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.”
IC
Hmmmmmm Sad. Has he been hanging around tooooooo many DIMRATS tooooo long or is it really that he doesn't quite have sufficient clout, yet.
SEEMS TO ME that the line item veto should have done it. Why is he not using it? Trying to stay on everyone's good side enough to keep em pulling with him until he has enough raw power on his Republican or MORE conservative [vs conservative] side of things?
Disappointing.
Especially for unions to still pull so much corrupt clout.
Not that industry isn't corrupt in plenty of spots, too.
Yep!
Arnold wanted a budget agreement - his approval rating started falling once the budget deadline passed. His logic for not being willing to use his line-item veto power escapes me - surely the people would support cuts in irresponsible spending, especially if he were to pass them off as a response to liberal intransigence in negotiations.
While McClintock continues to preach the politics of fiscal responsibility found in the conservative agenda, GovRino continues to play on the political margins, with little success in reducing spending, reducing the budget deficit and reducing state debt overall. If this continues, increases in state income taxes are around the corner.
Brother, you got THAT right! :-(
The sad fact is that many Californians are fleeing BECAUSE of the high cost of supporting illegal aliens (and being forced to put up with the mess they bring).
Yes. General fund spending = $81 billion, while revenues = $76 billion. The $5 billion in difference is borrowed.
Same here.......where are all the rabid Arnold supporters today? I remember FR threads taking McClintock supporters to task and none too nicely.
Hay! Where's my Ping... Pang... Pong??? How 'bout a Pogo Ping so's I can start jumpin up and down???
So where were all you holier-than-thou McClintock blowhards when you let the Democrats take 48-32 majority in your State Assembly, and a 25-14 majority in your State Senate?
Blaming Arnold is asinine, and its the singular obsession of a small cadre of losers still consumed with bitterness from Arnold's 48-13 assicking of McClintock last October.
It seems rather odd to me that McClintock would take to the floor of the senate on the eve of information coming out of Schwarzenegger's Budget Analysis Committee, revealing that suggestions for massing state staffing cuts, elimination of over 100 state commissions, and a rather heathy cut in state spending.
In effect McClintock's words were dated within 24 hours of them being uttered.
Let's presume the worst. Let's say none of these cuts take place. McClintock will come out looking pretty good. But if there are significant cuts, California's state employees are cut significantly, the budget is cut between $5 and $10 bilion per year and over 100 state commissions are disolved, then Tom's not going to come out looking pretty good.
Tom has gone on the record trashing Schwarzenegger's efforts to turn state politics around. If Schwarzenegger does turn state politics around, does bring spending under control, does balance the budget and pay down the debt, Tom's prognositications are going to ring hollow throughout the state and beyond.
Time will tell. I'll be rooting for Schwarzenegger's plan to work. I guess that makes me a star-struck person. I should probably join the others and hope like hell the predictions of his disasterous failures come true.
We'll see how things look by 2006. If things work out as Tom has predicted, perhaps I'll be voting for him in the 2006 primaries. If not, he's not going to have much political pull on me at the ballot box.
Are you saying that blaming Davis for an irresponsible budget last year was perfectly fine, but blaming Arnold for an irresponsible budget this year is asinine? Seems slightly illogical to me.
I see your point that Arnold is not singularly at fault for this bugdet, but, given his sky-high approval rating, don't you think he should have used it to pursue more cuts and exercise his line-item veto?
Heh! That's putting it mildly! They said McClintock supporters were secret "Buste-MECHA" enablers, donchaknow. Deep down, the "Tomikazes"* hated California and Arnold so much, that they would rather see California burn than let a hollywood action hero who embodied "the American Dream" have a chance at correcting California's problems. And who _cares_ what Rush says???
Yikes. And that was from _Republicans!_
but california is far from perfect.
He not talking perfection … He’s talking reality …. Cold hard facts math & logic
It, not "California is far from perfect". … it "California is far from reality"… it’s fantasy land
We have McClintock's word for it that things are getting even worse on Arnold's watch. Is he correct? I don't know, but would appreciate reading an objective opinion of where California finances are really heading. Selective use of numbers can often be used to mislead the unwary.
Well, this was a statement on the budget - a particular piece of legislation - not an assessment of how Arnold is doing in general. When looking at a budget, you have to go by the numbers in front of you, especially in light of the fact that there are no assurances that Arnold's CPR plans will come to fruition.
>>>We'll see how things look by 2006.
By 2006?!
GovRino's rhetoric during the recall campaign gave many the impression that he would have the state turned around and back on track by the end of 2004, or sometime in 2005 at the latest. So far, Arnold has increased the size of the budget and hoodwinked people into voting for passage of an additional $15 billion in loan debt. A form of taxation that places a significant amount of the burden for payoff on the backs of future taxpayers.
I can appreciate your desire to see Arnold succeed. After all, you live in the state. I just thing your spin is misguided. Face it, you can't have it both ways and you definitely can't have it all.
Need I remind you of what Arnold said shortly after entering the recall race. Once the budget is back in the black, Arnold will be able to keep his pledge and fully fund all the social welfare and entitlement programs that the people want. That's tax and spend liberalism. That isn't fiscal conservatism. McClintock may not be in the drivers seat, but his rhetoric is right on the money.
Let me check. Oh yes, I did say we'd have to wait and see. Clock's a tickin'. The spring of 2006 is coming. We'll see if Tom's predictions bear out.
Not only a a star-struck person but a disingenuous a star-struck person to boot.
You participated yesterday in the discussion of the yet unveiled proposal to redirect state spending to the private sector. You know the shift will accomplish some savings but not enough to offset the continued liberal binge to be approved by Schwarzenegger today.
One ballyhooed step forward to accomplish two quiet steps backward and Schwarzenegger's donor's get a pot of gold from the state to boot. A win-win deal, for liberals and big donors equally.
And to think that your blind party loyalty helped accomplish all this. Congratulations. Good for you and screw the rest of us.
Without the people you call blowhards, Gray Davis would still be governor. Everybody else didn't want to pursue the recall. So, basically, you wish that Gray Davis was still governor.
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