California’s Deficit is Biggest in Nation

A recent Rasmussen Report found that sixty-eight percent of voters view Congress’ job performance as poor. Failure in the eyes of the public doesn’t belong only to federal representatives. Many state legislatures face equally dismal public approval ratings. In California, the Legislature’s approval rating is just twenty-two percent. At the end of 2011, Hawaii Governor Neil Abercrombie earned the dubious distinction of the worst job approval rating among governors at just thirty percent. Oppositely, a majority of Garden State voters approve of the job performance of New Jersey Governor Chris Christie. In a recent poll, Christie’s job approval rating is fifty-three percent, and has not dipped below fifty percent since August 2011.

California, Hawaii and New Jersey have diverse approval ratings, yet the three states have one commonality: debt. In a recent State Budget Solutions study, California, Hawaii and New Jersey are among states in the worst fiscal situation. The study examines how total state debt is affected by state size, including population, among other factors. However, the study does not include analysis regarding the Constitutional limitations that each state developed to limit their respective debts.

The approval ratings in these three states may drop further if each constituency knew that Constitutional violations are being overlooked. Why would a state go to the trouble of amending its Constitution to limit spending powers if the legislature cannot assure citizens that spending will, in actuality, be limited?

Looking deeper into California, the Golden State places first among the states with the largest total deficits with $117,747,412 in outstanding debt. According to the American Enterprise Institute (AEI) data, the economic outlook ranking of California is just 47th out of the 50 states, indicating dismal future economic performance. Interestingly, the California Constitution is one of the longest in the world. The length is attributed to a number of factors, among them, a lack of faith in elected officials. The California Constitution includes individual rights that are broader than in the federal Bill of Rights, suggesting that Californians placed a lot of emphasis on protecting individual liberties and ensuring the government does not have an undue influence on the people.

The California Constitution specifically addresses debt in Article 16, Section 1. Here, the Constitution states, in part:

The Legislature shall not, in any manner create any debt or debts […] which shall, singly or in the aggregate with any previous debts or liabilities, exceed the sum of three hundred thousand dollars ($300,000), except in case of war to repel invasion or suppress insurrection, unless the same shall be authorized by law for some single object or work to be distinctly specified therein which law shall provide ways and means […]. [Emphasis added].

Unless California is at war or suppressing an insurrection unbeknownst to Californians and Americans alike, the California legislature is violating their own Constitution. An additional breakdown of the subsections of the study, including the definitions of “accumulated state budget deficit,” “single object or work,” as well as bond allowances may offer some Constitutional cushion, but the intent of the provision is clear: limiting the legislature from accumulating excessive debt.

Historically, the California legislature has spent in excess of 100% of its revenue for nineteen of thirty-six years since 1976. Not only does this overspending violate the Constitution, it depleted the Budget Stabilization Account (Proposition 58). Since constitutional debt limitations do not apparently suffice, voters approved the Budget Stabilization Account (BSA) in March 2004 to require the State Controller to transfer a specific percentage of estimated General Fund revenues from the General Fund to the BSA. Theoretically, the proposition was meant to help balance the budget.

However, since FY2008-09, the Governor has issued an executive order each year tosuspend the transfer to the Budget Stabilization Account. Strategically, in the 2012-13 Governor’s Budget, the expenditures from the account are labeled “Proposition 98 Expenditures,” while the empty transfer line item is labeled “Budget Stabilization Account.” Despite overwhelming public support to limit the debt California is rapidly racking up, it seems that the appropriators are happy to suspend efforts attempting to accomplish that end and will even use labeling techniques to help cover up these efforts.

Even more alarming, Governor Jerry Brown proposed in January that the state plug $5.4 billion of deficit by borrowing from other internal state funds, shifting property tax revenues from redevelopment agencies to counties and taking money from voter-approved funds for services for mentally ill and for young children.

So, how can Californians reconcile excessive spending with the violation of the Constitution and a voter-approved proposition meant to curb spending? It is readily apparent that tricky budgeting and below-the-radar executive orders indicate that the provisions mean little to California lawmakers. Lawmakers in the Golden State should follow the provisions in the state Constitution, the highest law of the state, and both address California’s massive deficit and create more responsible budgets in the future.

(Bob Williams is the President of State Budget Solutions; Kristen De Pena is an Associate Writer for Sunshine Review and State Budget Solutions. Originally posted on Fox & Hounds.)