Over many decades, Californians built the best public education system and the finest, most accessible higher education system the world had ever seen. We invested in transportation and water systems. We built parks and protected our environment so that we had clean water to drink and air to breathe as the population grew by tens of millions. It is this public infrastructure upon which we built our thriving private sector. The two are irrevocably dependent upon another.
Unfortunately, Governor Arnold Schwarzenegger and his Republican colleagues are proposing a state budget that would disassemble much of what we’ve built in the past 50 years. Their approach represents a reversion to smallness in thinking, instead of creative problem solving.
Facing a $19 billion state budget deficit, the governor has proposed further cutting education, eliminating CalWORKS and programs for poor children and decimating in home support services for frail seniors and the disabled. If the Legislature were to approve the governor’s budget proposal, the unemployment rate would rise another 1.8 percentage points.
As we search for a solution to our budget crisis, it helps to understand how California’s General Fund spending grew over the past decade. Between 1997 and 2007 our state budget grew from about $57 billion to $102 billion, although that number has been cut to $84 billion given our current fiscal woes. Republicans claim that this growth was due to out-of-control spending. The facts tell a different story.
The largest component of General Fund growth, about $33 billion, came directly from population growth, coupled with inflation. A growing population means there is an increased need for essential public services like schools, roads and water. A second large area of growth was in the Department of Corrections, which grew from 5.3 percent to 11 percent of the General Fund in the last 10 years. Voter-approved transportation and infrastructure expenditures round out those increases, along with the $6 billion annual hole in the General Fund the governor created when he cut the vehicle license fee, which the state has to backfill.
While our expenditures grew, we also saw a shift in how we fund government services. Thirty years ago, 35 percent of our General Fund revenue came from individual taxpayers. Today, individual taxpayers shoulder 53 percent of the General Fund. During that same time, corporate income taxes dropped from 14 percent to just 10 percent of our General Fund revenue. All of this happened while net income from corporations has grown 411 percent and personal income has grown just 25 percent.
We can get our state out of its dire fiscal situation, but it can’t be done with cuts alone – our approach must be balanced with tax reforms and new revenue.
We must make smart choices to balance our budget without dismantling this wonderful state of California. When faced with the urge to destroy everything that makes us great, we must remember that investment, not decimation, is what made our state golden in the first place.
State Senator Mark Leno