…Horrible, No Good, Very Bad Budget
A Look at the State Budget from the “California Street”
There is something indescribably annoying about wading through the fetid swamp of the California state budget, especially for the non-expert. A well-groomed online version of the proposed 2009-10 budget, the one that (with recent crisis revisions) is going to result in a deficit increase of $8 billion or more, can be reviewed here. If, that is, you have the grit, the patience, and the stomach for it. In the end, we can only report. You will have to decide what the budget proposal is telling you.
The proposed 2009-10 total state expenditures in the extant Governor’s Budget amount to $134,764,078,000, including general fund, special fund, and bond fund expenditures (bond funds cover a little over $7 billion of that).
Of course, that’s state expenditures. As we will see, this figure doesn’t include California expenses that are paid with federal funds.
The largest single block of state expenditures goes to K-12 education, for which proposed expenditures are $54.8 billion. It is difficult to make sense of the various pieces of information out there on the proposed state K-12 education budget, so for this budget element I am relying on the 3 February 2009 analysis of the non-partisan Legislative Analyst’s Office (LAO), whose figures accord with a funding reduction of over $6 billion from the originally proposed $61.1 billion K-12 total in the Governor’s Budget. (This amount is the K-12 portion of the total $8.4 billion reduction proposed for K-12 and the state community colleges, or “K-14.”)
With the California Department of Finance’s demographic projection of 6,199,569 students in the state K-12 system in 2010-11, this works out to total state and federal expenditures per pupil of about $8,850.29 in the relevant budget years. This amount does not include county expenditures per pupil on education.
The next largest budget item is the Department of Health and Human Services, which in the Governor’s Budget will get $37,985,503,000 in state funds, and with federal funds will account for expenditures totaling $82,345,579,000.
We could say “Wow” now or later. May want to save it for later. We’ll come back to HHS.
(The question whether California is still a “net donor state” in terms of federal revenues and outlays comes up here, and is obviously of interest. The latest data I can find showed California still as the number 1 donor state through 2005, and number 51 among recipients, which include the 50 states and the District of Columbia. As we would expect, DC occupied the exact opposite positions in the list.)
Coming in at number three as a state expenditures item is higher education, which gets $13,088,118,000 from the state, and with federal government expenditures included, receives a total of $39,099,827,000.
Adding total K-12 and higher education expenditures bumps “education and research” to a total of $93,977,827,000. This puts education as a whole ahead of health and welfare programs, although a substantial portion of the higher education expenditures actually goes to research, and the operation of teaching hospitals and laboratories.
Interesting factoid: adding education, research, and health and welfare programs together, the total proposed California expenditures (of $176,323,416,000) are a little less than the aggregate product of the state’s second-largest industry – manufacturing – in 2006 (a year in which the state GDP was $1.8 trillion). California is spending a whole industry’s worth of production on these four areas. Of course, over $90 billion of that $176+ billion comes from federal funds. Some of those federal funds in their turn come, like happy cows, from California.
Business, transportation, and housing is the final budget item in the double-digit billions, coming in at $11,963,283,000 in state expenditures, and a total of $18,236,898,000 with federal funds added in. About $10.6 billion of this goes directly to capital road projects and maintenance, with another $2.02 billion to operate the Highway Patrol, and $483 million to mass transit improvement and maintenance. Much smaller budgets keep the DMV and other service agencies in operation.
Aha! As a middle-class taxpayer, I have finally found, in this budget, some state services I actually use. There’s more, down in the smaller numbers.
Down at $5,616,378,000 from the state is the Department of Natural Resources, which manages the California Department of Forestry and Fire Protection. These are the folks who show up and help your local firefighters protect your home from wildfires. One of the most basic of public services. The state proposes to spend $855,478,000 on the CDF in 2009-10. Federal funding support is projected to bring the total to $1,802,008,000, or a little under 1% of the total budget for education, research, and health and welfare programs.
Fascinatingly, Governor Schwarzenegger has warned that the CDF budget will have to be cut in 2009-10, if voters fail, on 19 May, to approve the set of state propositions that would make it easier for legislators to raise taxes and redirect state funds. I have to say that in a budget reflecting – at a minimum – total state expenditures of more than $110 billion (even if the governor sticks with his $15 billion in cuts from the original proposal), it seems very unlikely to me that we really and truly have to look for $80 million in savings from the firefighting budget.
But there are other interesting aspects of this budget, from the middle-class taxpayer’s perspective. Water resources are, of course, a major concern for California, what with the ever-present threat of declining reservoirs in some areas, and existing resources being withheld from human use by federal injunction in others. Of the total Natural Resources expenditures (with federal funds) of $12,344,747,000, how much might we imagine is going to infrastructure improvements and state water services? About $965 million, it turns out, if we add up infrastructure expenditures and those on service provision, and water control and public safety (e.g., guaranteeing safe water quality. Additional funding for this is provided through the Environmental Protection Department, which operates the Water Resources Control Board).
There is, however, a Resources allocation of $150,139,000 for this line item: “Continuing formulation of the California Water Plan.” This enterprise of the state requires the services of a surprising 387 people.
One of the larger items ($4,271,583) in the Natural Resources budget is “Energy Resources Scheduling,” a legacy of managing long-term contracts for outside energy that were concluded during the power crisis under Gray Davis.
On the hunt for other expenditures important to the middle-class taxpayer, we find state assistance to local law enforcement, under the heading of “general government.” Assistance to police and sheriff departments, and to juvenile and probation programs, is accounted for in a budget totaling $364,785,000. Of course, the counties and cities spend their own (declining) revenues on these local services, and in most urban areas the local authorities provide the bulk of the funding.
Speaking of law enforcement, state expenditures on corrections are proposed at $9,736,025,000. This amount is a reduction from the 2008-09 budget proposal of $10,356,399,000. Of 12 budget line items listed in this category, reductions are proposed to 10 – with the exception of “Community Partnerships” and “Education, Vocation, and Offender Programs-Adult.” The prison operation budget is cut by about $37 million. Some of the reduction in overall funding is offset by the shift of drug and alcohol programs to other budgetary line items; portions of it are realized through eliminating parole administration for certain classes of offenders.
The state courts system is to receive a total of $4,033,441,000 in funding, nearly $3.4 billion of that going to trial court funding. The 2009-10 state expenditures are, however, a reduction from the previous budget.
We should not neglect the total expenditure on the California National Guard, which comes to $146,333,000. Of course, most Guard funding comes from the federal government.
In terms of basic public services, the kind – other than K-12 education – that the actual paying taxpayer derives benefit from, the total expenditures proposed for 2009-10 appear to amount to about $30.6 billion. So, we have total expenditures on education, research, and health and welfare programs of something over $176 billion, and on public infrastructure, resources, and public safety and services of about one-sixth of that.
A Closer Look at Education, Health, and Welfare
Within K-12 education, we may note, the largest percentage increase for a budget item is in Special Programs, for which the budget is to increase from $4,378,440,000 to $5,142,935,000. (The revised crisis budget proposal appears to reduce this increase by about $19 million.) It is probably best to let “Special Programs” speak for themselves:
30 – SPECIAL PROGRAMS
30.10 – Child Development:
Provides a full range of child care and development services, including part- and full-time child care and development and supportive services to children from low-income families and families with special needs. Several different programs exist to target resources to specific populations or to address specific needs. The State Preschool Program provides a wide range of educational services in part-day settings for pre-kindergarten (three-four year old) children from low-income families and parent education for the parents of eligible children. The After School Education and Safety program provides students in grades K-9 with academic support, homework assistance, and enrichment programs, in a safe after-school environment. Child care services for families participating in the California Work Opportunity and Responsibility to Kids (CalWORKs) program help public assistance recipients achieve and maintain self-sufficiency. The Department of Education administers child care for CalWORKs Stages 2 and 3.
30.20 – Child Nutrition:
Assists participating public and private schools, county offices of education, public and private residential child care institutions, camps, family day care homes, and non-residential adult day care centers in serving nutritious meals by providing educational and technical assistance, and federal and state subsidies. Subsidies are received from the United States Department of Agriculture (USDA) to fund the National School Lunch Program, School Breakfast Program, Special Milk Program, Child Care Food Program, Adult Day Care Food Program, Summer Food Service Program, After School Meals Program, and the Nutrition Education and Training Program. Subsidies also are provided by the state through the state-mandated Child Nutrition Programs, the School Breakfast start-up grants program, and the Meal Supplement for Pregnant and Lactating Students Program.
30.50 – Food Distribution:
Makes surplus USDA donated food available to certain California public, private, and nonprofit agencies. The Department of Education is designated as the California State Agency for USDA surplus food distribution.
The Department of Health and Human Services is proposed for a $334 million hit (in state-provided funds) to its Department of Developmental Services, which has 7,262 employee positions, and a budget of $4,571,004,000. However, the actual decline in funding for this department is from $4,645,716,000 in the previous budget to $4,571,004,000 – or $74,712,000 ($74.7 million). Federal funds appear to be picking up about $260 million of this slack.
The DDS provides services to the developmentally disabled, including those with mental retardation, epilepsy, cerebral palsy, and autism. According to the “Summary of Major Changes” for the 2009-10 budget,
The DDS Regional Centers continue to experience significant and unsustainable expenditure growth. The DDS will work closely with the regional centers to manage program expenditures while meeting consumer service needs within the existing 2008‑09 appropriation authority. For 2009‑10, the DDS estimates that absent changes to contain costs, there will be significant caseload and expenditure growth. The budget establishes a savings target of $334 million. The DDS will work with the Legislature and stakeholders in the coming months to develop proposals to maintain the 2008‑09 fund level and achieve the targeted savings while maintaining the entitlement and ensuring program and service integrity.
The other major element of the HHS budget taking an actual hit is the Department of Social Services, which administers the welfare programs: SSI/SSP, CalWORKs, TANF, etc. Its funding is proposed to decline from the current $20,253,099,000 to $19,252,273,000, or a reduction in total expenditures of a fraction over $1 billion. More than half of this amount comes from adjustments to CalWORKs described as follows in the Summary of Changes:
A decrease of $123.5 million in 2008‑09 and $696.9 million in 2009‑10 for the CalWORKs program. These savings would be achieved by modifying the Safety Net program to reward working families who are fully participating in federal work requirements with continued maximum Safety Net benefits, imposing a 60‑month time limit on assistance for certain child‑only cases, implementing a six‑month self sufficiency review requirement to engage families who are not participating in work requirements, and reducing monthly assistance payments by 10 percent. Due to the shifting of federal funds, these proposals also result in General Fund savings of $24.3 million in the DDS budget and $192.6 million in the California Student Aid Commission budget.
One might have thought there was already a six-month self-sufficiency review to engage families who are not participating in CalWORKs work requirements, but apparently one would have been wrong. Reducing monthly assistance payments by 10 percent appears to be the concrete measure here, and perhaps will realize the savings hoped for over the current $5.3 billion CalWORKs budget. The 2009-10 budget also proposes suspending COLA for CalWORKs and SSI/SSP indefinitely, a measure that would not actually decrease expenditures, but might keep them from going up.
“Might,” of course, is the operative word: nothing in the budget or any current legislative proposals will prevent new beneficiaries from being added to the state’s welfare rolls in the coming months.
(This is as good a place as any to highlight the proposed budget’s handling of unemployment compensation funding, found in the Labor and Workforce Development budget item. It’s proposed to decline in the 2009-10 budget. State unemployment and disability are comparatively small line items anyway, unemployment being funded at $9,523,312,000 in the current budget. This represents a substantial increase over the $5,890,661,000 expended in the 2007-08 budget, but the 2009-10 budget proposes to bring it back down to $7,724,815,000, or by about $1.8 billion. Presumably this proposal is based on optimistic economic projections, and the assumption that unemployment claims will decline. Overall, the state Labor and Workforce Development department’s budget is proposed to decline from $16,115,778,000 to $14,462,876,000, indicating that the substantial reduction in funding for unemployment claims is the major one anticipated for the department. Notably, unemployment disability disbursement expenditures are proposed to rise from $5,159,854,000 to $5,335,767,000. Disability payments came in at $4,523,209,000 in the 2007-8 budget. The projection about their increase appears to be based on seminal factors as well as current economic predictions.)
Expenditures on health care services are proposed to increase in the 2009-10 budget, from $39,894,427,000 in the previous budget to $40,673,587,000. The state’s share of that in 2009-10 is about $17.6 billion. The largest single item in this budget is, of course, Medi-Cal, which accounts for over $40.1 billion of it. Medi-Cal expenditures may not rise as they might have, without implementation of the following measures in the proposed budget:
- A decrease of $50.8 million in 2008‑09 and $668.7 million in 2009‑10 for various eligibility and benefit changes in the Medi‑Cal Program, including:
- $39.4 million ($19.7 million General Fund) in 2008‑09 and $258.8 million ($129.4 million General Fund) in 2009‑10 by eliminating certain Medi‑Cal optional benefits for adults, including dental, optometry, and psychology.
- $4.4 million ($9.4 million General Fund and increased federal funds of $5 million due to diminished recoupments) in 2008‑09 and $64.6 million ($139.9 million General Fund and increased federal funds of $75.3 million) in 2009‑10 by providing “limited‑scope” benefits to newly qualified immigrants and immigrants who permanently reside under the color of law.
- $9.6 million ($4.8 million General Fund) in 2008‑09 and $142.4 million ($71.2 million General Fund) in 2009‑10 by implementing month‑to‑month eligibility for undocumented immigrants unless a subsequent emergency ensues.
- $5.2 million ($2.6 million General Fund) in 2008‑09 and $176.4 million ($88.6 million General Fund) by reducing income eligibility for the Medi‑Cal 1931(b) program and modifying eligibility for two‑parent families by redefining under‑employment.
- $54.2 million General Fund and an increase of $54.2 million in federal funds in 2009‑10 by reducing reimbursement rates for public hospitals and instead using federal funds for particular public health programs.
- $28.6 million ($14.3 million General Fund) in 2008‑09 and $371.6 million ($185.8 million General Fund) in 2009‑10 by increasing the Medi‑Cal share of cost requirement to the 2001 eligibility level for the Aged, Blind, and Disabled program.
- A shift of $85.5 million from 2008‑09 to 2009‑10 to reflect a one‑month delay in checkwrite payments to Medi‑Cal fee‑for‑service providers. This proposal is in addition to a previously authorized two‑week delay under current law.
It is probably not too early, at all, to implement month-to-month eligibility for undocumented immigrants (unless a subsequent emergency ensues), particularly if doing so can save the state $142.4 million in the next budget. There are some who might even think such a measure was long overdue.
Encouragingly, California proposes to add $584,000 to the budget for Medi-Cal Program Integrity and Eligibility Verification; a change we can surely all believe in, if perhaps one that could use a little more “juice,” in administering benefits that run to over $40 billion.
As with the welfare programs, there is only one concrete, cost-saving policy change in the state health programs, and that is the elimination of dental, optometric, and psychological services benefits for adult Medi-Cal recipients. This ought to save some money out of what would otherwise been spent on those benefits – although it cannot be a large amount – and perhaps the adjustments to eligibility criteria will too. But as with the welfare programs, the state health services are an entitlement. You show up meeting the criteria, the expenditure on you is obligated. What will stop more people from meeting even the adjusted eligibility requirements, in the coming months? The improving economy that is supposed to allow the state to save $1.8 billion on unemployment claims, perhaps?
Some Fascinating Miscellany that Might be Missed by the Casual Reviewer
Some things in the budget don’t immediately make sense. I have never thought public employee pensions were our biggest budget problem, and by the numbers they certainly are not, in California in 2009-10. Total expenditures on the teachers’ retirement system are proposed to be about $9.8 billion in 2009-10, not an amount that would strike one as way out of line. It is not clear to me, however, why the number of personnel positions in the teacher retirement system needs to increase from 710 in the 2007-8 budget, to 846 in the current budget, to 865 in 2009-10. What has happened since 2006 that requires an increase of over 20% in personnel positions?
The separate Public Employees Retirement system took a big jump in personnel positions from the 2007-8 budget to the current one: 1,950 to 2,346. I would be interested to know what justified that jump, before deeming the 18-position cutback in the 2009-10 budget (down to 2,328) a sufficient cost-saving measure.
I am all in favor of Science Centers and Exposition Parks. But in a near-catastrophic fiscal environment, bumping the personnel positions of the California Science Center (in LA) from 180 to 189, and the budget from $24,262,000 to $28,439,000, seems to require some special justification. We are, after all, declining to fund dental and optometric services for adult Medi-Cal recipients, and banking on drastically reduced unemployment claims – and the governor is threatening cutbacks to the CDF firefighting budget.
Regulation of utilities appears to be quite costly in California, having bounded from $447.5 million in 2007-8 to $568.5 million in the current budget. The 2009-10 budget proposes spending $703.5 million on it. This is something of a head-shaker, especially since the administration of the Universal Service Telephone Program, which guarantees phone service to all at a 2009-10 cost of $638,749,000, is a separate line item. One wonders what exactly the Public Utilities Commission plans to do with that $703.5 million, and why the amount needs to be so much more than it was in 2007-8. Whatever the reason, we’re paying for it with our gas consumption surcharges and phone service surcharges (check your monthly statements), which account for almost $900 million of the funding for the Commission’s proposed $1,364,724,000 budget.
The good news about the Fair Political Practices Commission is that its proposed funding of $8,312,000 is down from the current budget (although up from the $7,824,000 in the 2007-8 budget). The other news is that the proposed budget retains the extra 9 positions in the current budget, which represented an increase from 69 to 78 positions. These are the folks who, among other things, “ensure that election campaign and expenditure data is fully and accurately disclosed,” so perhaps we should simply rejoice that there are 78 of them on the job, and move on.
A very cool item is the Commission on State Mandates, whose budget has been bouncing around rather dramatically. From $53.7 million in 2007-8, it plummeted to $14.4 million in the current budget. However, the 2009-10 budget proposes to establish it on a higher plane of existence, at a funding level of over $146.6 million. What do the Commission’s 12 personnel do for us? They “fairly and impartially hear and determine if local agencies and school districts are entitled to reimbursement for increased costs mandated by the state.”
Perhaps, although unemployment claims are going to go down, and more CalWORKs recipients are going to participate in work requirements, state planners expect economic conditions to bring local agencies to the Commission on State Mandates ten times as often, to represent their need for mandate relief.
Before leaving this topic, we should not fail to consider the Energy Resource Conservation and Development Commission. The Commission’s funding steadily declines from $545,109,000 in 2007-8, to $414,539,000 in the current budget, to a proposed $407,194,000 for 2009-10. This steep budget decline is occurring, however, in conjunction with personnel position increases from 482 to 578 to 593, respectively – making one wonder what exactly they’re doing down at the Energy Resource Conservation and Development Commission, other than sending each other memos. Well. Their charter, at any rate, is to ensure “a reliable supply of energy to meet the state’s needs, while protecting public health, safety, and the environment.”
I have to say, this investigation of the California state budget has been extraordinarily painful and time-consuming. That in itself is worth noting. That we have a state Arts Council employing 18 people, whose largest funding source for a $5.6 million budget is the state’s Graphic Design License Plate Account, seems surreally emblematic of the way state programs and spending have metastasized in my lifetime.
We propose to employ 320 people in the Department of Managed Health Care in 2009-10 – that’s 27 more than in 2007-8 – to oversee the operation of HMOs in California. (The Department does provide this service.) The Highway Patrol, with over 11,000 employees and one of the oldest of public service missions, operates on a $2 billion or so budget that comes in at less than half that of the “unsustainably” growing Department of Developmental Services (which has around 7,200 employees). The state proposes to spend $132 million more to operate the Commission on State Mandates in the coming budget years, but has to cut the budget of the state prison system by $37 million, and threaten citizens with $80 million in cuts to the CDF firefighting budget.
As Daffy Duck would have put it, “Thomething amith, here.” A few observations about the California budget, after this necessarily brief tour d’horizon.
First, California is spending a lot on education, even looking only at K-12 expenditures. I have no doubt that the funding reduction of some $6.6 billion proposed for K-12 is a painful prospect, particularly with county property tax revenues declining throughout the state. But it takes no more than the common sense of the experienced adult to recognize that $54.8 billion is still a lot of money; and the ordinary, intelligent citizen is not misguided to suppose that it ought, in fact, to be enough to educate 6 or so million K-12 students.
We have every right to ask why proposing a K-12 budget of $54.8 billion requires laying off thousands of classroom teachers. That’s the question I want the answer to. Naturally, we do not want to see teachers laid off if they are teaching our children. But this issue isn’t fundamentally about layoffs or total spending. The unexamined proposition I am not willing to accept is that California’s children can only be educated if the state spends $61.1 billion in the 2009-10 budget. What I want to know is, What are we spending money on, that $8,850 per pupil from the state budget is inadequate; and a budget cut – one that largely amounts to not increasing spending by a set rate per line item – causes the school system to fire teachers first?
It is absolutely absurd to suggest that California is spending inadequately on education. California may very well be spending stupidly and misguidedly on education. But inadequately? Try selling that one down the street. No sale here.
The second observation is that federal funds pick up a lot of California’s state expenditures already, such as well over half of welfare and health program expenditures, and expenditures on higher education and research. This doesn’t make California different from the other states, of course. And if California is not still at number 51 as a recipient of federal funds, it is surely still in the high 40s, and a net donor state.
But as we are seeing with Obama’s threats over the in-home care wages issue, reliance on federal funding means living by Washington’s rules. Those rules end up constraining states to spend in ways they may not want to, as Governors Jindal, Barbour, and Palin have observed in making decisions about accepting federal stimulus money. Governor Schwarzenegger might well be moved to make the same observation, as Washington holds his state’s federal stimulus funds hostage to a wage increase for in-home care workers.
Having the option to use federal funds also carries with it the ever-present risk of encouraging the state to be sloppy and imprudent about its spending commitments. But I suppose that’s obvious, and would probably be regarded by some as an old-fashioned – even outdated – point.
A third observation about the budget is that for the all the tumult and shouting surrounding it, it is, in essence, fiscal business as usual. The cuts to spending – even the widely-decried cuts to the K-12 budget – are marginal, not fundamental. Suspending Proposition 98 mandates that drive education spending levels (and by implication, increases) accounts for much of the 2009-10 cutbacks to the K-12 budget. This is a stopgap measure, and a fiscal maneuver, but it is not an education policy decision.
The same is true for welfare and health spending. The budget proposes to realize savings from suspending COLAs, and from tightening eligibility criteria, and some enforcement, on the margin. (And of course, shifting $85 million in current-year costs to the next budget cycle, by sleight of hand.) It will eliminate a small category of health services, and it proposes to cut monthly CalWORKs payments by 10%. Only these last two measures are guaranteed to prevent particular elements of line-item costs from rising (and the numbers involved are small compared to overall HHS expenditures). Meanwhile, economic and demographic factors could easily overwhelm any savings from these and the other measures, and end up presenting the state with entitlement obligations outstripping the planned budget for them. In fact, if I were a betting person, I’d bet that they will do exactly that over the next few years.
This is not a budget that changes the state spending posture. It takes a big, approximately 11% whack out of proposed education spending (a smaller whack when we compare the “reduced” 2009-10 spending with actual spending from previous budget years). But it leaves virtually all the state’s existing forms of expenditure in place, with policy on their scope and priority hardly changed at all.
A serious attempt to correct California’s fiscal course would include eliminating or sunsetting a lot more line items, instead of adding personnel positions to dozens of program elements no one has ever heard of, and adding funding to centers and commissions a retrenching state should probably recognize it cannot, at present, afford.
But, of course, such a serious attempt would also address the elephant in the room, the subject of my fourth observation, which is: Holy food stamps, Batman – we spend a lot on health and welfare programs. Divided by the nearly 38.3 million Californians estimated to be inhabiting the state as of January 2009, the combined total of state and federally-funded spending in the 2009-10 budget proposal (over $82 billion, see above) represents $2150.43 per person. (For comparison, the average individual tax burden in California, from state and local revenue programs, was $4,571 in 2005-6.) Of the total expenditures of state funds in a budget cycle, health and welfare represent 28%, typically behind only K-12 education in terms of spending rank.
Health and welfare spending involves a whole lot of money that we don’t propose to seriously restructure or change our policies on, when the economy deteriorates. We are apparently willing to compromise state corrections, fire teachers, and cut funding for CDF firefighting before we will actually change our entitlement policies – as opposed to merely trying to realize savings on the margins. The most impressive thing about health and welfare in the 2009-10 budget is how small the proposed cuts are.
An additional observation about health and welfare relates to this latter dynamic. It is very informative to look, as we did earlier, at the proposed allocation for unemployment claims in 2009-10, which the Governor’s Budget seeks to reduce from the current budget by $1.8 billion. At $7.7-some billion, the proposed unemployment claims budget is very small compared to health and welfare. But the budget projection is that less will be needed in the next budget for claims.
By contrast, the need for an essentially unreduced level of health and welfare assistance is assumed to continue, apparently independent of how the economy is performing. (There also seems, conversely, to be little sense that new beneficiaries may flood the social services system as economic performance worsens.) The budget treatment of social services certainly argues that they are seen as a permanent feature of state spending – one that there is no intention of sunsetting, or eventually seeing a substantial percentage of beneficiaries “graduate” from.
The Bottom Line
Look, most of us on the right could have said, before reading this lengthening meditation on the California budget, that we spend stupidly on education, wildly on health and welfare, unthinkingly on goofy little anonymous line items – and far too much overall. It is impressive to see, however, than on closer investigation, these often-rote assessments are, in fact, exactly correct.
It also brings home the point that we cannot improve our fiscal condition by tinkering with spending on the margins. The numbers are just too big. Spending on state programs in California has taken over a huge portion of the economy (with GDP of $1.82 trillion in 2007). The only thing that will work is policy changes that roll back intentions and expectations about major programs. If we want to recover fiscal health, we cannot maintain so many people on welfare, and we cannot pay for so much health care for so many people. And if we decide to act on that reality, it’s not fiscal collapse we want to choose as our method; it’s coming up with a different plan.
If we do not want cuts to K-12 spending to produce teacher layoffs, we need to look at our priorities for education spending. In a down economy, why would we cut teacher positions instead of administration, auxiliary “child development” services, and construction programs? Do we have an education system to educate children, or do we have it to employ childcare workers and construction firms?
And when we look at public services we justifiably think are underfunded – perhaps schools, but certainly road improvement and maintenance, water distribution projects, and others – we will have to look for redress not in increased taxes on an already heavily-taxed citizenry and business sector, but in spending cuts where we spend the most. As long as our systemic approach to health and welfare entitlements is sacrosanct, it is not possible for us to improve our fiscal condition – and our fiscal condition is likely to keep having a deleterious influence on our overall economic condition.
As a final thought exercise, consider how we have approached the need to cut state spending. First, by trying to mitigate that need with tax increases, on a state that already has one of the highest tax burdens in the nation.
Next, with minor savings (few genuine cuts) on the margin across various programs – but no moratorium on spending or personnel increases in many of the smaller programs.
Then, with some actual cuts, the largest of which, either absolutely or percentage-wise, are proposed (or threatened) to the most basic, time-honored state services relied on by the most Californians: K-12 education for our children, correctional facilities and parole administration to keep the public safe from proven criminals, firefighting – in a fire-prone state and a fire-prone climate cycle. (And also, as I’ve noted, cuts to unemployment compensation: during an economic downturn.)
Finally, when the big whack was taken to the proposed K-12 education budget, the state began firing…teachers.
There are multiple layers of wrong here. And if, as the cynical have speculated, the governor and the state legislature are proposing the cuts most likely to alarm voters, as a means of persuading us to vote for the tax increases inherent in Propositions 1A-F, that is the first and most egregious layer.
One thing is certain. Voting “Yes” on 1A-F is a vote to continue overspending as usual, by enabling it for a while longer with higher taxes. Q.E.D.