Friday, December 19, 2003

California - Revenue Shortage, Spending Surplus


Your editorial, Junk Budget, December 12, 2003, was very amusing, since the ICO was not a critic of the Davis administration’s fiscal irresponsibility. When liberals bemoan reducing the regressive car tax just to criticize a Republican (a tax that hits the poor much harder than the rich, and then the rich take it as an itemized tax deduction, adding further salt to the wound!), it is true hypocrisy.

You are not alone in your liberal bias. The San Francisco Chronicle, Los Angeles Times, and other willing accomplices of the Democratic majority that gave California the worst fiscal management of all fifty states (for details of the study that awarded California last place, see USA Today, June 23, 2003, Bad Moves, Not Economy, Behind Busted State Budgets, by Paul Overberg), also never editorialized against the spending that created the problem, but have been all over Governor Schwarzenegger for honoring his campaign promise to throw out the car tax increase. Good thing too, because that was one of the main promises that got him elected!

The problem in California can be summed up neatly. We did not have a shortage of revenue; we had an excess of spending. The only revenue shortage we experienced was due to our inflated expectations of taxes from the rich as they exercised stock options. California budget statistics show: 26% - Increase in state revenue from 1998-99 to 2002-03; 45% - Increase in total state spending from 1998-99 to 2002-03; 37% - Increase in just the General Fund portion of state spending from 1998-99 to 2002-03; and 37,000 - The number of new workers hired as of March 2003 in state government since the Governor's "hiring freeze" was imposed March 2002 (that's 37,000 new hires in ONE year!). Any questions?

Facts, not opinions.

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