State Budget Crisis is Spending Issue

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.

About Ron St. John