California Budget

You can find the 2009-2010 California budget here, with links to summary information here. For example, here are the summary pie charts. Figure SUM-07 shoes that the vast majority of the budget goes to Health and Human Services (28.2%), Corrections (7.3%), Business, Transportation & Housing (8.9%), K-12 Education (30.2%), and Higher Education (9.7%). Any significant cuts in expenditures will have to come from there.

What I found most interesting were the tables at the end of the full budget. Consider Schedule 6. Let's look at data from 1989 and 2009, the last 20 years. For reference, inflation has been about 74% over that time. (or, by 1.74 X)

1. The state population increased by 1.32X, 32%, from 29.1 to 38.5 million. (Note - there may be some discrepancy between this number and the official US census numbers.) Multiplying time inflation yields a factor of 2.3 (or, if you prefer, 130%) for CPI+population (CPI+P) adjustments.
   
2. The number of state employees per 1000 population has increased slightly, from 8.7 to 9.3. This is 6.9%.
   
3. Personal income increased by 2.68X, or 168%, from 601 to 1609 billion. Adjusted for inflation and population growth (CPI+P), that it a 16% increase in average personal income. Since this took place over 20 years, that's about 1% a year. Not earth shattering, but a solid positive number. Note that it's an average, not a median, so lower income Californians may not be faring so well.
   
4. Revenue is up from by 2.52X, 38.7 to 97.7 billion. Adjusting for CPI+P, it's up by 2.52 / 2.3 = 1.097, or about 10%. In effect, we are taxed 10% more than 20 years ago. (Maybe due to the highly progressive tax code and more millionaires).
   
5. Expenditures from the General Fund rose from 39.5 to 95.5 billion. They are tracking revenues, in fact, they are rising slightly slower, about 5%.
6. So, whats the problem? Total Expenditures are way up, from 48.6 to 134.8 billion, which is 2.77 times higher. Adjusting for CPI+P, they are up by 20.5%! Another way to check this math is to view the Total Expenditures per Capita, which rose from $1667 to $3495, or 2.1x. Adjusting for inflation, we again get 20.5%.
   

We have bonded ourselves into this mess. Some of this 20.5% increase is the increased fraction of state employees (see #2 above), 6.9%. A conservative cynic might quip that this proves government is now 6.9% less productive, since it requires more employees to get the same stuff done. It does make me wonder a little what has happened to the huge productivity gains of the computer era. But, in any case, assuming that these state employees are useful and necessary for all the new programs enacted in the last 20 years, that still leaves a 13.6% increase in something. What is that? I think we need to look at the state budget from 20 years ago to find out. I'll see if I can find it for a future post.