Saturday, August 18, 2012

Hide the Pea - Shoebox accounting in the 21st Century

California has been a basket case budget-wise for the better part of a decade.   It caused one governor (Gray Davis) to be recalled and has allowed the next two governors to go through an elaborate dance each budget cycle trying to "balance" the budget.    But according to an interesting article from Kevin Yamamura in the Sacramento Bee, the numbers are not the numbers.  His article states that "According to Finance Department data, annual total spending from 1993 to 1999 was slightly lower as a share of California income than in the budget Brown signed in June."   That is very different picture than the one painted by most members of the political class.  The article is well worth the read.

Yamamura's article does not point fingers but tries to explain.  A lot of the complexity has come from convoluted program changes.   Some expenses that were formerly paid out of the General Fund are now paid out of special funds.   For example, some rural fire support is paid through a direct tax on rural residents.   All of that makes sense but at some point it would be helpful to have two things which the current system does not provide - namely a unified revenue picture and a unified expenditure picture.   The article quotes Jason Sisney of the Legislative Analyst office who says it is too complex to allow "easy description" but he goes on to say it is not bad, just complex.    From my view much of the complexity is unnecessary.  Government should attempt to clarify just how much is being collected and spent - from all sources.

In his first term as Governor, Ronald Reagan proposed that state spending be tied to a percentage of gross state product.   The initiative went down in flames but the concept was sound.   How much of our dough have we committed to spending through the state of California?  That could be from income, sales or corporate taxes or from special levies.   When one receives a service from government they rarely ask was this funded from the General Fund or from a special levy - but they are concerned about the quality of the service being delivered.    The complexity may serve the political class but it does not serve the rest of us.

Read more here:

No comments: