Easily Debunking Villaraigosa’s Claim of CA’s Broken Budget System
I have updated the post when a reader caught an error in one of my figures. Teaches me to double check me math and shows you one of the advantages of this medium. While we lack editors, we have commentators who can draw our attention to errors in our posts. Thanks for catching that, Pat, and drawing it to my attention!
Yesterday, when Los Angeles Mayor Antonio Villaraigosa addresed the Decision Day Rally in West Hollywood, he mentioned his recent trip to the state capitol and whined that our state’s budget woes were caused by a “broken system.” (Note how he used the passive to deflect responsibility.)
And that got me thinking. Earlier in the day, I had read about the California Scare Campaign where the folks that Democrat is courting as he prepares his run for Governor, “California’s political-journalist class was gearing up to frighten-slash-chastise Californians about the ‘annihilating cuts’ coming their way now that petulant voters failed to heed the weary wisdom of their betters“:
Calfornia lawmakers, and the unions who put them into office, will do everything in their power to cut services first, employees last. That is indeed a crucial reason why we got here in the first place. Any analysis that doesn’t explore how a higher-than-inflation-plus-immigration budget has failed to deliver on any increase in services, is not an analysis worth taking more seriously than common propaganda.
So, with that bolded expression in mind, I decided to do a little web investigation. And a few google searches helped me discover just how profligate our state legislators have been.
I decided to use 1999 as a baseline, the year Democrat Gray Davis succeeded Pete Wilson as Governor. That year the population of the Golden State was 33,145,121 (according to Census Bureau estimates). By 2008, the latest figures I could find online, the population has grown to 36,756,666, an increase of 3,611,545 or 10.89616%. (Please note that in my original draft, I had failed to double check my math and has a lower figure. Thanks for reader Pat for catching the error.)
Calculating inflation over that period was easy, once I discovered the handy-dandy US Inflation Calculator online. I plugged in 1999 and 2008 to get a rate of inflation change of 29.2%.
Thus, combining an inflation plus population increase, we get a rate of 32.38%.
(Pat, in the comment below, uses a different method of compounding percentages, I get a 43.27% rate.)
According to the Legislative Analyst’s Office (LAO), “California’s Nonpartisan Fiscal and Policy Advisor,” the 1998-99 Budget totaled 57,827,075,000. If we multiply that by 32.38%, we get an in incease of 18,724,407,000. Without any budget cuts, allowing funding to increase by the rate of inflation plus population grown, the 2007-08* budget should be $76,551,482,000. (With Pat’s method, we get $82,848,850.)
According to the LAO, the 2007-08 budget was over $100 billion. Even with cutbacks, expenditures haven’t fallen below $90 billion. Is that the result of a broken system or of legislators failing to hold the line on spending? Or is it governors letting them get away with it?
ADDENDUM: Had I followed a link in Matt Welch’s post (from which I pulled the block quote above), I might have spared myself some effort. Michael Flynn and Adam Summers of the Reaon Foundation has already looked into this:
If the state [since fiscal year 1990–91] had simply limited spending increases to the 4.4 percent annual average growth in consumer price index plus population, the state would be sitting on a $15 billion surplus this year instead of a $42 billion deficit.
A significant portion of California’s spending increase stems from the growth in state employees. Today there are more than 356,000 workers on California’s payroll, or 9.3 state employees for every 1,000 residents. The biggest hiring binges came during Gray Davis’ dot-com exuberance, and then again during the pre-recession Schwarzenegger administration.
They went back to Pete Wilson’s first budget. I started with his last.
Guess Antonio Villaraigosa, even eager to please the interest groups clamoring for more money from the state, hasn’t bothered to look back at the record of the men who once held the job to which he currently aspires.
ADD-ADDENDUM: Maybe the sizable salaries of California public employees have something to do with the state’s rapidly increasing expenditures.
———–
*Figured I’d use that year because 2008 was the last year for which I had population data.
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[...] exact. Oh BTW, that “Special Nurse” is a government employee. In a related article by The Gay Patriot mentions how Los Angeles Mayor Antonio Villaraigosa (and another real pile of….) mentioned his recent trip to the state capitol and whined that [...]
Pingback by California bankrupt - yet a “special nurse” makes $350,000 | Fire Andrea Mitchell! — May 27, 2009 @ 10:32 pm - May 27, 2009
Sorta like how unions and government intervention helped trash the auto industry. Then to add insult to injury, liberals decide that even more damage is what’s required to save it. That and tens of billions of our money.
Why is it that liberals always use the fear card of cut services? Why don’t they start with cutting spending and government/union employees? Why do we have to do without, but te government never does?
Similarly, I found an article where a study was done in Orlando, where it was discovered merging Orlando FD with Orange County FD could save the people tens of millions a year. The unions sued to have the study buried.
http://cms.firehouse.com/content/article/article.jsp?id=63918§ionId=46
Comment by ThatGayConservative — May 27, 2009 @ 10:36 pm - May 27, 2009
Check your math. Looks to me like the population increase is about 10%.
Comment by Bob — May 27, 2009 @ 11:12 pm - May 27, 2009
What did I say? 30% baby!
http://www.gaypatriot.net/?comments_popup=11991#comment-424907
Comment by Robert — May 27, 2009 @ 11:52 pm - May 27, 2009
HA! I kept thinking of Malkin’s post as I was reading yours — and whaddyaknow, there it is at the end.
I just want to correct the author you quoted:
Democrats will cut police, fire and emergency personnel, stop maintaining streets and parks, etc LONG before they will cut funds for gay and lesbian studies, needle-exchange programs, free condoms, and dental care for illegal immigrants.
The problem is, it is basically everything Democrats have done for the last however many years that needs to be cut, and you can damn well bet they aren’t going to do it.
Republicans in California must prepare to heavily publicize the budgetary priorities Democrats choose. They are guaranteed to be outrageous.
Comment by American Elephant — May 28, 2009 @ 2:58 am - May 28, 2009
Then again, how often are public services actually cut? Florida Republicans, especially Jeb & Crist, can’t fart without some doom & gloom liberal douchebag running to the compliant media with some sob story about how services are going to be cut as a result.
A similar example came last summer when gas prices were so high. We were promised that fire and EMS service might only respond to dire emergencies. Needless to say, it didn’t happen.
Comment by ThatGayConservative — May 28, 2009 @ 4:41 am - May 28, 2009
Here in Ohio, cities are doing the ‘doom and gloom’.
In Columbus, they’re challenging the city council.
In Toledo, they’re stockpiling guns and ammo.
Go Team Redneck!
Comment by The Livewire — May 28, 2009 @ 6:42 am - May 28, 2009
Dan, I like your analysis, but one correction. The increase in population was 3.6 million, so the percentage increase is 10.9%.
[Pat, thanks for catching that. Teaches me to double check my figures. Recrunching my numbers now. --Dan.]
Also, when compounding percentages, convert the percentages to decimals, add one to each, then multiply. Then subtract the product by 1 and convert back to a percent.
[Is that the officials statisticians way?]
So for your example, you would multiply 1.109 to 1.292 to get 1.433. So that is an increase of 43.3%. (With your 1.09% figure, the combined percentage should have been 30.6%)
Even with my figures, the 2007-08 budget should be 82.866 billion. So the current budget appears to be bloated by at least 17 billion, enough to wipe out most of the state’s deficit.
Unfortunately, for the rest of us, this is not unique to California. Many states, including New Jersey, have budgets that have increased much higher than the rate of inflation and poulation increases.
Part of it is overpaid, underperforming government workers, but that’s only a small part. And when laying off government workers, generally, union rules prohibit getting rid of overpaid dead wood, while laying off newer, lower paid, more efficient workers.
A bigger problem is Medicare/Medicaid and other health costs as part of the state’s expenditures. While prices, on average, have increased 29.2%, health costs have increased much higher.
Comment by Pat — May 28, 2009 @ 7:00 am - May 28, 2009
[...] Other posts: Fire Andrea Mitchell!: California bankrupt – yet a “special nurse” makes $350,000 GayPatriot: Easily Debunking Villaraigosa’s Claim of CA’s Broken Budget System [...]
Pingback by “I Left My Wallet… in San Francisco”: Huge Gov’t Salaries in “City of Pelosi” Adds to California’s Disastrous Debt « Frugal Café Blog Zone — May 28, 2009 @ 9:27 am - May 28, 2009
Is Gay Patriot following the Sotomayer pick?
Laura makes many good points, Clarence Thomas’s personal story was not of any concern to the Democrats who grilled him…maybe filleted him is the right description.
Laura Ingraham this morning on Imus in the Morning weighing in on Sotomayer.
She (Sotomayer) has the right probably political out look for them, and so her personal story is going to be highlighted, and sold, and resold, and retold, and she is going to be an inspiration to Latinas and Latinos. And yet Justice Thomas, and Justice Miguel Estrada, weren’t any such inspiration so they were fair game for ridicule and disparagement.
http://youhavetobethistalltogoonthisride.blogspot.com/2009/05/i-fav-laura-ingraham-reaches-perfect.html
Comment by keyboard jockey — May 28, 2009 @ 11:48 am - May 28, 2009
Dan, excellent article. Thought provoking. Good for you!
The group who best profits from California’s budget crisis –which seems to have been going on since Davis briefly warmed the seat– are the Democrats who want to run against the record of leader-less-ship on the part of the GOP gov. It won’t be the individual GOP senate and assembly seat candidates targeting incumbent Dem office holders.
It’s just another case of where the voters punish the wrong culprits and the taxpayers remain the victim without a day in a court.
Comment by Michigan-Matt — May 28, 2009 @ 12:45 pm - May 28, 2009
It’s more valid to relate government expenditures to more closely track GDP than simply population+inflation. It would be unreasonable to expect Belgium, for example, to have the same budget as Haiti (each with about 10 milllion people).
According to the only source I’ve found, In 1998, California’s GDP was about 1.09Billion; in 2007 it was about 1.70Billion, an increase of about 59%. If you assume about 30% inflation over that period, it corresponds to about 2.5-3% annual real GDP growth, a reasonable number for 1998 to 2008.
That said, California state spending surpassed GDP growth over that period by a heft amount, but not by nearly as much as your calculation which does not take into account economic activity.
The massive deficits we see today is because our tax code relies far too heavily on revenue from capital gains and income taxes on the wealthiest americans, sources which fluctuate wildly with even small changes in GDP. California needs to rework its tax code so that it tracks more closely to actual economic activity in the state.
Comment by DaveO — May 28, 2009 @ 12:45 pm - May 28, 2009
[Is that the officials statisticians way?]
Dan, no, it’s a short cut in showing how to compound numerical values. In fact, you kind of did it yourself in your analysis. Using your figure of 32.38%, you first figured out the increase from the 1999 budget. And then added that increase to the 1999 budget. You could have also have done that by simply taking 132.38% (adding 100% to your percentage) of the 1999 budget to get your figure of $76.551 billion. You probably converted percents to decimals when doing your calculation, so you could use a factor of 1.3238. If you have another compounding factor, do the same thing with that percentage (convert to a decimal and add 1) and then multiply the two figures. The product will give you the compounding amount. Subtract 1 and converting back to a percent will give you the percent increase.
It’s kind of similar to compound interest and effective rate of interest formulas.
I’m curious. How did you get your figure of 32.38% from the 10.9% and 29.2% figures?
Comment by Pat — May 28, 2009 @ 1:31 pm - May 28, 2009
Budget crisis?
What…budget…crisis?
Comment by The Ugly American — May 28, 2009 @ 1:47 pm - May 28, 2009
I think Pat’s method is right, and as Pat points out, that still leaves 17 / 100 billion in excess growth.
OK, then what about education? We in CA are always hearing how we need to spend more money on that. But I hear stories of school principals who drive Ferraris and I have seen estimates that real administrative costs (after inflation and after population growth, again) have basically tripled since I was a kid. What is that about? State employee unions, I dare say. One thing is clear: throwing more money at CA schools isn’t the solution to anything. CA is pretty consistently in the top five States for education spending and the bottom five for education quality. Something is very wrong in how CA schools are run, and it isn’t “lack of money”.
Comment by ILoveCapitalism — May 28, 2009 @ 6:04 pm - May 28, 2009
#15: Speaking of public education, ILC, you’ll probably love this:
http://www.youtube.com/watch?v=e2Nuy_gbMtc
It’s Thomas Sowell blowing common myths about school funding out of the water.
Comment by Sean A — May 28, 2009 @ 9:10 pm - May 28, 2009
Yeah Sean – good clip!
Comment by ILoveCapitalism — May 28, 2009 @ 10:58 pm - May 28, 2009
Pat, I multiplied .109 x 29.2, then added the result to 29.2, figured that was how you “compound” percentages.
Comment by GayPatriotWest — May 29, 2009 @ 4:58 am - May 29, 2009
OK, then what about education? We in CA are always hearing how we need to spend more money on that. But I hear stories of school principals who drive Ferraris and I have seen estimates that real administrative costs (after inflation and after population growth, again) have basically tripled since I was a kid. What is that about?
ILC, yes, that’s another budget buster. In NJ, we had a Supreme Court decision about having equal money put into all school districts. It’s turned into pouring more money into the “Abbott” districts. When the papers publish the amount of state aid that goes into each district, the Abbott districts get tons more than districts with comparable populations. Somehow, that translates into comparable cost per pupils, but it’s still somewhat higher for Abbott districts. And what do we get for that? Well, the schools in these districts still suck, and it seems like these schools become nothing more than day care. We seem more worried about saving all students, including the ones with severe discipline issues, that we end up dragging down the students who may have had potential along with them. Anyway, don’t want to get to far off-topic. The budget crisis is forcing the state to slow down the increases in education aid.
Comment by Pat — May 29, 2009 @ 8:01 am - May 29, 2009
Pat, I multiplied .109 x 29.2, then added the result to 29.2, figured that was how you “compound” percentages.
Dan, one of the reasons why I think that method is incorrect is, you would get a different answer if you decided to add the product to the result of 10.9% instead.
Here’s another example. Let’s start with a product that costs $100. In the first year, let’s say inflation is 10%, and the second year it’s 20%. After one year, the product will cost $110. Then you have to tack on 20% to $110 for the second year. That’s an additional $22. So the cost will be $132. (Note: if you did 20% first, then 10% second, you would still get $132.)
So the inflation rate for the two year period is 32%. The could also have been found by converting the percents to decimals, adding one, muliplying, and subtracting 1 and converting back to percent. So 1.1*1.2=1.32, which corresponds to 32%.
Adding the 1 (i.e. 100%), is just a shortcut for adding the increase to the original amount in one step.
Comment by Pat — May 29, 2009 @ 8:11 am - May 29, 2009
The system isn´t broken. It is the failure of the legislators to hold the line on spending, it is the governors who let them get away with it, by signing off on the budgets, and it is the electorate who put the spendthrifts in office.
Comment by Roberto — May 29, 2009 @ 12:50 pm - May 29, 2009