Sep 24 2009
Oh how the state budget grows
The state budget grows. It grows every year. It has not shrunk. So how does it grow? The budget grows because of an increase in service levels, case load and inflation.
Some people might think it grows because there is increased revenue and that revenue is spent. This is true. In times of increased revenue, the Legislature has decided to increase programs, which causes increased expenditures. These expenditures have no funding attached to them for the long term, and become an obligation to fund in out-years. This is one way the budget grows.
That type of change is a change to the level of services the state provides. The state can also simply choose to provide more services. For instance, Medi-Cal provides some sort of dental coverage, even though it is not required, by federal law, to do so. This is an increased level of service the state decided to provide. Increased level of service to education have accounted for a large percentage of the growth in the state budget.
The state budget also grows through case load growth. Case load deals with two primary areas - corrections and health/human services. In corrections, the case load is also called the population estimate. In effect, the more prisoners in the corrections system, the more growth that budget has. In the past few years, under the federal Receiver and with the other federal court cases, the corrections budget has bloomed - in no small part because they are providing an increased level of service as well as increasing the medical case load in corrections.
Health and Human Services also work on case load. Medi-Cal, Healthy Families, Welfare to Work, and those public assistance programs are provided funding on a case load basis. In years where revenues are down, those case loads tend to increase. This is because those programs provide support and services to people who have lost their income (which has caused state revenues to drop). The increased case load in recession system has been true for many decades. It is an acknowledged fact, however, it is one the people preparing the budgets do not take into account. In no year has extra money been put aside to handle increased case loads in bad years. This simply means that in bad years, there have to be cuts to these programs in order to balance the budget.
The last way the state budget grows is through inflation. When the cost of goods goes up, so does the cost of state salaries (they get a cost of living adjustment), the cost of state programs, the cost of gas for CHP cars and everything else. This means the state spends more in years when inflation is rising. The state will give increases to departments and agencies to spend more on operating expenses in these years. However, due to the strange California budgeting system, the state does not automatically re-evaluate the needs each year, but instead considers the prior year’s budget to be the baseline, and simply adjust upwards from there. In rare situations, it adjusts downward. However, the departments and agencies that were given increases for gas when gas was almost $4.50 a gallon have not had that increase removed, even though gas is down to $3.10 a gallon in most places.
These are three simple ways the state budget grows without having to even deal with the growth of each program and whether the programs are successful or not.
