State Budget "High Risk," Says Auditor

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When Governor Schwarzenegger ran in the 2003 recall election, he promised a full audit of state's finances that would finally shed light on the causes of California's budget dysfunction. But the much ballyhooed audit actually ended up being a short spreadsheet of numbers whose calculations were much criticized.

Based on a comprehensive report issued today, maybe he should've just used the California Bureau of State Audits.

That report, released by State Auditor Elaine Howle, classifies the annual budget process as a "high risk" issue added to a watch list of some of state government's most vexxing operations.

(Summary is here.)

The data points in Howle's report are thought provoking, especially as we wait for a sign of white smoke in ongoing private negotiations between Schwarzenegger and legislative leaders over a $40 billion deficit solution.

Without further ado...

The audit concludes that in 12 of the last 20 years, the state has faced projected deficits totaling a whopping $146 billion (using projections made each May in revised budget documents). Eight years of that time span showed projected surpluses, for a combined $30 billion.

The budget solutions proposed over those decades point to the problem: more than 27% of those solutions, says the audit, involved increasing state debt (borrowing)... while another 22% involved "fund shifts and transfers, accelerated revenue payments that reduce future revenues, and expenditure deferrals." In other words -- half the solutions have been gimmicks.

One of the most fascinating statistics in the audit shows some of the pressures faced by legislators, and may give ammo to those who currently oppose talk of a new cap on state spending tied to population growth.

The audit concludes that the population growth in certain sectors served by state government has been noticeably higher than the 28% growth in California's general population over the last two decades. Growth in the number of prisoners, according to the audit: 82%. Growth in the number of people eligible for Medi-Cal assistance: 90%. Growth in the number of school-age children: 32%.

"This disproportionate growth," says the audit, "has caused increases in the state's general fund expenditures to outpace the combined rate of inflation and general population growth."

The audit also notes the pressures that's been created by voter initiatives that mandate spending without mandating some revenue source for that spending.

Hard to say what the impact of all this new data will be, or should be. At the very least, it's one more way -- and perhaps, a valuable way -- of looking at the political and systemic dysfunction that's become the norm inside the halls of the state Capitol in recent years.

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About John Myers

John Myers is senior editor of KQED's new California Politics & Government Desk. He has covered California politics for most of the past two decades, serving previously as Sacramento bureau chief for KQED News and most recently as political editor for KXTV News10 (ABC) in Sacramento. In 2014, he was named one of the nation's top statehouse reporters by The Washington Post. Follow him on Twitter @johnmyers.

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