California budget ballons 40 percent in four years – still running out of cash

Where have we heard this type of rhetoric before? A California state official is claiming the state is going to run out of cash in 60 days unless the legislature and Gov. Arnold Schwarzenegger get on the same page and make some changes.

Well isn’t that just terrible. I remember back in 2004 when then Gov. Gray Davis was unceremoniously tossed out of office and Schwarzenegger let us know the California spending was out of control and he was going to terminate excess spending and get the budget in check.

You know, Schwarzenegger’s fiscal conservative social liberal idea lie.

Damn, that economic down-turn in California must really be terrible. Maybe it is pretty bad, but it certainly does not help that the California budget has ballooned more than 40 percent in four years.

Holy crap. 40 percent!

The Legislature and governor, grappling with another huge budget deficit, are suggesting raising taxes, so it seems opportune to ask what we got from the last $41 billion.

Some of it went to cover increases in the cost of living, and state spending naturally grows with the size of the population. But even adjusting for inflation and population growth, state spending is up almost 20% compared with four years ago, a big enough bump that ordinary Californians should be able to notice it. The state’s financial statements describe where the money went — the big gainers were education ($13 billion), transportation ($10 billion) and health ($10 billion) — but not why these billions don’t create even a blip on our day-to-day radar.

I’m sure that spending the additional $13 billion on education and $10 billion on health care improved student performance and health care services… not.

So, what’s the solution? How about more taxes!

The governor has floated the idea of higher sales taxes, and the Legislature wants to increase the income tax on high-earners — but the state already seems to be pushing the boundary on taxes.

California’s statewide sales tax of 7.25% is already the highest in the nation. Income taxes are also high, with the 10.3% rate on the top income bracket the highest in the nation. The highly progressive nature of the state’s income tax schedule — the top 10% of earners supply more than 70% of income tax revenue, according to one estimate — already results in excessive revenue volatility. It also raises questions about how much redistribution of wealth is fair: Should the top 10% foot the bill for basic services enjoyed by all Californians?

Will we ever learn?