Posted on 07/31/2004 10:04:12 AM PDT by calif_reaganite
Mr. President:
Over the last few years, we have seen a variety of inventive ways to balance the budget on paper while racking up multi-billion deficits. So in preparation for this budget, I asked the Legislative Analyst’s Office two simple questions.
First, how much are we taking in from the revenue structure of the state – all of our taxes and fees and interest earnings?
And then I asked, how much are we actually spending for general fund programs?
In other words, how much is this family actually earning and how much is it actually spending?
And it turns out that last year, we spent $4 billion more from our general fund than we received as income.
Under this budget, according to the LAO, the revenue structure of this state will actually generate – in round numbers -- $76 billion. And it will spend $81 billion on general fund programs. We’ll “earn” $76 billion and spend $81 billion. The deficit – nearly $5 billion – will have to be borrowed.
And that assumes every budget assumption works perfectly.
In our last budget debate, one senator said, “that’s OK. Borrowed money is real money.”
If you believe that, try this one out on your spouse – “Honey, we spent $5 billion more than we earned last year, but don’t worry – I just put the difference on our charge card.” I wish you better luck with that one than I know I would have with my wife.
We’re told, “at least this is a step in the right direction.” No it’s not – it’s a $5 billion step in the wrong direction.
Let me put it another way. Over the next year, inflation and population will grow at a combined rate of 4.2 percent. Our revenues will grow 6.7 percent. So, this is still NOT a revenue problem. Revenues continue to grow faster than inflation and population combined. But here is the problem -- spending will grow 7.4 percent. That’s a faster annual growth rate than under the previous administration’s 7 percent. Our annual spending is actually growing faster now than it has over the past five years.
The widening gap between revenues and expenditures continues to be papered over with borrowed money.
Less than three months ago, on May 1st, the total amount of state general fund supported debt (this includes all the bond issues) was $33 billion. By the end of this budget year, that debt will have grown to nearly $51 billion. That is a 54 percent increase in debt in a mere 14 months. Borrowing by this state is now completely out of control.
Here is what we have:
That is the budget we are about to vote on. “Never mind that,” we’re told, “the budget doesn’t raise taxes” – or, at least, it doesn’t raise them by much.
But here’s the fine point of it: resistance to tax increases only works IF IT IS ACCOMPANIED BY RESISTANCE TO SPENDING INCREASES.
As I have repeatedly warned – YOU CANNOT PAY FOR SOCIALLY LIBERAL PROGRAMS WITH FISCALLY CONSERVATIVE POLICIES. You cannot be both things. IT DOESN’T BALANCE. Fiscal conservatism means not only restraining taxes but restraining spending.
“Never mind that,” we are told. “We’ll control spending increases sometime in the future.” This is a song we hear with every budget – like we hear “Jingle Bells” at Christmastime. Let me remind you that successful diets don’t start in the future. They ALWAYS begin in the present.
And here’s the problem with the future diet that we are promised. This budget also obligates us to make enormous balloon payments beginning in 2006. Not only are we spending more than we can afford this year, but we are agreeing to even bigger obligations just 24 months from now. We will have balloon payments due to local governments, to the pension system, to the public schools, to the universities. Some diet.
Last year when we took up the budget (a budget that we also were told was “balanced”), I warned that it was “a rotting porch just waiting to collapse.” We ended up spending $4 billion more than we took in. This year – if all goes well – we will spend $5 billion more. The porch is gone. Now the very financial structure of our house is being eaten away.
Forty years ago, in 1964, when California admirably met the needs of its people, it spent $202 per person from both general and special funds. That’s $1,160 adjusting for inflation. $1,160. You are about to vote on a budget that spends $2,878 per person. And let me ask you – where are the roads, where are the aqueducts, where are the power plants, where are the top-flight schools and universities that our parents delivered 40 years ago?
What will be our generation’s answer to history? “Sorry, it’s the best we could do?” Shakespeare’s words come to mind: “Age, thou art shamed. Rome, thou hast lost the breed of noble bloods.”
The combined rate of population growth and inflation will be: 4.2%
Revenues will grow by: 6.7%
Spending, however, will go up by: 7.4%
Thanks for posting this.
in a perfect world mclintock would be governor.
but california is far from perfect.
i moved out because i could no longer afford to live there.
Excellent article! Thanks for posting it!
I'm not from California, but this is the kind of question that ought to be asked in every state a lot more often than it is.
This is the first time period since the 1930s that California has lost residents to other states than it gained in newcomers (illegals excluded). I don't think there's any better testimony to the ineptness of those in power than this sad fact.
Did Arnie cave in to the special interests or
were the DIMRATS in the legislature toooo powerful to get something effective done?
Once the human locusts have fed and reduced California to baren stubble, they'll take flight and look for the greener fields that her productive expatriots have fled to.
Thanks for the article. I supported McClintock in the recall. I'm glad he is still fighting the good fight.
Hear, hear! California and her governor are fortunate to still have him around. Maybe one day, before it's too late, Californians will listen to him.
Excellent piece. McClintock knows his stuff and has a genuine knack for demonstrating -- in layman's terms -- why this budget deficit is no way to go.
Thanks for posting this. I'm fortunate to have Tom as my State Senator, but he's just one man up against the political establishment of both major parties. I don't have much hope left for California, so I'm looking at other states to move to.
Once you start asking those questions, the leftists lifta dn shift their aiming to you and lay a barrage of "Racist! Fascist! Homophobe! Woman-hater! What about the children?"
Too few can endure the cacaphony for long and bank-breaking budgets are passed laden with entitlement programs for everyone but the productive.
It was more a Mexican standoff..
True reform can't begin until the majorities or quite a few Rats are tossed out of office this November.
That is priority 1 right now besides getting more and more folks back to work in California with decent paying jobs.
I'm gonna follow you outta here soon enough, ken21---maybe before those balloon payments become due :)
Arnold caved in on pensions and other labor issues (such as restoring $4 million in funding to a union-run "university thinktank"), borrowing heavily rather than cutting spending, especially to agencies that duplicate services provided by others. This would be undoubtedly difficult to achieve, but under the CA Constitution the Governor has line-item veto in budgetary matters, which Arnold has been unwilling to use thus far. The Dems would not be able to override his line-item vetoes.
If you come to Texas, you'll be on the front lines again.
SO WHAT IS ARNOLD THINKING????
The combined rate of population growth and inflation will be: 4.2%
Revenues will grow by: 6.7%
Spending, however, will go up by: 7.4%
To a liberal that just means that inflation and revenues aren't keeping up with spending.
So, Arnold is increasing the deficit from 4 to 5 billion?
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