As state lawmakers continue to seek ways to balance the budget and communities react to the governor’s push to consolidate schools and jails, you’re likely to hear a lot about the need to rein in state spending. While the state can likely operate more efficiently, it is worth remembering that government performs many functions, such as providing health care to the poor and education to everyone, that other entities can’t or won’t. In addition, the state mostly spends money where it is required to – by the Maine Constitution, by federal laws, by public referenda.

A common opposition to the governor’s consolidation proposals is that he must first get control of “runaway state spending.”

Since 2000, state General Fund appropriations, adjusted for inflation, have increased an average of 1.2 percent. Take out the year 2001 when a large budget surplus led to a 10 percent inflation-adjusted boost in General Fund spending, and the rate of growth is negative. That hardly paints a picture of runaway spending.

A look at where the money goes further erodes this argument. Of the state’s $6.3 billion General Fund budget for the 2008-09 biennium, 48 percent of the money goes toward K-12 and higher education and 32 percent funds the Department of Health and Human Services, including MaineCare and mental health services. Another 8 percent pays for law enforcement and public safety, and 2 percent goes to the natural resource agencies. That leaves 8 percent for everything else, including debt service.

Eighty-seven percent of General Fund revenue goes back to municipalities in the form of school aid and revenue sharing, to individuals as property tax relief, to health care providers as Medicaid funding, and to pay down unfunded liabilities and bonds.

In 2004, the public voted to require the state to pick up 55 percent of K-12 costs. Billed a way to make the state fulfill its promise to fund local education, this vote is a major reason for the current budget shortfall.

Since the 2004-05 biennium, state funding to school districts has increased by more than $583 million. Total state funding to local school districts will have increased by 37 percent from 2006 to 2009. The consumer price index is projected to rise by 11 percent during that time period.

The additional money comes at a time when the number of students in Maine’s schools is dropping. The student population has dropped by 40,000 since the early 1980s and is projected to decline another 20,000 in the next five years. This has led Maine’s per-pupil costs to rise much faster than the national average.

This is not sustainable, and the ongoing consolidation effort is one necessary way to reduce spending.

Another oddity of the budget debate is that many people now freely admit that state government does essential work. Cut spending and programs and services really do disappear. After the governor proposed $38 million in cuts, there were protests that vital social services were being eliminated. A proposal to merge the state’s natural resource agencies was panned because sportsmen would be overlooked.

The state’s budget shortfall – likely to get worse as the national economy weakens – has rightly brought more scrutiny to state spending. But that scrutiny must be based on a realistic assessment of where the state’s dollars go.