Driven by spending on services like health care, education and social services, Virginia’s total operating budget increased 59 percent between 2001 and 2010, a report released Monday shows.
More than half of all budget growth occurred in four agencies: the Department of Medical Assistance Services, Department of Education, the University of Virginia (including the Medical Center) and the Department of Social Services, according to the report from the General Assembly’s Joint Legislative Audit and Review Commission (JLARC).
Adjusted for inflation and population growth, the state’s overall budget increased 19 percent, equal to the average spending growth experienced by all 50 states over a similar 10-year period, the report said. Given those adjustments, the state’s general fund actually declined 10 percent over the last 10 years. General fund revenues come from sources like income and sales taxes. The state budget still grew, however, as non-general funds, which include federal funds, increased 51 percent after adjusting for inflation and population.
“That is surprising to me,” Walter Smiley, JLARC’s fiscal analysis section manager, said of the general fund decline. “But on the other hand, they’ve been cutting budgets, and the revenues [are] just not showing up.”
Between 2008 and 2010, the general fund declined $2.2 billion, or 13 percent — the first time since at least the early 1960s that it decreased for two straight years, the report said.
But over the long term, spending on services like health care and education has increased. The Department of Medical Assistance Services, for example, saw a $3.7 billion increase in appropriations over the last 10 years — more than a quarter of the total budget growth.
“What you see in these charts is Medicaid is killing us,” said Del. Dave Albo, R-Fairfax, a member of the audit commission.
But an increase in Medicaid expenses is not surprising, said Katharine Webb, senior vice president of the Virginia Hospital and Healthcare Association, a trade association of Virginia hospitals.
“It’s a counter-cyclical program,” she said, in that it’s used more during times of economic stress.
Virginia ranks 48th in the country in total Medicaid expenditure per capita, according to the hospital association.
Gov. Bob McDonnell, though, said the future cost of Medicaid could balloon under the federal health care law enacted in March. The state is projected to be on the hook for $1.7 billion from 2014-2022 as a result.
