Monday, March 27, 2017

Other Funds: Reply from Speaker Harshman

Returning to the Other Funds issue for a quick update. Over the weekend, Speaker Harshman replied to my article (sharing his reply with the legislature's official e-mails). I have invited him to write a full piece, which I hope he will do. If he does, I will publish it in its entirety, unedited and without comment. 

My motive for writing about this issue is, as I explained in the March 9 article, that when spending is rerouted through Other Funds, it tends to vanish from the public debate over government spending. The Speaker adds a valuable, informative perspective, as exemplified below by an excerpt from his reply.
For clarification, the numbers Speaker Harshman refers to below are spending, as reported by the National Association of State Budget Officers. They report those numbers on an annual basis and have done so with the same methodology since the 1990s.
With that in mind, here is an excerpt from Speaker Harshman's comment that I find particularly valuable:
When I read your blog it seems that the vast majority of the “Other Funds” are appropriated by the Legislature within the various budget bills including the general Budget Bill, the State Capital Construction bill, the Local Government funding bill and the School Facilities bill. In addition I have a couple of observations:
1) I am not sure if your numbers are all appropriations or “spending." As a result, it appears that some of the increase is due to K-12 school capital construction appropriations from multiple years being expended in the last 2-3 years. We do have a “big pig” moving through the python of school facilities with the Casper high school projects. In addition there was some other UW/CC construction that was expended after years of saving.
2) The second big expenditure of other funds is the SFP and LSRA for these years. The SFP is beginning to take a larger share of K-12 funding – not that the total spending is necessarily increasing, but that the local share is declining and the state share is increasing. The local share of K-12 spending does not show up within the GF, FF, or Other Funds. As a result, while there is a decrease in local funds and increase in Other Funds, this analysis does not capture the decrease in local funding. This will be even more pronounced in 2017 and 2018. The Legislature is also starting to expend some amounts in the past few years from the LSRA, which will count as “other funds.”
3) After the SCCA, SFP, and LSRA the next large Other Funds is from the water accounts. This will rise in some future year as well since the Legislature appropriated about $80 million for large projects.
Speaker Harshman also adds that part of the Other Funds effort on behalf of the state is to offset declining local revenues. This is an important point that merits further discussion about transparency in government spending, but even more importantly the difficulties in reforming government spending programs that have been turned into "joint ventures" between different governments. From this perspective, state funds in local government budgets are almost as problematic as federal funds in the state budget.

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