CA Budget & Fiscal Policy is Unsustainable

May Revise 2017While the governor’s leadership has been the key to keeping California in the black and paying down debt, the Legislature continues to grow permanent spending based on an increasingly volatile revenue stream. The Legislature’s highest priority for environmental policy is sustainability. Yet today their highest priority for budget and fiscal policy is unsustainability.

Since the economic recovery began in 2010, taxpayers and the business community have grown the General Fund by $41 billion and special funds by $28 billion, representing an overall revenue increase of $69 billion or 63 percent. In addition, we have also grown local property tax revenues for Prop. 98 more than $10 billion, which is equal to a 72 percent increase.

While California is already the highest taxed state in the nation, the Legislature introduced bills to authorize more than $370 billion in new taxes and fees in 2017 — more than double the state revenues contained in the budget bill.  For example:

  • During this same period in 2017, state funding for K-12 education is set to grow $17 billion, or roughly 50 percent, while state employee pension and health benefit payments are set to nearly double to more than $14 billion.
  • There also is considerable growth in spending for health care and social services expansion.  Since 2009-10, Medi-Cal spending has increased by $9 billion in the General Fund and by $64 billion in state and federal funds.  California is committed, even under existing federal law, to picking up an increasing share of the federal portion.
  • In 2022, the hastily approved minimum wage increase of 2015 will be at full implementation, impacting General Fund costs by $3 billion and all funds by $10 billion.
  • The series of labor agreements approved this year-to-date commit the state to another $4 billion in permanent spending increases.

The passage of these spending priorities required the state to pass $5 billion in new taxes to fund critically needed road and infrastructure repair. Now it is time to prioritize major structural reforms that create long-term economic stability before another recession occurs, the impacts of which could be even more devastating than what we witnessed during the economic downturns in either 2001 or 2008. We must work towards a budget that better protects all Californians and our economy for our long-term future.

resident, California Business Roundtable

This piece was originally published by Fox and Hounds Daily

Comments

  1. askeptic says

    CA does not have a revenue problem, it has a spending problem.

  2. Patton'sGhost says

    CA is the Petrie dish of liberal governance…

    I breathe a sigh of relief that our home in the vaunted OPUSD closes escrow on the day after Independence Day… somehow, that’s ironic….
    Took the money & ran…
    Good luck, those of you still stuck there….

  3. Victoria Smith says

    To say that Gov. Brown’s “leadership” has taken us in the black is absolutely ludicrous. In 2010, the state government gave themselves hefty raises, after they screamed at us to tighten our belts. I do not know where all these glowing figures are coming from, unless they have continue to find money, like the $54 million that suddenly materialized in the State Parks budget. There has been at least two major mass exoduses of businesses in this over regulated, atmospherically taxed state. By the way, that is where most of their dollars are coming from, taxes…Prop 30, which segued into Prop 55 and yes, good old Jerry Brown manipulated the brain numbed voters in this state to vote for those. Then, we have the Oroville Dam debacle, which was caused by our state government and the unaccountable NGO’s that work for them, who diverted the taxes we pay for roads and infrastructure to their pet pockets, raises and perks, and now are raising our vehicle registration and gas taxes in their typical tyrannical manner. We need to recall Jerry Brown, Gavin Newsome and the whole lot of them.

  4. The California legislature is acting like children when it comes to spending money.

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