by Lance T. Izumi, Fellow in California Studies
Pacific Research Institute
January 8, 2002

Announcer lead: Time for Perspectives. Lance Izumi says that overspending is the cause of California’s budget crisis.

As California’s budget hurtles over the cliff into the deficit chasm below, one can only shake one’s head and say, “I told you so.”

Governor Gray Davis blames much of the state’s $12.4 billion deficit on the events of September 11th. The foundation for the budget disaster, though, was laid much earlier. Back when times were flush, Gov. Davis and the State Legislature went on a spending spree. Many of us warned at the time that when the inevitable recession hit California, we would discover that Gov. Davis signed all those spending bills using a pen filled with red ink. Now the recession is here and, voila, we have big deficits.

While California’s population increased by 5 percent during the first three years of Gov. Davis’ term, state general-fund spending skyrocketed by 36 percent. Much of this increased spending has funded new or expanded government programs. To take just one example, Davis signed a bill this year providing $200 million for a new toothless program to improve underperforming schools that, in reality, ensures that there will be no state sanctions for failing schools for four or more years. Davis ignored the lessons of the late ‘80s and early ‘90s when state spending shot up causing a gaping deficit when the economy went south. History is now being repeated.

The governor and lawmakers will likely cobble together some short-term response to the budget crisis. The question is whether they will address the larger issue of long-term fiscal discipline. State Senator Tom McClintock makes the worthwhile suggestion to require the state budget to grow no faster than the combined rate of inflation and population. If such a spending limit had been in place over the last three years, state spending would still have grown by 13 percent, but instead of a $12.4 billion deficit, the state would be enjoying a $28 billion surplus. Whether it’s Senator McClintock’s recommendation or some other variation, a long-term spending cap should be part of any real budget deficit solution.

With a perspective, I’m Lance Izumi.

Lance Izumi is the Director of Center for School Reform at the California-based Pacific Research Institute for Public Policy. He can be reached via email at lizumi@pacificresearch.org.