There were once bright lines that separated the state’s general fund budget from its special funds.
The former was supported by broad revenues such as income, sales and corporate taxes and financed equally broad services such as colleges, prisons, K-12 schools and welfare.
The latter had specialized revenues and financed services tied to those revenues such as the gasoline tax-supported state highway fund’s construction and maintenance of highways, or the auto and driver’s license fees that paid for the Department of Motor Vehicles and the Highway Patrol.
By and by, however, those once-bright lines became blurred, especially during periods of fiscal distress.
Funds meant for one purpose were often “borrowed” to finance another, and services that had been in the general fund were transferred to special funds.
One effect of those frequent shifts is that it’s very difficult to make comparisons between different fiscal years and measure the overall reach of the state budget. But the Legislative Analyst’s Office gave it a try at the request of Sen. Mark Leno, chairman of the Senate Budget Committee, and clarified what has been a very muddled picture.
The LAO report points out, for instance, that back in 2007, before recession gripped the state, it had estimated that by 2012-13, general fund spending, then about $104 billion, would reach nearly $136 billion. In fact, however, actual 2012-13 general fund spending was just $97 billion, nearly 29 percent lower.
Gov. Jerry Brown’s proposed 2015-16 budget places general fund spending at $113 billion, still much lower than 2007 estimates. But does that mean that he and predecessor Arnold Schwarzenegger really clamped down on spending to cope with recession-battered revenues?
They did moderate spending from previous forecasts in response to revenue shrinkage, but the LAO report also reveals that many general fund activities have been shifted into special funds, thereby making spending growth seem lower than it truly is.
The biggest example occurred in 2011, a $7.2 billion “realignment” of responsibilities for probation, parole and low-level offenders from the state to counties, plus a host of other previous state functions.
The shift of money and control was financed by a dedicated share of the sales tax through a special fund.
When the LAO adjusted for realignment and other shifts, it tagged Brown’s 2015-16 general fund budget at $130 billion, much closer to those 2007 forecasts.
Combining general and special fund spending for historical analysis, the LAO also found, state expenditures have been remarkably consistent over the last three-plus decades at around 7.5 percent of Californians’ personal income, considered to be the fairest measure.
It puts all the rhetoric over whether we are spending too much or too little in perspective.