The following chart shows they actually are being fairly prudent. The key is the Gann Limit initiative, which voters passed as Proposition 4 in 1979 with 74 percent of the vote. It was backed by Brown. It imposed a limit on general-fund increases in spending of population increase plus inflation.

The idea was that the people of California can only bear so high a level of taxing and spending. And that the amount they bear can only increase when population and inflation go up. The idea really is obvious. For example, a 10-year-old child can only lift so much weight. But when he grows older, he can lift more — but not until then.

The Gann Limit prevented excess spending throughout the 1980s, and even a tax refund in 1987.

Unfortunately, in 1990 voters passed Proposition 111. Advertised as a measure to reduce traffic congestion, it effectively gutted the Gann Limit. Doing so restored the yo-yo budgeting that has seen spending swell during good times, then collapse during bad times.

The following graph shows two things for the past decade, all numbers for the general fund:

• In red, actual spending.
• In green, spending if the Gann Limit had been in effect.

As you can see, if the Gann Limit had been in effect, the spending limit for fiscal 2014-15 (just “15” on the chart) would be about $109 billion. Close enough for government work to the actual amount of $108 billion.

Schwarzenegger splurge

Notice a couple of other things. The red line (actual spending) soared way above the green line (Gann Limit speding) from 2005 through 2008. Those were the years when Gov. Arnold Schwarzenegger and the Democratic Legislature went on a wild spending splurge during the phony real-estate boom that collapsed in 2008-09. Ironically, Arnold won election in 2003 on a pledge to end the “crazy deficit spending” of recalled Gov. Gray Davis.

Breaking his no-new-taxes pledge, Arnold’s record $13 billion tax increase in 2009 then slowed the state economy more than the rest of the country, hampering revenue collections because bankrupt businesses and citizens don’t pay taxes. The red line (actual spending) then dropped way below the green line (Gann Limit spending) until the new fiscal year of 2014-15, which begins on July 1.

Finally, notice how the green line (Gann Limit spending) rises gradually every year, as you would expect because it tracks inflation plus population growth. This shows that, if the state just maintains an adequate rainy-day fund to take care of budget deficits in recessionary years, it could avoid the downward budget crashes during recessions.

And if it doesn’t splurge — that is, spend above the green line — during prosperous years, it can avoid the excessive spending that painfully has to be cut during recessions.

Republicans are complaining that the budget still spends too much. And it’s good to have them warning against repeating the excesses of the Schwarzenegger years, and of the Davis years before that.

But for now, at least, Brown prudently still is keeping spending within the Gann Limit.

Data

What follows is a snapshot of the spreadsheet I cooked up. The first set of numbers is all the data and calculations. The second set is the numbers broken out that I used to make the chart. I call the budget amount the Gann Limit would have produced the “Gann Number.”

And after that are links to the sources.

Sources

California population:

http://www.infoplease.com/ipa/A0004986.html

California Population 2013

https://www.google.com/#q=california+population

Inflation:

Historical Inflation Rates: 1914-2016

Current US Inflation Rates: 2006-2016

Budget:

http://www.ebudget.ca.gov/

By John Seiler

San Bernardino — San Berdoo to old-time Californios — just declared bankruptcy. The reason, reported the Sun:

By JOHN SEILER

The problem with Calfornia’s $25 billion budget deficit is that state spending gushed upward in three wild splurges. I’ll list them here. As I do, recall if your pay was increased each year anything near as much as the California budget. Probably not.

The first splurge is one people often forget. When Gov. Pete Wilson’s 1991 tax increases expired  in 1994, California finally joined the national economic recovery — two years late. Revenues recovered. And he spent the money. Expenditures rose 8 percent a year for four years straight fiscal years: 1994-95 through 1997-98. Then, in 1998-99, revenues went up another 9 percent.

The second splurge was when Gov. Gray Davis was elected in 1998. For his first two budgets, for 1999-2000, he increased spending an incredible 15 percent. And for 2000-2001, he splurged with an increase of an even more incredible 17 percent.

Spending rose from $57.8 billion in 1998-99, the year before Davis became governor, to $78.1 billion in 2001-02, his second year in office. It was a 20.3 billion increase in spending in just two years — a 35 percent.

That was during the dot-com boom, when we were told — I remember this well — that “the new high-tech economy” would never go back into recession and “the business cycle has been repealed.” Then the dot-com bust hit.

The third splurge of wild spending was after Davis was recalled and Gov. Arnold Schwarzenegger was elected on promises to “tear up the credit cards” of state deficit spending and “blow up the boxes” of government waste. He lied. His 2005-06 budget spiked spending upward 15 percent. And his 2006-07 budget added another 10 percent spending increase. That was during the real estate boom, when we were told that “the new investment economy” would go forever upward and “the business cycle has been repealed.” Then the whole thing collapsed like a cheap card table.

Calculating Gann

Now, here’s the question: What if the Gann Limit had been in effect during this period?

The Gann Limit on state spending was passed by state voters in 1979. It was supported by then-Gov. Jerry Brown, again today’s governor. It limited spending to the increases in inflation plus population growth. It effectively was repealed by voters in 1990.

Here’s the process:

1. Let’s go back to 1993-94 budget and use it as our Baseline Budget. General-funding for that fiscal year was $39 billion.

That’s the last budget before the three Wilson-Davis-Schwarzenegger budget splurges. If you remember, how was California then? A pretty good place, all considered. The schools were funded, the poor helped and government got adequate revenue.

There was even a state surplus (remember those?) of $1.1 billion. That surplus was a substantial 3 percent of the budget. It was a rainy-day fund.

2. Allow spending increases of the rise in population plus inflation. The population in California increased about 19 percent from 1993 to 2011.

As to inflation, using the Inflation Calculator of the U.S. Bureau of Labor Statistics, we find that $100 in 1993 equals $153.16 in 2011. So that’s a 53 percent inflation increase.

3. Add the two together: 53 percent inflation plus 19 percent population increase = 72 percent combined increase.

The Baseline Budget we’re using, for fiscal 1993-94, was $39 billion. Increase that by 79 percent and we get $70 billion. ($39 billion X 1.79 = $70 billion.)

Jerry’s Budget

Gov. Brown’s January budget proposal amounted to $86 billion. To reach that, he’s asking for tax increases of $12 billion.

But if those taxes are not imposed, then he would have to cut another $12 billion, bringing the budget down to $74 billion.

That $74 billion still would be higher than the $70 billion that, as our calculations have shown, would be spent if the state had followed the Gann Limit the last 18 years — instead of going on the three Wilson-Davis-Schwarzenegger spending splurges.

One solution to the budget impasse, then, would be to go back to that 1993-94 state Baseline Budget. Just increase every item in that budget by 79 percent — a hefty sum by itself — and the budget would be balanced. With a $4 billion surplus.

Fundamentally, what the Gann Limit did was to allow spending to grow only as fast as it could be supported by the underlying tax base. Other states don’t need a Gann Limit because their governments are more prudent. The California government’s historical imprudence, as shown by the above brief fiscal history of the past two decades, can only be restrained by statute.

Otherwise, the general fiscal and economic collapse of the state, which has been much worse than at the national level, will only.

* * *

Source: The numbers all were taken from Gov. Brown’s January budget proposal, which is available here. Flip to Schedule 6, which is on Page Appendix 12. I have copied the page below. The column used is Expenditures/General Fund.