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California desperately needs a spending limit and a rainy-day fund for emergencies, but Proposition 1A won't do the job. It won't contain spending, and its rainy-day fund is full of leaks.
The need to control state spending is now plain to any impartial observer. Revenue from all sources grew from $100 billion to $194 billion over the 10 years preceding the fiscal crisis that hit last year, almost twice as fast as inflation and population growth.
Yet despite this gusher of new money, the state emerged in mid-2008 with a prospective deficit in the vicinity of $15 billion. As the economy slid into recession, the prospective deficit grew to $42 billion by Jan.1of this year, according to the Department of Finance.
This did not have to happen. Even without the recent tax increases, anticipated revenue from all sources this year is about $185 billion. If spending for the last 10 years (starting in 1998- 99)had been capped at inflation plus population growth, this year's budget would be $168 billion, a surplus of $17 billion. And if revenue in excess of the limit had been deposited in a rainy-day fund each of the last10years, the fund would be worth about$237billion,not counting interest.
A recent study by political scientists Thad Kousser, Mathew McCubbins and Ellen Moule at the University of California, San Diego, and the University of Southern California found that in 19 of 20 states with tax and expenditure limits, the limits had no detectable effect over the last 30 years. They conclude that spending limits seldom work because state officials are able to circumvent them.
This story contains 296 words.
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