What Caused California’s Crisis?
The Associated Press reports today (July 21) that California lawmakers may have finally found a way to solve their budget impasse through an agreement that includes major budget cuts. While the details of the budget deals are not yet known, according to the article’s author, Judy Lin, we know what caused the problem in the first place. She writes: “While California has been criticized for spending beyond its means, much of the current deficit can be traced to a steep economic downturn that has robbed the state of tax revenue.”
Certainly it is true that the economic downturn has depressed tax collections in California as well as around the country, but Lin shouldn’t have dismissed the spending argument without a fair analysis of the facts.
According to usgovernmentspending.com, in the last ten years, California’s state government went from spending about $75 billion to almost $150 billion. In other words, state spending nearly doubled. During that time, the size of California’s economy grew by about 58 percent. That’s significant growth, but didn’t keep pace with Sacramento’s spending. Had government grown just at the rate of the rest of the economy, government spending would be about $30 billion less—and California’s budget would be balanced.
Yes, it’s tough for lawmakers when boom times don’t continue uninterrupted and tax payments slow. But it’s foolish for anyone to assume that good times are going to last forever and not to plan for contingencies. Lin shouldn’t let lawmakers off the hook by suggesting that the crisis was all due to circumstances outside of their control. Policymakers made bad choices and voters should realize that so they can encourage their elected officials to behave more responsibly in the future.