Senator George Runner
Serving the 17th District which incorporates portions of the Los Angeles, San Bernardino, Ventura and Kern counties.

Imagine a family with a $50,000 per year income winning a $5,000 lottery prize. This same family then spends $55,000 a year, not only the year they won the prize, but every year thereafter. Not only is it unwise to spend all of the winnings at one time, but also imprudent to continue adding that $5,000 one-time prize to their annual budget despite the fact that their salary has not increased.

This family might use credit cards or loans to temporarily offset the fact that they are spending more than they receive in income; but such irresponsible spending habits are not sustainable. If they fail to pay off the loans, the interest rates will ultimately cause the debt to balloon. Their credit rating will drop and they will soon find it difficult to afford even the most basic necessities.

While the scenario above describes some California households, it clearly illustrates the budgeting practice of our state government. During the economic boom of 1998 to 2000, California’s revenues increased 23%. But like the lottery prize, these were only one-time revenue increases that would not continue flowing into state coffers. Yet the state government increased its spending as if it would continue to receive that money indefinitely.

Californians are still paying the price for this irresponsible spending. The fact that the Governor called a special session to address a $42 billion deficit a mere two months after the 2009-2010 budget was passed illustrates the perils of this reckless and unsustainable budgeting.

Without reforms, such as a meaningful spending cap and a better tax collecting system, state spending will not only continue to exceed population growth but will also increase the state’s exposure to the volatility of the stock market. Currently, the top 1% of the state’s income earners pays 50% of the state’s taxes. Because these taxpayers tend to keep their money in stocks, anytime the market plunges, California is faced with a disproportionate decrease in revenues.

California ’s enduring budget woes will continue as long as there is chronic overspending and an over reliance on volatile revenues. Unfortunately, the negative effects of the state’s fiscal mismanagement are more far-reaching than the effects that are experienced by a single household that engages in the same practices. For the sake of all citizens, California lawmakers must make the tough decisions that will put our state on the road to fiscal well-being.