California Dreaming

CALIFORNIA DREAMING….I’m not quite sure why I did this, but I’ve been curious for a while about state spending patterns in California, what with that $35 billion deficit staring us in the face, so I went out and got the numbers today to find out what really happened.

The chart at the right shows spending as a percentage of GSP (the state version of GDP), and as you can see the average for the past 20 years has been 9.67% (yellow line). Basically, we went past that mark in 1998, but things didn’t really get out of whack until 2000, when the budget shot way past its historical average. As it turns out, if we had stayed at 9.67% our budget would be $14 billion less than it is. Since our deficit for next year is about $27 billion, that means that roughly half the problem is due to overspending (compared to historical averages) and about half is due to the bad economy. (Oh, yeah, and greedy power companies.)

As near as I can tell, this is an almost precise rerun of what happened in 1991. That year, after a decade of good times, the budget exploded just in time for the 1991-92 recession, causing our last budget crisis. The only difference is that the budget explosion seemingly all happened in a single year last time, while this time we spread it out over three years. What’s more, we had a Republican governor back then, and a Democratic one this time, so this particular failing ? assuming that a good economy will last forever ? appears to a bipartisan affair.

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