California’s budget catastrophe didn’t suddenly appear by magic.

California’s budget deficit now stands upwards of $22 billion, up from $17 billion earlier in the year, $12.4 billion at the end of 2001, and $4.2 billion last May.

Some state leaders, especially Governor Gray Davis, would like the public to believe that the deficit is like a bleeding hemophiliac, with little that could have been done to staunch the losses. The truth is that the deficit disaster is the result of unconscionable budget mismanagement. Indeed, California’s budget crisis was preventable.

It has been clear for some time that state tax revenue would be tailing off. Even before September 11, economic models, Federal Reserve estimates, and Wall Street credit ratings all pointed to hard times for the state. Given California’s huge reliance on the personal income tax, that will naturally result in lower receipts.

This declining revenue occurred at just the time that Gov. Davis ramped up state spending to record levels. In the current 2001-02 fiscal year, state general fund expenditures will total approximately $78.4 billion. During Davis’s first three years in office, general-fund spending increased by a whopping 36 percent.

The massive hike in spending was not justified by California’s population growth, which rose by just five percent in Davis’s first three years as governor or by inflation, which grew by seven percent during that period. Rather, the governor and lawmakers went on a spending spree when the economy was still strong and high revenues produced budget surpluses.

Just reining in that binge a little would have made a big difference. If state spending had increased by 20 percent rather than 36 percent, then California now would be enjoying a balanced budget.

California is not alone in its fiscal difficulties. However, its deficit problem is greater than other states not just because of its size, but because the rate of its spending increases has been higher. During the first two years of Gov. Davis’s term, California’s spending grew at a rate more than double that of New Jersey, three times the rate of Massachusetts, four times the rate of New York, and more than seven times the rate of Texas.

Last year, Elizabeth Hill, the state Legislative Analyst, warned that Davis did not cut ongoing spending enough, relying instead on short-term fixes such as transferring money between accounts, reducing one-time expenditures, and drawing down the state’s reserve fund.

In January 2002, Davis proposed a budget that relied chiefly on more fiscal sleight of hand including loans, transfers, and other internal shifts from various state special funds to the general-fund budget. However, even if all of Davis’s proposed budget-balancing devices were adopted, that would still leave a deficit of around $10 billion. State Controller Kathleen Connell is already planning to borrow more than $7 billion just to keep the government running.

Talk among majority Democrats in the legislature centers around increasing taxes rather than reducing spending to close the deficit. Increased taxes on the wealthy and other tax hikes might generate some short-term revenue, but they would also create negative disincentives in an already weak economy. Further, leaving permanent increases in ongoing spending in place would create the potential of more deficit problems in coming years – a warning voiced late last year by the state Legislative Analyst’s Office.

The bottom line is that California’s budget catastrophe didn’t suddenly appear by magic. It occurred because state leaders acted like shortsighted politicos rather than disciplined stewards of the public purse. To get control of the deficit will require that lawmakers summon the courage to cut spending now.

Examiner columnist Sally Pipes is the President and CEO of the Pacific Research Institute, a California-based think tank. She can be reached via email at spipes@pacificresearch.org.