Saturday, December 25, 2010

California's state treasurer believes their situation is greatly exaggerated

Here is the money quote in Bill Lockyer's (the state treasurer) LA Times article which attempts to convince readers that California is really not that bad off.

"Our critics say we are addicted to spending. But the numbers show that isn't true. Thirty years ago, general fund expenditures totaled about $7.43 for every $100 of personal income. In the 2009-10 fiscal year, that ratio was almost $2 less, at $5.52 for every $100 of personal income. In the current fiscal year, per capita general fund expenditures will total $2,246, less than the $2,289 spent 10 years ago and roughly equal to the inflation-adjusted level of 15 years ago."

California's demise is greatly exaggerated -

Unfortunately those statements are gobsmackingly over simplified, especially given the author's credentials and responsibility.  If spending has actually declined as Mr. Lockyer implies, we begin by asking how he would define the problem?

For most assuredly cost of living has increased almost solely because of taxes and public programs.

On the business side, California has lost many of its anchor tenants. Lockheed, Bendix, Hughes Aircraft Company, General Dynamics, Boeing, Lear, Fairchild-Republic, Teledyne and General Motors have all vacated the premises.

Its school systems are now one of the worst in the nation, approaching third world status, and its population, better described as taxpayers, is declining. Here is a quote from another LA Times article:

In a survey of 1,000 Californians conducted in June by the Pew Center on the States and the Public Policy Institute of California, half of respondents believed state spending could be cut 20% or more with no impact on services. The report points out that the state would have to eliminate the equivalent of its entire prison system, all welfare programs and all transportation spending to save that much.

An ugly, temporary answer to California's intractable budget problems

It is difficult to over-exaggerate those statements.

In another article mirroring my own travels in the state:

On the western side of the Central Valley, the effects of arbitrary cutoffs in federal irrigation water have idled tens of thousands of acres of prime agricultural land, leaving thousands unemployed. Manufacturing plants in the towns in these areas — which used to make harvesters, hydraulic lifts, trailers, food-processing equipment — have largely shut down; their production has been shipped off overseas or south of the border.

Two Californias - Victor Davis Hanson - National Review Online

Once upon a time even Democrats understood the inherent structural issue of unionizing the public sector. Most states successfully dealing with bloated service issues are using private contracting of services as a pillar to control costs. Elected bureaucracies are the worst method of actually managing something.

But California's unions are only part of the issue. I am not being alarmist when I say I will surprised if Europe's penchant for rioting does not infect California.

1 comment:

  1. Exactly. But state budgets everywhere tend to grow faster than economies, and since they are based on the Ponzi scheme of taxes, they are vulnerable to downturns especially given that politicians have figured out that using the people's own tax money to appease special interests tends to get them re-elected.