Fiscal Fallout: States continue to increase budgets despite end of COVID emergency

By Arthur Kane | The Center Square
The Center Square

(The Center Square) – States around the country, hooked on billions of federal dollars that flooded in during COVID, don’t want the party to end.

But the pandemic subsided three years ago and the federal government, which is $38 trillion in debt, is pulling back on sending money to the states, causing massive budget problems for states like California, Illinois, Louisiana, Pennsylvania and Washington.

Those states and others enjoyed huge budget increases during COVID because of federal spending, but even after the pandemic ended lawmakers continued to increase state budgets on a much higher COVID-era spending base.

Now, the states are scrambling to balance their budgets without laying off staff or cutting services.

Washington State Economic and Revenue Forecast Council member and ranking minority member for state House Appropriations Rep. Travis Couture, R-Allyn, questioned his state’s spending spree.

“At the end of the day you have to ask yourself, ‘What did we get for that new spending?” he asked. “At the end of the day, we don’t see the results on what we’re spending on.”

Washington state budget doubles

Washington state spent about $80 billion in the 2013-15 budget but in the current budget expects to spend more than $173 billion. That is more than a 116% increase during a decade when inflation in the United State increased 35.63%.

Earlier this year, the state Economic and Revenue Forecast Council predicted that Washington would run out of money in two years. That was exacerbated by the passage of President Donald Trump’s One Big Beautiful Bill Act, which slashed billions in Medicaid funding.

“We’re in the worst budget crisis we’ve ever had,” Gov. Bob Ferguson’s Senior Health Policy Advisor Caitlin Safford told the Senate Health & Long-Term Care Committee.

Medicaid spending in Washington state increased 500% since 2013, and the number of residents enrolled nearly doubled from 1.3 million to about 2.2 million. That is more than one in four Washington state residents receiving Medicaid, and the program’s expansion included taxpayers paying $150 million for illegal aliens’ healthcare, The Center Square found.

Ferguson’s office did not respond to requests for comment about the state’s budget spending.

California spending spree

California’s annual spending went up more than $100 billion in less than six years – the year before COVID started.

Since 2019, the first year Gov. Gavin Newsom, a Democrat, took office, state spending went up 50% per capita, or $106.3 billion, an analysis by The Center Square found.

According to taxpayer advocates, the state government has increased spending — despite the state’s constitutionally-mandated balanced budget requirement — by over-estimating tax revenue.

“The Newsom administration and the Legislature have been recklessly over-projecting revenue to meet the requirement for a balanced budget while increasing spending,” wrote Howard Jarvis Taxpayers Association Vice President of Communications Susan Shelley in an email to The Center Square. “They’ve used accounting trickery that would make Enron blush.”

Newsom’s office did not respond to The Center Square’s request for comment.

Illinois budget increases under Pritzker

Illinois discretionary spending increased more than $16 billion – or 43% – since Gov. J.B. Pritzker took office nearly seven years ago.

Before Pritzker, the state’s general fund spending was generally flat or had modest increases, a review of financial data by The Center Square found.

“When it comes to overall taxes and the burden on taxpayers, much more has happened over the past six years,” Ravi Mishra, a researcher for the Illinois Policy Institute, told The Center Square. “Having one party basically in control over your state gives a bit too much power to do whatever they want.”

The three annual budgets Illinois lawmakers approved following the start of the pandemic had general fund spending increases of about $6 billion. In the past three years, the annual spending increased another $9 billion to a total of about $55 billion.

Pritzker’s office declined The Center Square’s requests for comment. But days after the story ran, Pritzker asked agencies to cut 4% of their budgets.

Digging deeper, an investigation by The Center Square found one small agency, Illinois’s new Commission on Equity and Inclusion, doubled its budget but actually had worse results in helping minority and women-owned businesses obtain government contracts.

“They created this additional layer of government on top of that,” said Tom Demmer, a former Republican state representative who voted against the commission’s creation. “If they weren’t happy with what the situation was, adding another layer of government on top of this probably would not contain the solution to the problem.”

The staff and part-time commissioners, who make $150,000 a year, did not respond to The Center Square’s requests to discuss the spending or the agency’s results.

Pennsylvania Dem budget increases

Pennsylvania’s annual budget has ballooned by nearly 64% under Gov. Josh Shapiro and his Democratic predecessor, an investigation by The Center Square found. When a Democrat is governor, state funding has swelled 6.3% a year on average. When a Republican has been governor, the comparable figure has been 1.8%, The Center Square found.

Nathan Benefield, chief policy officer of the Commonwealth Foundation, a free market think tank, blamed Shapiro and other previous governors for overspending. “The situation would be worse if the legislature hadn’t rejected those spending increases – and rejected several proposed tax increases in that time,” he said in an interview with The Center Square. “And every time there was a significant budget impasse – including this year – was because the governor wanted to spend significantly more than the legislature would go for.”

Pennsylvania, with about 13 million residents, spends more than what it takes in and its structural deficit is projected to grow to $4.8 billion this year.Shapiro’s spokesman did not respond to a request for comment, but Shapiro, a Democrat who was in the running for Kamala Harris’ vice presidential pick, has publicly said Republicans are more showmen than legislators.

“They elect their senators to be part of a full-time Senate to get paid full time, and then they worked 32 days over the last 246,” Shapiro said on Oct. 8. “It’s time for the Senate to come back to work [and] be serious about passing a budget.”

Four areas, including K-12 education, human services, corrections and the state treasurer showed the largest increases and represented 85% of Pennsylvania state spending.

Louisiana’s budget woesLouisiana’s annual budgets swelled more than 71% over the past decade despite the COVID crisis ebbing in 2022. The state has relied on significant federal funding to recover from Hurricane Katrina and later COVID, an investigation by The Center Square found.Louisiana’s state spending jumped more than 27% during the peak pandemic years from 2019 to 2022 and an additional 14% since 2023, data shows. “That growing dependence on federal money can be dangerous,” said Erin Bendily, a former assistant superintendent for the Louisiana Department of Education and now a policy expert at the Pelican Institute for Public Policy. “But when we look at state funds only, we also see increases that we believe are not sustainable for Louisiana taxpayers.”But Jan Moller, executive director of Invest in Louisiana, said other than Medicaid spending, state budget increases have been lower than inflation.”Most of this growth is in health care,” he told The Center Square. “Louisiana bought something very important with that, which is health care coverage for people who didn’t have it before.”Gov. Jeff Landry’s office did not respond The Center Square’s request for interviews, but in a video revealing his budget plans, the Republican promised to cut waste and keep spending in check.”This budget was built on the goal of flat funding for this fiscal year when compared to last year,” Landry said in the video. “It continues the trend of decreasing the overall amount of money that we spend. This is a tremendous step forward for fiscal responsibility.”