A new report released by the Fiscal Policy Center at CT Voices today takes a look at the past 20 years of state budgets, examining trends in the mix of state spending since 1992.  We set out to find out if, how, and why the makeup of a “representative dollar” of state General Fund appropriations has changed over this time period.

Here’s what we found:

In short, the past twenty years have seen a clear shift in state spending away from things we think of as investments in the future – mainly, K-12 and higher education, as well as a variety of programs in the Human Services budget function – and has moved towards the “non-functional” budget category, which is made up chiefly of healthcare expenses for retired and current state employees, and debt service payments.  Since 1992, the shift between the Education and the Non-Functional budget categories is unmistakable, and holds real consequences for the state’s ability to make and maintain strong investments in Connecticut’s future.   In total, this amounts to a cumulative shift of about $2 billion inflation-adjusted dollars – more than 10 percent of all General Fund appropriations.

In retrospect, the report makes one thing extremely clear: that any serious conversation about the state budget must begin with the cost of healthcare.  This is not an isolated issue that only impacts the state of Connecticut – health costs are rising nationally, and are impacting families, businesses, and governments alike.  As the state budget continues to face constrained revenues into the foreseeable future, this problem becomes even more acute.  As the report suggests, the increasing cost of providing health coverage to state employees may be crowding out investments we need for a healthy economic future.

The Fiscal Policy Center plans to release a series of follow-up “Shifting Priorities” reports that will explore the causes and effects of these trends more fully, and will explore in more depth their potential remedies.  Stay tuned!