. News and World Report, Nov. 4, 1974, p. 38.
(*4) Id., p. 39.
(*5) The conversion from current to constant dollars was done by using the U.S. Department of Labor, Bureau of Labor Statistics' consumer price index for various types of goods and services as published in selected issues of the Monthly Labor Review. The base year from which the value of the dollar is determined is 1967.