Someone from Southern California has finally stopped drinking the Kool Aid the California Legislature is serving up and asks: Where has all the money gone? This is the question that USC business professor, John Matsusaka, asked in the LA Timestly picked up widely by othert papers including the San Jose Mercury News. In fact, he asks the crucial question that if the state government is spending 40% more than it was four years ago, about the time Mark DeSaulnier has been an Assemblyman – why aren’t we feeling the impact of improved services, roads, schools, etc.? Masusaka asks, “Legislators, pundits and interest groups warn of dire consequences if state spending is slowed or cut. But if most Californians haven’t detected a significant change from the last $41 billion, including 40% more on schools, will they notice if some of that spending disappears?”
Some excerpts:
- The state’s financial statements describe where the money went — the big gainers were education ($13 billion), transportation ($10 billion) and health ($10 billion) — but not why these billions don’t create even a blip on our day-to-day radar.
- How many Californians know that public school teachers in the state earn an average of $59,000 a year, essentially tied with Connecticut for the highest average pay in the country?
- The highly progressive nature of the state’s income tax schedule — the top 10% of earners supply more than 70% of income tax revenue, according to one estimate — already results in excessive revenue volatility. It also raises questions about how much redistribution of wealth is fair: Should the top 10% foot the bill for basic services enjoyed by all Californians?
- Voters are criticized for wanting more services yet being unwilling to pay higher taxes. That is unfair; Californians have repeatedly demonstrated their willingness to fund valuable programs. But if spending can go up 40% and most of us can’t discern any difference, can we blame voters for being hesitant to put even more tax money in the hands of the state?