Haynes is an Assembly member representing Riverside and
He serves on the Appropriations and Budget Committees. [go to
Assembly Member Haynes
website at California Assembly][go to Haynes index]
Are Wrong - Again
Liberal ideology drives the Legislature's analysts…
Analyst's Office (LAO), whose staff is hired by the Democrat
majority in both houses of the Legislature,
puts out an estimate of the revenues and expenditures for the
upcoming budget year each November. They did it again this
year, projecting a $7.3 billion shortfall. The good news is
that the LAO is wrong--again. The bad news is that some of
my Democrat friends are going to try to use this report to
raise your taxes. The fact is that revenues will be higher
than the LAO projected, and much of the state's budget problems
will disappear, if the Democrats can keep from spending your
tax money faster than it comes, like they did from 1995 to
2000. Raising taxes will not be necessary--ever.
previous November reports are available online so it is relatively
these days to check just how good the LAO
has been in projecting past budget revenues. They’re predictions
have become quite predictable. LAO has been wrong projecting
the size of the surpluses in times of growth, and wrong in projecting
the size of the deficits when times were tough. For instance,
in 1996-97, LAO estimated that the state would end the year with
virtually no reserve. The total reserve was close to $3 billion.
It also projected (in 1995) that the budget deficit by the year
1998-99 would be $1 billion. The budget surplus that year was
$8 billion. The LAO recommended against tax cuts that year because
they thought the state would run out of money. Republicans cut
taxes anyway, and huge surpluses occurred. Keep in mind that
in that year, total budget expenditures were only $46 billion.
In 1997-98, LAO projected a $769 million surplus. It was $5
billion. In 1998-99, LAO projected a $331 million surplus, and
that by 1999-2000, the state would face a $1 billion deficit.
The surplus in 1998-99 was $8 billion, and the surplus in the
1999-2000 budget was $12 billion. LAO blamed the car tax cut
for their projected losses. Republican fought for, and won, the
car tax cut anyway, and the surpluses emerged. To keep this in
perspective again, the total revenues were $61 billion for 1998-99,
and $77 billion for 1999-00. The state was then projected to
end the 2000-01 budget year with a $6 billion surplus and a $10
billion surplus in 2001-02 in November 2000.
The LAO recommended no reductions in spending. In fact, LAO
recommended a $4 billion increase in spending. Oops. Revenue
in the 2001-02 year dropped from $77 billion to $66 billion.
Spending did not decrease, at all. The state spent its reserves,
borrowed short term money, and continued the spending spree that
began in 1999, when total spending went from $57 billion to $79
billion in two short years. In none of its reports throughout
this time did LAO recommend that the Legislature restrain spending.
In fact, throughout this time, the only thing LAO did was recommend
against tax cuts.
Now the LAO
asks the Legislature to consider tax increases to address the "ongoing structural deficits." In
fact, these deficits were caused by the splurge of the Legislative
majorities, encouraged by then-Governor Gray Davis, and the LAO,
in the 1999-2001 budgets. If the state has simply raised its
spending by population and inflation growth, the state would
be experiencing a $3 billion surplus right now, and the $15 billion
deficit bond approved by the voters last year would not have
I would be
more forgiving of the LAO had they not been so adamantly opposed
to tax cuts,
and more receptive to spending curbs, during
this time. They were not. In fact, they encouraged $4 billion
in ongoing expenditure increases, and $6 billion in one-time
expenditures in their November "fiscal outlook" reports.
Now, for their mistakes, they are now telling us in the Legislature
to "look" at revenue enhancement solutions to this "shortfall."
the Democrats model, but it is not sufficiently critical of
how we got into
this mess. The fact is--the Democrats spent
this state into this mess, and rescinding as much of that spending
as is politically possible is the only way to get out of it.
The state doesn't need to increase taxes, it just needs to decrease
the bloat created 4 years ago. That is what the LAO should say.
But--that wouldn’t satisfy its Democrat masters. CRO