I looked over the state Legislative Analyst’s recent report about the fiscal outlook for next year. I certainly was not expecting any good news, but I at least expected a realistic view of the dire situation the state is in. I was stunned by what I saw. The LAO is projecting a 14.5% increase in expenditures next year over this year. Go ahead, read that sentence again: he is saying the state will spend 14.5% MORE money next year than this year.
In part that is because many of the sneaky "savings" games the Governor and Legislature have played will expire. No more borrowing from cities, stealing from redevelopment agencies, or shifting state employees’ December payday into the next calendar year. At the same time, federal stimulus money will expire and our state’s debt service will soar.
To put this into perspective, consider these figures distilled in a recent issue of Political Pulse: In 1990-91 the state spent $1,350 per person. By the current fiscal year, that was up to $2,644 per person. Have you seen double the benefit from the state since 1990? Political Pulse says that if the state had limited its spending in those years to the average Consumer Price Index and population growth, our current surplus would be in the neighborhood of $15 billion. Instead, that figure represents just a portion of our deficit.
I came across some other numbers that help explain how such an insane situation developed. According to my estimates, only about 34% of California residents pay income taxes. So if you look at your neighbors on either side of you, only one of you actually paid into the state coffers via income tax. Unbelievably, there are 4.4 million MORE people registered to vote than people who paid income taxes. Now, not all of those registered actually cast ballots, but it provides insight into the dynamic that is crippling our state. When there are more takers than givers, the system cannot work and California’s system is not working in many, many ways.
Some people look at these numbers and facts and lament that there is nothing to do but wait for the inevitable collapse of the state. But that is not only extremely unlikely, it is irresponsible. It is as irresponsible for an individual who cannot pay his current bills to run up all his credit cards figuring that he will "just" declare bankruptcy and be done with it, sticking someone else with his bills. We know that debt service has first call, then education, on all state funds, but to continue to accrue debt is reckless because that debt will be paid even if we shut down every state spending program. We simply must cut spending and programming and services or whatever you want to call the outflow of money. We must stop the budget smoke-and-mirrors that allow one year to look okay while pushing the pain into the next fiscal year. Cut first, cut now.