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Wednesday, July 8, 2009

As we’ve discussed in previous posts, Initiative 1033 would have a harmful effect on the ability of state and local governments to fund investments in education, health, public safety, and economic security. Importantly, this restricting effect will grow bigger over time making it increasingly difficult to fund these and other public priorities.

Take for example, the effect on the state budget if 1033 had been put into place in 1995. Economists measure the size of state budgets as a share of total personal income. This provides insight on the share of total resources that are used for public investments.

Even without 1033, the share of personal income in the state general fund has declined between 1995 and 2011, from seven percent to 5.5 percent. If 1033 had been in effect in 1995, there would have been a much more dramatic drop in the state general fund, from seven percent down to just over four percent. As the graph below shows, this means we would have had $6 billion less to spend in the current biennium than we actually had.

This $6 billion amounts to the entire two-year state budget for higher education, natural resources, public health, early learning, corrections, and the Basic Health Plan.

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