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Debunking a budget myth

A reader writes:

“California’s problem is mainly on the spending side. If we stuck to a budget increase of inflation plus population growth over the last 10 years, we would probably be in fairly decent shape.”

Sounds right, doesn’t it? The same perfectly reasonable supposition was expressed in scores of e-mails I received following last week’s budget ballot debacle.

Indeed, the idea that California’s budget has been out of control as measured against inflation and population growth is a deeply cherished talking point in the debate over the state’s fiscal deficit.

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Unfortunately, it turns out to be yet another infectious myth. The truth is that over the last 10 years, California’s spending has tracked population growth and price increases almost to the penny.

This finding comes from the nonpartisan legislative analyst’s office, which subjects the state budget to more careful scrutiny than almost anyone else in Sacramento.

Analyzing the 2008-09 budget bill last year, the legislative analyst determined that since 1998-99, spending in the general fund and state special funds -- the latter comes from special levies like gasoline and tobacco taxes -- had risen to $128.8 billion from $72.6 billion, or 77%.

During this time frame, which embraced two booms (dot-com and housing) and two busts (ditto), the state’s population grew about 30% to about 38 million, and inflation charged ahead by 50%. The budget’s growth, the legislative analyst found, exceeded these factors by only an average of 0.2% a year.

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My calculations show that the combined growth factors would have allowed the budget to grow even more. But for the purpose of argument, let’s use the legislative analyst’s more conservative number. That punctures the notion that the state has been on a drunken spending spree out of proportion to these common multipliers.

A couple of caveats are in order. These budget figures don’t include federally backed spending. Gov. Schwarzenegger’s ’08-09 budget included $56 billion in federal funds, mostly for health and social services programs such as Medi-Cal.

Nor do they include spending of bond proceeds or the various borrowing scams the governor and Legislature implemented, such as dipping into local government coffers.

The inflation factor, further, isn’t the consumer price index, which rose about 35% over the period, but a separate federal index of state and local purchases. This makes sense because the state buys relatively less of what’s measured by the CPI, like bread and hamburger meat, and relatively more of what’s measured by the government index, like healthcare, heavy equipment and educated workers.

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That said, it’s worth examining where the state does spend money, and why.

To dispense with a common bugaboo, yes, the state spends plenty on illegal immigrants. How much is impossible to specify because no one knows how many live in the state or what services they use.

My colleague George Skelton recently estimated this cost, net of the federal government’s skinflint contribution, at some $5 billion a year. As he observed, undocumented workers contribute plenty in taxes, too.

I would further add that we employ these people to tend our farms and gardens, build our homes and help raise our children.

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In any event, far more blame for the deficit belongs to California voters. Year in, year out, they enact spending mandates at the polls, often without endowing a revenue source.

“Budget management really is in the hands of the voters,” says Assembly Budget Committee Chairwoman Noreen Evans (D-Santa Rosa), who recently posted a video online cogently outlining the dysfunctional budget process.

Some of these programs have hidden costs -- well, not so deeply hidden. The three-strikes law saddled the state with hundreds of millions in costs to prosecute and jail thousands of innocuous defendants. After Proposition 63 expanded mental health services in 2004, the Mental Health Department’s budget expanded from $370 million to $1.5 billion.

From 1998 to the present, by my count, voters passed 27 separate bond issues to pay for school buildings, libraries, hospitals, highways, a high-speed rail system, stem cell research, veterans facilities, clean water and air, and more. These may be mostly worthy amenities, but that doesn’t mean they pay for themselves.

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Since 2000, the legislative analyst’s office reports, $85 billion in such borrowing has been authorized at the ballot box -- half of it in 2006 alone. Annual payments on these bonds have climbed from $2.5 billion in 1998 to more than $5 billion this year.

Then there’s budgetary borrowing, those little subterfuges so favored by our political leaders, which include the $15-billion deficit bond issue of 2004, the governor’s version of a credit card max-out binge.

Debt service on those borrowings rings in at more than $4.2 billion this year and next.

Every one of these items was approved at the polls. But here’s the real scandal of the California budget: Not a single one received the support of a majority of eligible voters.

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That’s because most voters are harder to get off their duffs than Homer Simpson. The California voter’s default approach to the ballot is a sort of militant apathy.

Only about 70% of eligible voters even register, and it’s rare for even 40% of the eligible to turn out. Undoubtedly many of them have better things to do with their time on election day, like shriek about politicians on talk radio and write profane e-mails to the newspapers.

The share of all eligible voters who cast a ballot on May 19 was 19%. Do the math on the 65% “no” vote on the key measures, and you find that it translates to about 12.5% of the California electorate.

This makes a mockery of Schwarzenegger’s claim that the election delivered a “loud and clear” message. What message? Proposition 1A, if passed, would have extended a parcel of tax increases for an additional two years. Who’s to say that the 81% of eligible voters who just stayed home didn’t intend to endorse the tax increase?

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But rather than blame the state’s fiscal condition on illegal immigrants or unthrifty politicians, they should blame their own stupefied -- or is it embarrassed? -- silence.

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Michael Hiltzik’s column appears Mondays and Thursdays. Reach him at michael.hiltzik@latimes.com, read his previous columns at www.latimes.com/hiltzik, and follow @latimeshiltzik on Twitter.


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