Posted on 01/09/2005 8:31:25 AM PST by NormsRevenge
SACRAMENTO -- California's state budget has nearly doubled in the last decade, far outstripping the growth of population or the personal income of its citizens, a Californian analysis shows.
Skyrocketing spending has also outpaced tax revenues, resulting in massive debt.
It is certain to increase even further when Gov. Arnold Schwarzenegger unveils his budget proposal Monday, despite his efforts to cut expenditures.
Driven by automatic spending increases and the failure to save boom-time revenue windfalls for a rainy day, the state's spending has climbed from $55.1 billion in the 1994-95 fiscal year to $105.4 billion this year.
That is an increase of 91.1 percent in just one decade.
By contrast, the state's population increased just 14.7 percent in the same time period. Per capita personal income, another standard measure of comparison for government spending, rose by 46.3 percent between 1993-94 and 2003-04, the last decade for which figures are available.
Despite a slight two-year dip in spending in 2001 after the technology stock bubble burst, state spending has continued on an upward spiral that one government finance expert says seems to be inevitable.
"No matter what happens, government never shrinks," said Steve Frates, a senior fellow at the Rose Institute of State and Local Government at Claremont McKenna College.
Schwarzenegger himself agonized over the situation last week in his State of the State address.
"I do not like this budget at all," he said of the spending plan he will send to the Legislature Monday. "It is a painful budget forced upon us by a broken system."
He was referring to automatic spending increases and other fiscal formulas that have been adopted over the years under pressure from educators, welfare activists, public employee unions and other interest groups.
No matter how much revenue comes in to Sacramento, more money goes out under the formulas.
That lesson thundered home in 2002, when the spike in capital gains taxes from the high-tech stock boom suddenly disappeared.
With no significant reserves in the bank, the state suddenly faced a $22 billion budget deficit.
Then-Gov. Gray Davis whittled that down to about $11 billion. Under his successor, Schwarzenegger, the state eventually got voter approval to borrow $15 billion in bond money to retire the deficit.
All but $3.5 billion of that bond money is gone now.
And that's not enough to cover the estimated $8.1 billion deficit facing Schwarzenegger in the budget he will propose for the 2005-06 fiscal year. Worse, he is facing a predicted $10 billion deficit the following year.
Budget deficits are not new, even though the California constitution requires the state budget to be balanced.
Former GOP Gov. Pete Wilson faced deficits of several billion dollars during the recession years of the early 1990s. But short-term borrowing and other gimmicks got the government through until the economy took off and left the state coffers swelling with money in 1999 and 2000.
Of the spending formulas that frustrate Schwarzenegger and other critics, the biggest single one controls the amount the state is required to spend on public schools.
That is Proposition 98, adopted by voters in 1988, requiring the state to spend about 40 percent of its general fund revenues on education. Officials say the percentage has gradually crept up closer to 50 percent and other funding pushes it over that.
This year, with a $105 billion budget, $58 billion is earmarked for schools.
Proposition 98 remains popular with voters and until recently, few officials have dared to criticize it.
But Schwarzenegger and a growing number of Republicans -- and even a few Democrats -- are beginning to suggest that it needs to be modified.
In his State of the State speech, the governor did not call for outright changes in Proposition 98, but he did propose abandoning teacher pay policies based on tenure and instead rewarding teachers for their effectiveness.
Demonstrating how hard it will be to reach agreement on reforms, teachers unions and other education groups immediately declared war on Schwarzenegger's proposals.
"I will admit the cost of everything has gone up in the last 10 years," said David Sanchez, vice president of the California Teachers Association. "But we still have to educate the kids. Getting rid of Prop. 98 is not the way to do it."
Other formulas driving budget increases include automatic cost of living increases for welfare recipients and the aged, blind and disabled.
"The way the formulas now work, we will never catch up," Schwarzenegger said. "No matter how well we do, the current system is programmed to spend even more."
That is an increase of 91.1 percent in just one decade.
Wow,, just wow.
He should get the revenue from homeowners. If they are able to afford homes for $400K and higher than they can afford taxes.
But beware, economists are predicting a real estate bust there shortly.
If I recall correctly, the federal government budget in 1994 was $1.2 trillion. Now it's what....$2.5 trillion?
Government at all levels is out of control.
Ouch!
John Kennedy's last budget was 99 billion. How about them apples?
If Democrats and their special interest friends don't stop to realize the implications of where our autopilot budget is taking us... in a few years, if nothing's changed, the state will become a giant check writing machine for Wall Street brokers. In other words, all California will be doing is servicing debt. That means no money for social programs. Like DUH.
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