McClintock is an expert on matters of the State budget and fiscal
discipline. He is a Senator in the California State Legislature
and ran for Governor in the 2003 recall election. His valuable
website is found at www.tommclintock.com [McClintock
didn't deliver - again...
From the Senate Floor - Thursday
I am sorry
to interrupt the chorus
of self-congratulations, but I feel compelled to
state an obvious fact – that this budget
is $6 billion out of balance; that the state’s chronic
deficit spending is getting worse, not better; and that the growth
of general fund spending is growing and not shrinking.
Nor can I
join applauding the “painstaking negotiations” that
have produced this document. The fact is, in May the Governor
proposed spending $88 billion (General Fund), the Democrats countered
at $89 billion, and they have now compromised at $90 billion.
I suppose it is a blessing that the negotiations didn’t
go on any longer.
Let me run
through the vital statistics of this spending plan. According
Legislative Analyst’s Office in June,
inflation and population will grow 5 percent and revenue will
grow 6 percent. But according to the budget staff analysis, spending
will grow by 10 percent. That makes it measurably worse than
the plan the Senate rejected on June 15th.
On June 15th,
we rejected a $5 billion operating deficit. This budget spends
takes in only $84 -- for a SIX BILLION
DOLLAR shortfall – THIS YEAR.
On June 15th,
we rejected a 9 percent increase in state spending. This budget
is a 10
percent increase – averaging 7 1⁄2
percent over the last two years. Spending increases under the
Davis administration averaged 7 percent.
Let me repeat:
This budget spends $6 billion more than we take in. Last year
spent $2 billion more than we took in. That
means that this year’s operating deficit is THREE TIMES
bigger than last year’s.
sorry to throw cold water on the celebration, but that is not
That is the opposite of progress.
once again, we’re told that the budget is balanced.
But the blunt truth is that it is only balanced with borrowed
funds carried over from last year.
We’re told that there is additional debt repayment in
this budget. But listen carefully: you’re using borrowed
money from last year to repay borrowed money. That gets you precisely
And by next
year, according to the staff analysis, we will have completely
out on our Prop 57 credit card and we’ll
still be about a billion dollars short. And our cumulative budget
deficit will have grown to nearly $30 billion. That’s more
than $3,000 in taxes that an average family will be obligated
to repay just as surely as the balance on their credit card statement.
IF this budget
is adopted today, I believe that it can be safely said that “Never in the field of California finance has
so much been owed by so many … because of so few.”
is only if everything goes perfectly. And that requires us
to ignore the
urgent warnings of the Anderson Forecast – and
others – that difficult economic times lie directly ahead.
If there is so much as a hiccup in the economy, this state will
be plunged into a financial crisis that will make 2003 look like
the good old days.
There is, however, one good thing that this budget accomplishes.
It makes it absolutely imperative that we restore to the governor
the authority that he held from 1939 until 1983 to make mid-year
spending reductions without having to return to the legislature.
served this state extremely well until it was bargained away – over my objections, I might add – back
the authority of the governor to halt this state’s
chronic deficit spending is at the heart of the “Live Within
Our Means Act,” and with the adoption of this budget, it
is now about the only thing that stands between our state and
financial insolvency. We would be well advised to adopt that
measure right here as an adjunct to this budget.
This is my
19th state budget vote. It might surprise many of you to know
that I voted
to support five budgets in the 1980’s – budgets
that were actually balanced and that had prudent reserves. The
concept seems almost quaint today. Those were days when we had
a Triple-A credit rating and our debt service was 1.3 percent
of the budget.
in the late ‘80’s
we saw the budget process gradually shifted from the legislature
to the so-called Big Five.
And we began passing budgets that were brazenly unbalanced or
that included massive tax increases that brought even bigger
deficits as they crushed the economy.
And we are
now dragging along the cumulative result of this folly. Some
of deficit-related general fund debt – growing
to nearly $30 billion by next year. Our credit rating is the
lowest in the nation and our debt service costs have quintupled
as a percentage of general fund spending.
I don’t know how much farther we can go down this road
before the state’s credit will be completely exhausted.
At that point, we will not only have failed to provide the sound
management of our generation’s affairs – but we will
also have stripped our children of their ability to meet their
generation’s needs as they struggle to repay the mountain
of debt with which we have crippled them.
I’m sorry to rain on this parade but those are the facts,
and as John Adams said, “Facts are stubborn things.” CRO