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Prop. 1A won't cure state's overspending

Original post made by Prop 1A Info, Jensen Tract, on May 15, 2009

There is a great opinion piece on the Sacramento Bee about Proposition 1A. It is at: Web Link

Some parts of it:

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.

Comments (1)

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Posted by jay
a resident of Downtown
on May 16, 2009 at 2:11 pm

Saw this press release for the No on 1A committee. Gray Davis, the governor who gave us this pension crisis, is stumping for 1A. That is enough reason there to vote against it!

Here is the press release:

Just one week before the May 19 Special Election, opponents of Proposition 1A extended their thanks to former Governor Gray Davis today, as he has assumed the role of lead spokesperson for Proposition 1A.

The former Governor, who oversaw California’s rocky economic times in 2003 – including widespread electricity blackouts, massive state deficits, and the tripling of the car Tax – began stumping for Prop. 1A over the weekend.

“We suspect that inviting Gray Davis to be a spokesperson for so-called ‘budget reform’ is an attempt to inject humor into the campaign --- who’s next, Bernie Madoff?,” said Jon Coupal,
President of the Howard Jarvis Taxpayers Association and Chairman of No New Taxes, the Committee formed to defeat the $16 Billion Tax increase. “Putting Gray Davis front and center illustrates what we’ve been saying all along, that Prop. 1A is all about the ‘status quo’ –
maintaining the power of the Sacramento politicians who got us into this mess. It is a complete farce that the recalled Governor who was thrown out of office for proposing Tax increases is now the public face of the new Sales Tax, Income Tax, Kid Tax, and Car Tax. Gray Davis is the gift that keeps on giving.”

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