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.

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.

http://www.youtube.com/watch?v=e2Nuy_gbMtc

It’s Thomas Sowell blowing common myths about school funding out of the water.

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.

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”.

What…budget…crisis?

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?

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.

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.

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

[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.

In Columbus, they’re challenging the city council.

In Toledo, they’re stockpiling guns and ammo.

Go Team Redneck!

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.

I just want to correct the author you quoted:

Calfornia lawmakers, and the unions who put them into office, will do everything in their power to cut essential and necessary services first, employees nonessential, political pet-projects last.

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.

http://www.gaypatriot.net/?comments_popup=11991#comment-424907

Calfornia lawmakers, and the unions who put them into office, will do everything in their power to cut services first, employees last.

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&sectionId=46