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"We need a strategic plan for California. We can let the future happen to us or we can plan our future."

-- F. Noel Perry,
Next Ten founder

"We need to rebuild the public's trust."

-- Leon Panetta, former Chief of Staff to President Clinton

Educating Californians on Budget Basics, continued

The biggest surprise for participants in every region: the number of state employees in California is the lowest per capita in the nation. As Steve Levy points out, "California ranks dead last among all 50 states in the number of state employees per population". Another key surprise: California is an average tax state – we rank 26th in state and local taxes as a percentage of our state total income (as reported by the Taxpayer Foundation).

Other surprises for the participants: K-12 education consumes the largest chunk of the state's budget, accounting for about 38 percent of state spending. At the same time, the $7,244 spent per pupil still lags behind the national average of $7,829.

Attendees were also surprised that:

• Undergraduate tuition at state colleges is relatively low in comparison to other states.
• 65% of the cost of MediCal assists the aged, the blind and the disabled. Many participants expressed concern with the long-term budget outlook as baby boomers move into old age.

Two other numbers that must be mentioned whenever the subject of the budget comes up are: 4.1 billion and 13. The 4.1 billion is the annual tax revenue lost by reducing the Vehicle License Fee (VLF) -- legislators first reduced the VLF in 1998 when overall tax coffers were overflowing. To get a sense of the magnitude of the car tax reduction, consider that the entire state funding for the University of California is $2.7 billion. As Christopher Cabaldon, Mayor of West Sacramento, stated at the Sacramento region budget education session, "We could have made tuition free for every student in the University of California system with the same dollars lost when we cut the car tax."

The second number, 13, is the number of the 1978 proposition that stipulated that property taxes could not exceed 1 percent of a home's purchase price (or its value in 1978). Proposition 13 reversed a trend where people were forced out of their homes because they couldn't pay their property taxes, and it has been vigorously defended against attack ever since. Its effect on local government revenues is undeniable. Proposition 13 stripped local governments of a major source of revenue, and has left them waiting for handouts from the state ever since. As a local elected official at our San Francisco meeting pointed out, "local revenues will be vulnerable until the state's structural deficits are addressed."

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