California's Budget: Producing Results

Last year, California's state government spent more as a percentage of family incomes than ever in its history. Now that Gov. Davis has signed a record-shattering $103 billion budget that increases the current sales tax by $1.2 billion, it might be a good time to ask what Californians are entitled to expect in return.

One needs only to look across the state line at Arizona to see what a difference good government makes.

The Grand Canyon State occupies the most desolate real estate in the Western Hemisphere, yet it has ample water supplies. It suffers blistering summer heat, and yet has no electricity shortage. In the last decade, its population has grown three times faster than California's and yet there is abundant housing at every income level and one of the best road systems in the country. Arizona spends much less for its schools per student, but significantly outperforms California in every measure of academic achievement.

To accomplish all this, Arizona's state government spends $1,800 per person from all funds. California now spends over $3,000 per person. If this were Arizona's budget - adjusting for all the population differences - it would come to $61 billion, $42 billion less than the budget Gray Davis just enthusiastically approved.

California once enjoyed good government, too. In 1966, the Golden State had embarked upon the greatest period of road building in its history. Young families could find the homes of their dreams at very affordable prices. The state water project promised the greening of California. New hydroelectric dams and nuclear power facilities pointed toward an era of cheap, clean and abundant electricity. California boasted the finest university system in the country and one of the finest public school systems. That year, California spent $1,300 per person (adjusted for inflation).

What accounts for the difference? Is it because Proposition 13 decimated local budgets, shifting funding to Sacramento? No, Arizona actually spends less per capita at the local level than does California. Arizona's property tax is capped at precisely the same one percent rate as California's Proposition 13.

Nor can it be explained by shifting educational funding. In 1966, California spent $3,000 per student from all sources (adjusted for inflation). Today it spends over $9,000 per student from all sources, including $5,600 from the general fund alone.

The conclusion is inescapable: Gray Davis is spending twice what he should -- and spending it badly. Critical infrastructure projects like highways and dams have been plundered for ongoing social welfare programs. Davis cut general fund support for transportation by $1.3 billion, while welfare spending ballooned.

A well-run state creates an economic and political environment that attracts the private investment necessary for critical support systems like housing and power plants. California's hostile policies have sent investment capital fleeing the state, requiring huge commitments of public resources to replace it. For the past two decades, for example, government has limited new home construction to half of what is needed to meet demand.

Meanwhile, the state budget has become a grab-bag for political pork projects that exclusively benefit one community at the expense of others, as the state's legislators subordinate the common good of the state to deliver as many local goodies as they can filch from the state treasury.

From 1994 to 1998 - supposedly the boom years for California's economy - the gross state product increased 16 percent. In the same period, Arizona's grew 27 percent. It is becoming painfully clear that despite record spending, California's government can no longer provide a decent road system, an adequate water or electrical system or a functional school system.

But it has accomplished one thing worthy of note. According to the census, it has convinced millions of people that California is a less desirable place to live and work and raise their families than the middle of the Arizona desert.

Who says California's state government can't produce results?