The Republican Big Lie: "It's a Spending Problem, Not a Revenue Problem"

[courtesy of The California Majority Report]

If you listened to Republican legislators, even those who know better like Assembly Budget Committee Vice Chair Roger Niello, or columnists like Dan Weintraub of the Bee, their tired budget mantra is that the current budget problem has to do with too much spending. They typically point to spending increases in recent years as evidence.
 
But like so much of California's budget, it’s a little more complicated than the simplistic glance that the right wing and quickie posts like to spend at addressing the real problems facing California.
 
Some have taken a quick look at General Fund spending totals over the past for years and come to the shortsighted conclusion that Government has grown by over $25 billion, or over 35 percent. But this does not come close to being an accurate measurement of spending growth or the growth of Government.
 
A more accurate description of spending levels the last for years is the analogy of a balloon that was squeezed at one end which forces an expansion at the other end. In the end, actual state spending has grown less than the growth of population and inflation over the past four years.
 
Here are some details:

• Four years ago, General Fund Spending for the 2004-05 year is listed at $79.8 billion. But that total does not include several short-term budget solutions that temporarily kept spending lower but did not at all effect the long-term spending levels.
   
  For example: 
• The General Fund expenditures for 2004-05 were reduced by $2 billion due to the use of Economic Recovery Bonds. So even though the total expenditures were reduced by $2 billion, these General Fund costs were essentially only shifted to bond funds rather than there being an actual reduction to state Government.
   
• Proposition 98 was suspended which reduced spending by $3.6 billion for what would have been the Constitutional requirement
   
• While this was real savings for that budget year, Proposition 98 requires that the state eventually gets back to what would have been the annual funding level had there not been a suspension as state revenues grow.
• The budget shifted $1.3 billion of schools spending from the state to local governments. This was done for two years, meaning there were short-term state spending reductions that would soon be shifted back to the state.
• The budget also suspended Prop 42 in 2004-05 with the promise that the $1.2 billion in savings would be added to future transportation payments.
• Without these and other minor short-term solutions, instead of the General Fund spending being $79.8 billion, a more accurate figure to be used for multi-year comparisons would probably be $88.3 billion (had the balloon not been squeezed).
• The squeezing continued in 2005-06 with the continued impact of the Proposition 98 suspension, the schools fund shift to locals, and other various fund shifts. But it also was the beginning of the increased spending totals due to repaying a $1.2 billion VLF "gap loan" to local government.
• For 2006-07, the balloon was really stretched with increased General Fund costs that are due to earlier squeezing. This includes $2.8 billion in debt payments, including transportation loan repayments, Economic Recovery Bond extra payments, and other various debts.
• For 2007-08, listed General Fund spending is $104.2 billion, but this reflects the expanded balloon to the tune of nearly $2 billion. This included $1 billion in extra ERB payments, repaying the STRS funds that had been withheld earlier, and more Prop 42 and Prop 98 "repayments".
• So had there not been these expanded balloon pressures, the 2007-08 General Fund spending would have been $102.3 billion.

So, to make accurate four year comparisons, the best figures to use would be $88.3 billion for 2004-05 and $102.3 billion for 2007-08.

This means that spending has increased a total of $14 billion, or 15.9 percent. The average annual growth is 4%, which happens to be less than the increase in population and inflation, which together have averaged about 4.8%.