Yesterday’s Media News Group papers, including the Monterey Herald, ran an article purporting to provide “the answer to where California’s tax dollars went” – why we’re in a budget crisis. Their answer: California overspent.

A MediaNews analysis of state spending since Republican Gov. Arnold Schwarzenegger took office in late 2003 found that he and the Democratic-controlled Legislature have spent money well beyond the rate of inflation and California’s population growth – $10.2 billion more.

Yet the programs that received most of that money are priorities that Californians broadly support or have demanded at the ballot box: tougher prison sentences for criminals, health care for uninsured children and an aging population, and a cut in the “car tax” that they pay every year to register their vehicles.

The problem, according to a report last week from the state auditor, is that Republican and Democratic politicians in Sacramento have shirked their responsibility for the past decade, papering over shortfalls that started after the dot-com bubble popped in 2001.

Like homeowners paying off one credit card with another, they used accounting gimmicks and more debt, rather than raising taxes or cutting spending, to balance the books.

It’s a classic case of journalistic truthiness – some facts and accurate analysis wrapped inside a totally misleading frame. But in making this analysis, and emphasizing that the growth in state spending came from core programs – education, health care, and prisons – they have actually reinforced the argument I made nearly a year ago that we have a structural revenue shortfall. As I explained it:

The real problem is that since 1978 this state has cut nearly $12 billion in taxes. This was done during economically prosperous periods, particularly the 1990s. And that lack of revenue has piled up over the years – the state has fallen further and further behind to the point now that our state’s governor is seriously proposing ending public education as we know it.

The MNG story is framed as one of “foolish politicians recklessly overspent our money! if only they’d been more careful!” But within the story itself the truth does emerge:

Schwarzenegger’s first act as governor, signing an executive order to cut the vehicle license fee by two-thirds, blew a large hole in the state budget. It saved the average motorist about $200 a year but would have devastated the cities and counties that had been receiving the money. So Schwarzenegger agreed to repay them every year with state funds. That promise now costs the state $6 billion a year, or $2 billion more than the rate of inflation and population growth since early 2003.

MNG claims there was $10.6 billion in “overspending” – but $6 billion of it, or more than half, was Arnold’s idiotic VLF cut. The article, which conveniently stops its history at November 2003, doesn’t include the other $6 billion in tax cuts that have been implemented since 1993 – cuts that would have allowed state services to be funded at the bare-bones levels we’ve seen during Arnold’s reign.

More criticism of the article over the flip…

The article also gives fuel to the wingnut fire that spending should remain within “inflation and population growth.” Although the authors acknowledge that an aging population is responsible for much of the growth in health care costs (meaning that using inflation and population growth as a metric to judge spending is even more idiotic than it first appeared), it’s not at all clear that they’re correct that state spending exceeded inflation and population growth. John Laird certainly doesn’t believe that:

“If you factor out voter initiatives and court suits, the remaining part of state government grew at or less than inflation and population growth,” said John Laird, a Santa Cruz Democrat who served as Assembly budget committee chairman from 2004 to 2008.

The authors don’t stop to peruse that statement, and instead barrel right ahead with these numbers:

· California’s general fund under Schwarzenegger’s tenure has grown 34.9 percent – from $76.3 billion in the 2003-04 fiscal year to $102.9 billion in 2007-08.

· But over that same period, population growth and inflation together grew by only 21.5 percent.

· If state spending had grown only at that rate, it would have reached $92.7 billion last year. Instead, Schwarzenegger and the Legislature spent $10.2 billion more.

These numbers were directly challenged here last week by OC Progressive, who cited the Legislative Analyst Office:

Total state spending over the decade 1998-99 through 2008-09 … Total spending grows over this period from $72.6 billion to $128.8 billion-an average annual growth rate of roughly 6 percent…

  * After adjusting for inflation, real spending has grown by roughly 18 percent over the entire period, or an annual average growth rate of roughly 1.7 percent.

  * Real per-capita spending-which adjusts for both inflation and population growth-would increase by about 2.2 percent over the period, for an average annual rate of 0.2 percent.

The other key point to keep in mind is that the spending increases that occurred after 2003 were largely restorative in nature – putting back funds that had been cut in 2002-2003 to deal with the prior budget mess.

With the basis of the “omg CA overspends!” argument shown to be built on false logic and bad evidence, all we’re left with is ideology. If anything government spending needs to increase as President Obama so well explained at his press conference last night. Government alone can lift the state out of a severe economic crisis, and that means more spending.

Advocating for less spending – which is the goal of the MNG article – is an inherently Hooverite stance. Americans don’t support it, but it has some power here in California. Progressives need to aggressively push back against this frame, otherwise we could see a hard spending cap and the death of California as we know it.

Voters have it right – they want high levels of government spending. And contrary to public opinion, they are willing to support taxes to pay for it. But the 2/3 rule, whether in the Legislature or in local tax votes, makes it nearly impossible to raise the necessary revenues.

Eliminate the 2/3 rule and voters will be make the right choices.

I don’t have much to say other than to call attention to a post today by San Francisco’s Stephen Smoliar at his blog site: The Rehearsal Studio.

Smoliar is concerned with the manner in which Scholastic Magazine is merchandising Harry Potter as part of it’s push into support of our education system.  This is something that we need to keep watching very carefully as the budget crisis in Sacramento forces schools to look for every more insidious creative means to secure additional funding.      

Last week, there was news of counties suing the state for their money. LA was even thinking of withholding sales tax revenue from the state.  Yes, the counties were angry then.  But, imagine what happens when they get IOUs in the mail:

California’s budget woes will sweep over the state’s 58 counties this week when they get promises instead of checks for $89 million in anticipated payments for welfare, food stamps and other services.

The move will be a devastating blow to the counties, which must serve more and more people looking for government help as the economy craters and jobs disappear, said Paul McIntosh, executive director of the California Association of Counties. (SF Chronicle 2/10/2009)

That’s all well and fine for governments to transfer bad checks amongst themselves, but how are the counties supposed to turn those slips of paper into actual money for services? How does that buy food for food stamp recipients, and how does that send out welfare checks.

Of course, this isn’t any sort of solution, but John Chiang really has no choice.  You can’t send money that isn’t there, and we don’t have the federal government’s luxury of printing money.

There is some money for these types of services in the stimulus, or at least there was, but there is no telling what emerges from the conference committee.  Either way, the state at this point is just paying their problems forward to the actual service providers, the counties.

There are no winners now, save those who laugh at our predicament. Those who want to see the collapse of our social safety net and the civilized and advanced society that we have built here have much to love.  Those who are not quite so depraved are out of luck.

Right now, the number one job of every public official, including state legislators and the governor, our representatives in Congress and our new President, is to revitalize our economy and put our people to work.  Here in California, that means promptly passing a budget that solves our state’s budget crisis, stimulates the economy and creates jobs.  We’re facing a $40 billion budget shortfall and the real possibility of insolvency within a month or two if we don’t get a budget in place.  With 9.3% of Californians unemployed and many more struggling, nothing should get in the way of helping get California’s economy back on track.   Any distraction from solving our budget crisis is a dereliction of duty.

Unfortunately, the Governor Schwarzenegger is stalling a solution to the budget crisis by pushing legislative leaders to accept unrelated and potentially dangerous measures to privatize vital infrastructure projects.  For instance, California, like most states, funds infrastructure through the low-cost, tax-exempt municipal bond market, where private investors’ money helps build schools, roads, flood-control and other necessary projects while paying those investors a fair rate of return.  

Now the governor wants to force the Legislature to experiment with a dangerous scheme for private firms to raise the money for transportation projects, only to be paid back later by Californians, undoubtedly with quite a bit of profit.  So instead of a low-cost, tax-exempt way of raising the money, the governor is pushing to spend more of your money to profit of private investors.  Doesn’t make sense, does it?  The U.S. Government Accountability office recently reviewed the deceptively-named public-private partnerships and concluded: “While private investors can make billions of dollars available for critical infrastructure, these funds are largely a new source of borrowed funds, repaid by road users over what potentially could be a period of several generations.  There is no “free” money in highway public-private partnerships.”

That approach may be a dream come true for ideologues who want to privatize our vital public services, and it may be easy for those politicians who want to pretend that they are not raising taxes.  But sooner or later we’re going to have to pay for the roads, schools and other infrastructure that our state needs and the public-private partnership proposals mean we’ll pay more in the long run as those private contractors seek profit from the deal.  That has been demonstrated across California.  The price tag for San Diego’s public-private partnership toll road (State Route 125) went from $360 million to $843 million by the time it opened a year late in 2007; the cost overruns will be paid by Californians with ten years of additional toll costs.

The governor also wants to be able to outsource vital public services in packages that won’t necessarily generate or save any money to address California’s budget problems.  The so called design-build proposal would effectively eliminate competitive bidding on construction contracts and might compromise quality in vital infrastructure.  That scheme has increased costs to California taxpayers: in four design-build projects, $2.2 billion has been wasted without expediting project completion.  For example, Orange County’s State Route 22 ballooned from a cost of $271 million to over $600 million after becoming a design-build project.  Why does the governor want to spend more of our money while potentially risking quality?

These ideas have been defeated in the Legislature because they just don’t work and they just don’t serve California.  California State Treasurer Bill Lockyer wrote in January in the Sacramento Bee “In fact, the single-minded drive to gin up a gold rush by increasing private companies’ share of the public infrastructure market has helped push California closer to fiscal calamity.”

Now, for whatever reason, the governor is delaying steps toward economic recovery and job creation by trying to push these failed schemes to privatize state government functions as part of the resolution to our budget crisis.  You and I know there’s no such thing as a free lunch.  But by pushing these schemes, Governor Schwarzenegger is trying to pretend that there is.

After decades of state and local government experiments with contracting out, the benefits of private delivery of our vital public services have proven to be elusive.  Contracting out often results in higher costs, poorer service, increased opportunities for corruption and diminished government flexibility, control and accountability.  Governor Schwarzenegger’s privatization schemes offer more of the same for California – more risks with little promise of benefit.

Governor Schwarzenegger is trying to push a bad idea on the state.  It’s bad for California’s economy, bad for our infrastructure, and bad for Californians’ pocketbooks.  These risky privatization schemes won’t stimulate California’s economy.  They may well cost California jobs.  Even more importantly, this is a distraction from the important work we need to be doing in Sacramento to fix what’s wrong with our state.  And with our floundering economy and budget crisis, that’s something we can’t afford. And as long as he keeps trying to shoehorn them into the budget bill, Governor Schwarzenegger is delaying the important resolution of the state’s budget crisis that will stimulate the economy and create jobs.  It’s time for the governor to be constructive by agreeing to a reasonable budget without irrelevant extras.

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Willie L. Pelote, Sr. is an Assistant Director of the American Federation of State, County and Municipal Employees (AFSCME), AFL-CIO.  AFSCME is the largest public sector union in the country representing 1.4 million members nationwide.

The Stacy Peralta-directed documentary Crips And Bloods: Made In America looks at the history of gangs in South Los Angeles over the last 50 years, and the violent civil war on the streets that has raged for the past 30, killing as many as 15,000 residents, three times as many as in the Unionist/Catholic war in Northern Ireland in the 1970s and 80s.  Anywhere else in the world, UN peace negotiators would be brought in and Security Council resolutions passed to stop the violence.  In South Central, the battles continue, and children growing up among the chaos, according to a recent RAND Corporation study, have higher rates of PTSD (post-traumatic stress disorder) than children growing up in Baghdad.

One of the more amazing things about the documentary is that, despite unparalleled access to the gang-bangers surviving on the streets over the past 30 years, there is precious little about the actual feud between the Crips and Bloods.  Most of the history of why they fight and why they kill has been lost in the minds of the young leaders on both sides who suffered an early death.  Crips and Bloods shoot and get shot largely because they are supposed to oppose one another.  Wearing the wrong colors in the wrong neighborhood is a death sentence, but it’s unclear why.  At one point, one of the original gang leaders, Masuka, says that “one of the ways the oppressor state functions is by turning the subjects against one another.”

The story traces gang culture from the earliest days, through the Watts riots of 1965, the Black Power movements of the late 1960s and early 1970s, and the rise of the Crips and Bloods, as South Los Angeles fell into a self-perpetuating cycle of decay and despair.  After the major factory jobs left in the early 1960s, residents were without opportunity and without hope.  Crack cocaine and other drugs eventually became the only economic salvation.  And it led to violence and warfare in the streets.

The most revealing sequence in the film comes when every current gang member is asked about their childhood, and they all – to a man – respond that they were products of a broken home, without fathers, with the family members who raised them selling drugs out of the house, caught at an early age without positive role models or figures to enable their own empowerment.  Those living in South LA with strong family units had mothers and fathers who kept them off the streets and away from the gangs.  Those without had little hope.  And this is a very direct consequence of an insane prison policy that locks up nonviolent offenders, particularly in the black community, at absurdly high rates.  One out of every four black men will be imprisoned at some point in his life, and particularly in California, the inability of the system to handle all the warehousing of inmates leads to a lack of rehabilitation and an expanded recidivism rate.  In fact, the explosion of gang activity inside the prisons ensures an increase outside the jail.  This revolving door in and out of prison rips apart families and leads to a sustained cycle of gang activity and violence.  The “war on drugs” is unquestionably a war on people of color and the lower classes.

That is the faillure we are talking about when we look at California prison policy, a failure that will now lead to mass release in the absence of leadership in Sacramento.  Policymakers would rather lock away the problem instead of facing the terrible blight in the black community.  Indeed, they have locked up these people inside AND outside of prison, confining them to the few miles in South Central that is their turf; there are stories in the film of young gang members who have spent their entire lives in a 10-block radius.  The border between South Central and suburbs like Lynwood and South Gate has been a virtual pen for black youth for 50 years, with anyone crossing the border risking a beating or even their lives.  We built communities that are prisons, through restrictive housing covenants and police directives to “maintain order”.  This is what created gang life, out of mutual protection from whites.  And what now sustains it is not only the locking up of parents from sons and daughters, not only the locking up of blacks inside ghettos and away from opportunity, but the locking up of minds, the locking in of self-loathing and the snuffing out of the flame of hope.

While South LA is now as Latino as it is black, the difficulties for residents and the ravages of gang life remain.  While violent crime has decreased since 1992 it remains unspeakably high.  As we look at prison policy in California, and in particular the efforts by elites in Sacramento to block any meaningful reform, despite bending over backwards from federal receivers to work out agreements that allow for inmates to retain their Constitutional rights to be free from cruel and unusual punishment, we need to think about the Crips and the Bloods, about why they persist, about why they fight, and about why we made them.