Monday, January 12, 2009

Causes of the Budget Deficit

In the last few weeks, I have thought a lot about the current budget mess in California. In order to understand how we got here, I thought it would be useful to go back to the time that our current Governor assumed office. Revenue growth has outpaced expenditures but as the Governor has said expenditures have outpaced revenues. So his argument is basically accurate. Over the period that the current Governor has been in office the following changes have happened on state spending and revenues:

Note - the underlying rate of inflation has been a total of about 15% and the concurrent growth in population was a total of 4.5% - Domestic outmigration about equaled the level of international immigration over the period.
PERSONAL INCOME TAX REVENUES +56%
DEPARTMENT OF CORRECTIONS AND REHAB +116% (Inmate population has grown from 151,000 to 170,000) The cost per inmate is just under $60,000 per year. At the start of the Administration the cost was about $30,000 per inmate.
K-12 POPULATION began to decline in 2007 (by about 30,000) to 5.9 million Average Daily Attendance.
HIGHER EDUCATION ENROLLMENTS - Community colleges had a slight decline - UC was up by about 50,000 and CSU by about twice that.

One other comment - getting these numbers is not as easy as it sounds. All of the budget figures during this administration are in electronic form. Yet, prior year budgets are not easy to get on the net. A good deal of the analysis done in the process is more incremental than it should be - the general components should be known and explained over a longer time perspective than just a year or two of prior budgets.

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