November 27, 2007

What kind of budget problem?

This post at Calitics says the media are already spinning the next budget crisis as a spending problem, not a revenue problem. The author urges his fellow liberals to man the ramparts to push for a big tax hike to balance the budget rather than settling for a slowdown on spending.

No doubt barrels of ink and millions of pixels will be spilled in the coming year debating that question.

But here is a decent place to start: Total state spending, as a percentage of the state's economy, appears to be at a record level this year and is approaching $10 for every $100 in personal income. It may have exceeded that benchmark, in fact, because the most recent numbers available are from the governor's budget proposal in January, which understated eventual spending and probably overstated the growth in the economy.

As of that writing, general fund spending was expected to total $6.86 per $100 of personal income. This is roughly in the range of where it has been for a generation, meaning that even as the economy has exploded, the size of state government has kept pace. If you want to go back to the dark ages when Pat "The Builder" Brown ran the state, the government then was spending just over 4 bucks in its general fund for every $100 produced by the economy, or about 70 percent less than the state is spending today.

I'm not saying that a case can't be made for more spending on any particular program. I'm just saying that it is far from clear that overall, state government is getting by on the cheap, at least relative to what California taxpayers historically have spent on public services.

Posted by dweintraub on November 27, 2007 6:09 AM