Saturday, August 16, 2008

The Bee On The Budget

As I was reading what I thought was an editorial in the Sacramento Bee yesterday, I thought it was one of the more level headed looks at California's budget problems I'd read. The Bee generally takes a big government approach to issues and I was surprised at the perceived change. Reading further, I realized it wasn't an editorial but an op- ed, or guest editorial.

Nonetheless, I thought this guy wrote a real good commentary. He points out we didn't have the budget problems back when the Gann Limits limited spending increases to account only for population growth and inflation. Those limits have been amended so many times since then they've become essentially meaningless.

I've mentioned here before what past State Senator, Ray Haynes, pointed out some years ago. He was referring to the 2000- 2001 state budget when spending all the spoils of the dotcom boom put us on the road to the deficits we face today: If the legislature had simply increased spending to account for population and inflation (the old Gann Limits), we would have ended up with a budget surplus in the billions. What happened instead is billion dollar shortages.

I think this Matsusaka guy that wrote that op- ed is right on the money.
As an aside, I've read a couple of different news reports saying the Democrats proposed budget is 3 billion dollars larger than last years. You'd think that when you're in a hole the first thing you'd do is to stop digging.
Also from yesterday's Sacramento Bee, Dan Walters reminds us of some other things that resulted in our budget mess including one looming problem: The Unemployment Insurance Fund. Yipes!

As always, if asked for a login to the Sacramento Bee site, you can use humboldtlib as the username and blogspot as the password.


At 2:41 PM, Anonymous Anonymous said...

Regarding the Gann limits Fred, you cannot have a spending policy without the subsequent tax policy. Perhaps mistake were made in the dotcom era, but in case you have never noticed, the state has always had a boom or bust way of collecting revenue. Every 3-4 years we get into trouble and then cinch the belt. And when we cinch the belt we often do so in ways that actually cost the state more money in the long run.

I guess what i'm trying to tell you Fred is that it isn't simply legislators wanting to spend beyond their means. The state does not have a stable source of revenue. Yet their are huge costs and huge neglected capital costs. The LAO said the state is in need of 250-500 Billion in infrastructure upgrades. In other words, deferred projects. Deferred probably because of the regular and chronic shortfalls the state faces every few years.

At 6:43 PM, Blogger Fred said...

It is certainly true that the State doesn't have a stable source of revenue. That said, the point I'm trying to make is the State did pretty well when we had spending limits. When the Gann Limits were diluted, we ended up where we are now.

I suspect you're suggesting we keep spending more.


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