The Dimensions of the Disaster: 21-28-36
By Sen. Tom McClintock
Three numbers tell the entire story of California's fiscal meltdown:
21, 28 and 36. Understand them and you will have transformed the Byzantine mysteries of
the state budget into precise mathematical order.
In the last four years, population and inflation have grown at a combined rate of 21 percent.
California general fund revenues have grown 28 percent. General fund
spending has grown 36 percent.
The spending lobby insists that California got into its budget mess
by irresponsibly slashing car taxes, thus leaving the treasury
dangerously vulnerable when the recession struck and state revenues
plummeted.
The facts paint a quite different picture. AFTER taxes were cut
and AFTER the economic bubble burst, general fund revenues have still
outpaced combined population and inflation growth by fully one third
during this administration. Obviously, California isn't suffering a
revenue problem. What it has suffered is a monumental spending problem:
growing 36 percent in four years. Not that we've seen a 36 percent
increase in highway construction or school construction or water
storage or electricity generation or anything else that government is
responsible for providing. We've paid for it. We just haven't gotten
it.
What we have gotten is a 38 percent increase in state payroll costs, a
38 percent increase in health and welfare spending (even though welfare
caseload is down 20 percent), and a 16 percent increase in prison costs
(even though the prison population is down 0.6 percent). In fairness,
local government assistance has increased to replace lost VLF revenues
(even while local property tax collections have ballooned). Yet even
ignoring these subventions, state spending has still streaked nine
points ahead of inflation and population.
According to Democratic Assembly Speaker Herb Wesson, "If we
fired every state employee - I mean every Highway Patrol officer, every
UC professor, every parks patrol officer - we would still be more than
$6 billion short." That's one way to look at it.
Here's another: if spending had merely kept pace with combined
inflation and population growth, today's budget would still be a hefty
21 percent bigger than it was four years ago. But instead of an
expected $30 billion deficit, we would today have a $5 billion surplus.
Or another: if the current year's budget was reduced just 9.5 percent
across the board starting January 1st and held there for 18 months, the
entire deficit would disappear. That would require deferring some pay
raises, postponing some projects, eliminating duplication, (combining
the Franchise Tax Board with the Board of Equalization, for example),
selling surplus property -- the same sort of things that any family
would do in similar circumstances. But of course, most families
wouldn't have gotten themselves into this fix in the first place. Most
families would have told you that if you spend every dime that comes in
during the good years, you're going to be in big trouble in a bad year.
And that's where California is today. But instead of dealing
forthrightly with the problem, California's officials will raise taxes.
We already hear the ransom demand: a dollar of taxes for a dollar of
cuts. If that happens, an average California family doing its best to
cope with a serious recession will feel its tax bill hiked $1,800 to
continue the state's spending binge.
The next time you hear that California's fiscal problems were
unavoidable, or that it has already cut to the bone, or that it can't
deal with the problem without some "revenue enhancements," remember how
to measure a prodigal state: 21 percent increase in inflation and
population; 28 percent increase in revenues; 36 percent increase in
spending. Ronald Reagan often reminded audiences that "facts are
stubborn things." And those are the stubborn facts.
Note:
Senator McClintock represents the 19th State Senate District in the
California Legislature. His website is www.senate.ca.gov/mcclintock
Filed January 2003. |
