The most often heard headline during this process is how a new budget is a certain percentage more than last year’s budget - let's say 3.5% for sake of example. What does that actually mean?

Most people think it means the amount budgeted to be expended in a given fiscal year is 3.5% more than what was expended the previous fiscal year. This is close, but doesn't tell the whole story. First, this increase applies only to the General Fund (GF). The GF is the state’s largest and primary fund. It is the fund which the legislature and Governor have some discretion over. Not only is that 3.5% GF only, but it is also only base-to-base spending and does not include spending that is “one-time” in nature or transfers to other funds. For example, employee salaries go up each year – so that increase is included in the 3.5 % increase. But if there are any one-time expenses, those expenses are not calculated in the % increase year over year. Other funds have statutory mandates and limitations, including the Transportation, Education, special and federal funds. These reasons are why the State focuses on the GF. One important thing to bear in mind is that agencies or departments cannot increase spending because they want to. All spending increases must be necessary. Requests are often rejected by the Administration or the Legislature. Plus, any additional expenses must be covered by increased revenue or decreased spending in another area.