I’ve tried to crunch some numbers to figure out how it is our state and local governments cannot muddle through on a mere $365 billion, and how the figures compare to past years. The furthest back I could get overall state and local spending figures was 1992, and I’ve adjusted all the numbers from 1992 – 2008 for both population growth and inflation so the comparison is realistic. Here are the highlights:
Year: Spending in billions: Adj. to 2008 for CPI and population:
1992 $160 $301
1998 $202 $323
2003 $308 $392
2008 $406 $406
Note that during the Pete Wilson years from 1992-1998 spending increased by 35%, which was a 7% real increase when adjusted for population growth and inflation. Not sure I remember government getting 7% better, but that’s a hard thing to measure. During the dark Gray days of the Davis years from 1998-2003, government spending increased by 52% which was a 21% real increase when adjusted for population growth and inflation. This led to the deficit crisis and when we realized government was definitely not 21% better we recalled Davis.
Since putting Arnold in charge, the rate of growth of spending as slowed, but we have done nothing to scale back the increases of the Davis years. From 2003-2008 there is an increase in spending of 31%, which is only 4% when adjusted for population growth and inflation, but is still a real-life increase. In other words, the only way that we got even close to having a balanced budget was by getting lucky with a strong economy, and we never did anything to fix the crisis that Davis’s spending spree created.
A 10% across-the-board cut in spending sounds draconian, but it really only puts us at the same level we were at in 2001, in the midst of the Davis run-up. A 20% across-the-board cut in spending leaves us with approximately the same amount of government spending (adjusted for inflation and population increase) that we had in 1998. It would mean that public employees would be giving back every gain they achieved since the beginning of the Davis term, except for inflation adjustments. But it would still give the Legislature around $325 billion to play around with. 1998 was not exactly a dark age of anarchy, and even our legislators should be able to cobble together some sort of state and local public sector at that level.
You are leaving out some important data, namely the population growth and inflation data you used for the adjustment.
Anybody can make up some numbers, but to actually see if your numbers are right all the data needs to be in the open.
Ron. As thefocus is on the state budget let me suggest that you break out that data.
Some time ago I did report Elizabeth Hills’s LAO reported general fund spending at $78.7 billion in 2004-05 which jumped to $102 billion in 2007-08
While we had some increase in our population and, a COLA needs to be factored in, there is no denying the fact that we increased the size of government or added entitlements that simply cannot be sustained at this time in this recession.
That’s the first place to look for ways to balance our budget.
It’s MediCAL and increases in spending per pupil in schools.
It really is that simple.
Joe, Fair enough. Here’s the website for historical figures on total California state and local spending: http://www.usgovernmentspending.com/#usgs302
Here’s the population numbers:
http://www.dof.ca.gov/html/DEMOGRAP/ReportsPapers/documents/E-7_Report_1900-Jul08.xls
Here’s the CPI table that I used (LA/OC All Urban):
http://data.bls.gov/PDQ/servlet/SurveyOutputServlet?data_tool=dropmap&series_id=CUURA421SA0,CUUSA421SA0
Side note to Larry and No-Lube, I kind of expected that sort of thing, too, but when I crunched numbers off the usgovernmentspending website hoping to make that point I was surprised by the result. I took the ten categories of state expenses on the 1992 budget vs. the 2008 budget as a percentage of expenditures to see where the growth/change was. The only category to grow was pensions. Here’s my extrapolation from the usgovernmentspending website figures:
Category: 1992: 2008:
Pensions 5% 8%
Health 14% 14%
Education 24% 25%
Welfare 10% 10%
Protection 11% 12%
Transportation 5% 6%
General 7% 7%
Other 13% 14%
Interest 4% 3%
Balance 7% 1%
My tentative conclusion is that most government spending is payroll and that the growth in spending is due to a general increase in compensation and benefits to state employees of all types, rather than a specific shift in priorities on public spending. This is consistent with the hypothesis that the public employee union political juggernaut has taken over our state’s government, and they are basically doing what they get paid to do which is to get the best results they can for their members. It accounts for the only category increase being pensions. I wish I could get a good apples-to-apples comparison of pay and benefit packages in random job categories from the 90’s vs. now, but so far I can’t find one.
Further note to all, In checking for my sources I noticed that the usgovernmentspending guesstimate for California state and local spending for 2009 is $429.8 billion. If that’s a good number, and the SacBee’s Capitol Alert number of $41 billion for the projected deficit is right, then it is only necessary to rollback spending to 2002 levels adjusted for inflation and population increase to balance the 2009 budget.
Ron, how much of that increase in pension expenditures is due to GASBY? GASBY is the federal law (Governmental Accounting Standards Board) that is pressuring governmental entities and private sector pension plans to fund their pensions actuarially at upwards of 90% which takes a lot of money out of circulation in the budget and increases the size of budget expenditures categories without increasing the actual amount they pay out under a cash accounting method.
Thanks to Enron’s pension default (not their gaming of the energy deregulation which was responsible for alot of the increase during Gray Davis Administration by the way) the Feds passed GASBY and FASBY that said that everybody that had pensions had to start doing an actuarial report showing the amount the pensions were funded actuarially so everybody started socking away money to bring up their actuarial figures even though their cash flow wasn’t jeopardized and they were in no danger of default.
I wonder how much of the State Budget is in reserve accounts that no one expects to pay out in the coming year? How much are we short in a cash accounting budget?
#3 no vaseline, I’m not sure if you are referring to the amount of the budget that has increased because of the double digit increases in healthcare expenditures per person over the last eight years, I wouldn’t be surprised if the costs doubled during that time. Well these costs, which cripple companies doing business internationally with an expense none of their competition has, adds billions to the state budget much of which is hidden in individual budgets like the education budget. The reason the schools have been able to absorb these costs is by denying medical insurance to many of their workers forcing them to work part-time even though there is full time work for them to cut down on benefit costs. If we passed a single payer healthcare plan we would have no problem with our state budget.
#2 Larry, I don’t think that “there is no denying the fact that we increased the size of government or added entitlements that simply cannot be sustained at this time in this recession” is a statement that can be accepted on face value. What entitlements did we add and how did we increase the size of government? Were there any offsets in entitlements lost and reductions in government during these past years of Republican Rule? We’ve had one Democrat Governor and President in the last 20 years and 4 Republican Governors and 3 Presidents. Who the heck is responsible in your scenario?
Anon #6.
Let me begin by stating I did not vote for Arnold!
Let’s keep the focus on CA and comment on the original post without introducing the federal nightmare.
That sadi, please let me know if the governor, with the exception of his veto power, controls the Bills submitted to him by the Democratic controlled CA legislature.
The expansion of our government will take some research as will increases in current or addition of new programs. That’s a fair challenge
Anon,
I don’t know about how much of the pension increase relates to GASBY.
Increased health costs is certainly a viable culprit for the recent overall increase in expenditures, since that would be a payroll benefit going across the board to all budget categories.