If you have read Kamal Jain’s story, then you might be wondering about total spending, and what, exactly, “off budget” spending is and how it fits into the budget.  The answer is that it does not.  When officials such as the Governor, the Senate President or the Speaker of the House — or any member of the legislature for that matter — refer to “the budget”, they are very specifically referring to the amount of spending in the General Appropriations Act of whatever budget year they are referring to.  As more than one legislator has said “it’s the part we vote on every year”, further claiming that they [the politicians] have no control over the rest of spending.

How often do we hear the politicians complaining about “difficult budget cuts” and having to “slash the budget”?  Every day it seems.  What they do not tell you is that the amount they are cutting — if they are cutting at all — is from a larger PROPOSED budget that they want to have, and that most of the time even after “slashing”, the actual budget for a new fiscal year is actually higher than the year before.  But it’s much worse than that.

You see, “the budget” is the only part of total spending the politicians will publicly acknowledge or discuss, and they have a good reason: It only represents just over HALF OF TOTAL SPENDING.  This is easy enough to prove once you know where to look, and we will get to that in a moment.  But first consider what it means to have a portion of total spending be called “the budget”, and the balance of spending to be hidden from view.  It means the politicians can shift spending from “the budget” to things that are considered off budget, and magically “the budget” looks smaller.

The truth can only be found in total spending.  Accurate total spending can only come from audited reports, such as the Comprehensive Annual Financial Report (”CAFR”), which is published in December of each year, approximately 5-6 months after the close of the prior fiscal year.  These reports comply with Generally Accepted Accounting Practices, or are said to be “GAAP compliant”.  The CAFR is typically more than 200 pages in length, and of those 200 pages, only two or three pages may contain the figure for total spending for a given fiscal year.

If you do not want to wait until 6 months after a fiscal year is over to determine approximately how much total spending will be, you have to do some digging because the state’s Mass.gov web site does not make it easy, and the location of information pertaining to spending changes during the budgeting process.  Significant changes to the economy notwithstanding, it is possible to get a sense of how much total spending will be.  You have to find the “resource summary” section of the budget site — this has been located at http://www.mass.gov/bb in recent years.  Once you locate the resource summary (if you are able — they keep moving it), you have to add together the columns which represent the “total budget” (or similar name), and one or more other columns labeled something like “other non-budgetary revenue” or “non-tax revenue”.  This method allows you to get very close to the estimated level of total spending for the fiscal year.

Using recent years as an example, the audited (CAFR) state government total spending for 2008 was approximately $50,000,000,000 – in a year when “the budget” was approximately $28,000,000,000.  The CAFR data for 2009 was not available at the time of this writing, but estimates would place total spending at approximately $52,400,000,000 in a year when “the budget” was again approximately $28,000,000,000.  Fiscal year 2010, which is going to be heavily influenced by the severe economic downturn affecting Massachusetts and the rest of the nation, shows a projected level of total spending of $53,900,000,000 with a total “budget” of approximately $27,000,000,000.

Through the magic of political sleight-of-hand, “the budget” has been seemingly reduced by nearly $1 billion, while total spending has gone up by over $1 billion.  Think of a word problem from grade school mathematics: Has spending been cut?  If so, by how much?  [Hint: If the politicians get this one wrong, they are either lying or really bad at math.]

Tags: Budget, Comprehensive Annual Financial Report, Kamal Jain, Massachusetts, Off Budget

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