What in the world is an unfunded earmark, and what does it have to do with you?

16 October 2014 Written by  

Utah’s state budget  has been undermined due to a nearly 1200% increase in General Fund earmarks during the past decade. Earmarking ties policymakers’ hands so they can’t adapt the budget to the evolving needs of the state’s ever-growing and ever-changing economy and population. And these are "unfunded" earmarks, meaning that they do not come with a new funding source, even though they go to meet newly identified investment needs, primarily in transportation. Because they are unfunded, these earmarks divert resources from other critical priorities such as education, public safety, aid to the disabled and substance abuse treatment. 

  • The impact of Utah’s earmarks explosion on disabled Utahns – thousands spend years waiting for urgently needed help.
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  • Due to the growing diversion of General Fund revenues, Utah is meeting only 15% of its drug treatment need.  
    subtance abuse
  • How is the earmarks explosion affecting public safety?  Pew’s Public Safety Performance Project found that resource shortfalls are a factor in rising recidivism rates.  
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  • How is the earmarks explosion impacting Utah higher ed, where tuition is up 200% since 2000?  
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  • If the Education Fund is separate from the General Fund, how can the GF earmark explosion hurt K-12 education? Learn how by reading the complete report: What's still eating Utah's General Fund?
    public ed

The following essay was originally published as an op-ed in the Salt Lake Tribune: Op-ed: Children are the losers in Legislature’s earmarking trend

Utah’s state budget has been undermined in the last decade by an increase in earmarks — from $42 million in Fiscal Year 2005 to over half a billion dollars in the FY 2015 budget approved by the Utah Legislature earlier this year. These earmarks have risen by almost 1,200 percent and now make up nearly one-fifth of Utah’s General Fund, an unprecedented level.

This explosion of permanent earmarks diverting revenues from their intended purpose is a problem both in principle and as a practical matter. They are a problem in principle because they tie the hands of policymakers, denying them the flexibility to adjust course each year in response to the evolving needs of Utah’s growing economy and population. They are a problem in practical terms because they divert revenues that were originally meeting Utah’s urgent needs in areas where the state has consequently fallen behind such as education, public safety, aid to the disabled, and drug treatment.

These earmarks are also "unfunded" earmarks in the sense that they were created without a new revenue source to finance them, even though they aim to meet newly identified public investment needs.

The overwhelming majority of the new earmarks have been for transportation projects. Few would deny that new transit and highways are important. But the prudent way to pay for newly identified needs is to create a revenue source to finance them rather than diverting the funds from other critical needs that are less popular or politically influential, though they remain equally critical to the state’s future.

These unfunded earmarks will continue diverting dollars from the General Fund indefinitely, because none of them has a sunset provision. Even if no new earmarks are created in future years, the amount of money diverted from the General Fund will continue to grow under current law.

Perhaps the most worrisome aspect of the explosion of unfunded earmarks is that it’s not the first time that Utah’s policymakers have chosen "robbing Peter to pay Paul" over finding new revenue sources to keep up with the state’s growing needs. This recent diversion of General Fund dollars to transportation earmarks bears considerable resemblance to the 1996 decision to amend the state constitution to make it possible to divert K-12 education funds to pay for higher education instead.

Prior to that time, Utah was ranked in the top 10 states for our K-12 education funding effort. Since then, we have fallen to about the national average in both our education funding effort and our graduation rates. In the most recent year for which data are available, the $252 million diverted from the Education Fund for higher education in FY 2012 was almost exactly equal to the amount it would have taken to boost Utah from 50th to 49th place in the nation in per-pupil K-12 education funding.

For a state like ours, performing at about the national average should not be considered "good enough." It’s time for Utah to break a bad habit. The governor and Legislature should reverse course and make the decisions necessary to restore best practices in state budgeting and place the state and its future on firmer fiscal ground.

For more information, see the complete report: What's still eating Utah's General Fund?

Matthew Weinstein 300Matthew Weinstein, State Priorities Partnership Director, joined the organization in 2014. As State Fiscal Policy Director, he conducts analysis and advocacy focused on the state budget from the perspective of what's best for Utah's children. He holds a Master of Public Policy degree from Georgetown University and a B.A. in Political Science from Amherst College.