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Ad watch: U.S. Chamber ad is wrong on 'hidden' accounts

Published: Saturday, Sep. 8, 2012 - 12:00 am | Page 3A

The U.S. Chamber of Commerce has begun a 30-second television ad criticizing California's business climate and state budget problems. Here is the text of the ad and an analysis by Kevin Yamamura of The Bee Capitol Bureau.

Text: California is struggling badly. Two million people out of work. Huge deficits. High taxes. Overregulation. Instead of creating jobs, politicians increased spending $30 billion since 2008. And bureaucrats put $37 billion in hidden, unaudited accounts. We can fund our schools and make government work by cutting waste and creating jobs. Check the facts at TheCaliforniaComeback.com. Paid for by the U.S. Chamber of Commerce.

Analysis: Launched at the start of the fall campaign season, the ad serves as an attack on Gov. Jerry Brown's initiative to raise taxes on sales and high-income earners. By avoiding mention of Proposition 30, the U.S. Chamber can run the spot as an issue ad and does not have to disclose its donors under campaign finance rules.

The claim that "bureaucrats put $37 billion in hidden, unaudited accounts" is wrong. It refers to the state's 550-plus special funds, which have dedicated revenue streams beyond the state general fund. The accounts are reported in budget documents each year and overseen by administration officials and lawmakers.

Special fund accounts do not face the same scrutiny as the general fund, but may face internal audits and are subject to state auditor review when problems arise. Recent Bee reporting found that the state parks department had hidden at least $20 million from finance officials while moving to close parks.

It is true that California continues to face high budget deficits each year. California's state-local tax burden ranked sixth highest in the nation in the 2008-09 fiscal year, according to the Tax Foundation.

The reference to $30 billion in additional spending since 2008 reflects California's total spending – including federal funds, bond expenditures, special funds and the general fund. The total grew from $195.5 billion in 2008-09 to a projected $225.4 billion this fiscal year, an annualized increase of 3.6 percent. Most of the growth has occurred outside the state general fund, and in many cases is paid for by revenue other than state taxes. Cuts in the general fund have led to teacher layoffs, higher university tuition and social service reductions.

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