[My thanks to Jon for the invitation to blog at the Flashreport. The best thing about the blog format is the chance to have back-and-forth exchanges, so comments on my posts -- and emails to me -- are encouraged!]
The scare tactics being used to stampede everyone into higher taxes are amazing. By estimating expenditures without reductions and by extrapolating current revenues and then multiplying that by several years, it is possible to declare a budget deficit that is bigger than the budget. The scaremongers are not quite there yet, but they are close. Let’s define the problem.
Revenues were $101 billion dollars a year ago. Despite declines in the economy, state leaders stuck to this number even up to the September enactment of the 2008-09 budget. Now these same people are all shocked and amazed to announce that the revenue for this year will only be $91 billion. Governments are not very good to adjusting income downward (actually, no one likes doing this), but by my math that is roughly a 10% drop in revenues from the prior year. Since there are lots of ways to squeeze 10% out of government spending the simple solution would be to adopt a 10% cut in spending and declare victory.
However, it is the spending side where the problems multiply. Despite the budget troubles, this year’s spending is higher than last year’s, and the budget gap projections propose that the spending will go up every year into the future regardless of revenues being available. All of this suggests that cutting spending, or in some cases simply not increasing the spending, would do wonders for a balanced budget.
This is where the scare tactics come back. We are told that even if we closed all state university campuses or closed all state prisons that it still would not solve the budget problem. This is all true. University of California is $3.4 billion per year, California State Universities are $3.0 billion per year, and state prisons are $10.3 billion per year. These three institutions total $16.7 of a $103 billion spending plan.
So, where are the big spenders and why do we not have a discussion about them?
Well, state support of K-12 education is $41.5 billion, which is why we do not have local control of our schools. Ask any teacher to name administrators or headquarter units that get in the way of teaching and you could probably save 15% permanently by closing them down. The overhead in our public schools is hurting education in the classroom. Governor Schwarzenegger is right on this one: if the schools are freed of state control they could actually make fewer dollars go further.
The other big player is Health & Welfare, which combined with K-12 education takes over 2/3 of the entire budget per year. Out of its $31.1 billion budget, $10 billion goes to welfare payments. This program has been growing since the historic Clinton/Republican Congress welfare reforms, and if the rising costs are not restrained it will always outrun revenue increases. The health category is roughly $7.5 billion for health care to the poor and $7.5 billion for nursing homes to the elderly poor. First, we should stop giving automatic grant increases because we cannot afford them. We do not give automatic pay increases for public or private employees–these are bargained for if there is enough money to pay for them. Second, we should make it harder to qualify for these programs so that the priority is given to the truly needy who have nowhere to turn. Third, we should modify the health benefits to be no better than the health insurance benefits we offer our own employees. Fourth, we should have a real debate on whether we can afford to offer these programs and benefits to people who are living here in violation of our immigration laws.
I am not intimidated by these scare tactics. Let’s tackle each of these areas of spending and not just look for ways to cut costs. First we should decide if a program is worth keeping at all and if it is, then find ways to make that spending count for the people who are supposed to benefit from it.