by Lance T. Izumi, Fellow in California Studies
Pacific Research Institute
August 25, 1998

Announcer lead: Time for Perspectives. Lance Izumi says that there are lots of problems with the new state budget.

When faced with a huge $4.4 billion budget surplus, California lawmakers had the choice of returning most of the overcollected tax dollars back to taxpayers or increasing government spending. Sadly, in the recently approved state budget, state politicians decided to do much more of the latter than of the former.

Take, for example, the reduction in the vehicle license fee, the state's car tax. According to lawmakers, the size of the car tax cut will be 25 percent this fiscal year, increasing to 67.5 percent in five years. Sounds good. But wait. In order for the added cuts in the car tax to take effect, 14 so-called "triggering" requirements must be met before those additional cuts could be implemented. According to the non-partisan state Legislative Analyst's Office, most of those requirements involve unrealistic estimates of future state revenues, making the chances for any future car tax cut virtually nil. The end result is that the car tax will continue to be an onerous burden on California drivers.

While lawmakers have touted the size of the tax cuts, much of which will never materialize, the real story is the size of the increase in state spending. As Assemblyman Tom McClintock notes, the $5.2 billion rise in state spending makes it the largest one-year state spending increase in American history. Much of this money will go to questionable programs such as legislators' pet pork barrel projects and programs with little empirical justification such as reducing the size of ninth grade classes. Governor Wilson has indicated that he will use his blue pencil authority to veto up to $1 billion of the added spending, which is good, but which still leaves the bulk of the huge spending increase intact.

Perhaps the most telling statement about the state budget came from a legislative staffer who said that those lawmakers supporting tax cuts got the rhetoric, while those supporting increased spending got the cash. No wonder people are fed up with politics.

With a perspective, I'm Lance Izumi.