HD16 - Review of State Spending: 2006 Update


Executive Summary:
[The electronic version of the report was replaced by JLARC on 3/21/07.]

Section 30-58.3 of the Code of Virginia requires JLARC staff to develop an annual report on State spending growth over the prior ten years. This report reviews the time period from fiscal year (FY) 1997 through FY 2006. Over the past decade, Virginia's operating budget grew 87 percent, growing from $17.1 billion in FY 1997 to $32.0 billion. When adjusted for inflation, the budget increased by 48 percent. When adjusted for inflation and population growth, the budget increased 25 percent, an average annual increase of three percent.

The decade under review includes the economic boom years of the late 1990s, reflected in three consecutive years of double-digit growth in Virginia's general fund revenues. The decade also includes the downturn of FY 2002, when general fund appropriations decreased 2.2 percent.

A variety of factors influences State spending, including economic conditions, federal mandates, State initiatives, and policy choices.

Budget growth is highly concentrated in the largest State agencies and programs, which tend also to be the traditional core activities of the State. Twenty out of the 150 State agencies accounted for 85 percent of all budget growth. Three agencies (the Departments of Education, Transportation, and Medical Assistance Services) accounted for 60 percent of the $6.1 billion growth in general funds over the period.