California to run out of money by February...

Yet another press release fortelling impending fiscal doom for the state.  Apparently, California will have to start issuing IOU's if no budget is passed by February.

Don't worry it's only January 25th, we've got plenty of time.

Jeff Nolan's California Government Spending Table

Jeff Nolan at Venture Chronicles lays out the difference between California state revenues and spending clearly over at his blog.  

He is discussing why people will attack Prop. 13 as an additional source of revenues, and I agree with him.  If they abolish Prop. 13, then it will make predicting the taxes for home ownership much less predictable.  The more potential variance in future expenses there is, the less people can plan and budget appropriately.  And eventually that will lead to less home ownership.  And as he points out California makes more revenue when the overall home ownership grows substantially, not when the taxes from each home owner grow.

But that's not the main point I got from the posting.  I noticed that California state expenditures grew almost 40% over a 4 year period from 2004-05 to 2008-09.  40%!  You would think it would be difficult to scale California's expenses 40% in four years.  It took 154 years for the spending to get to $100 Billion.  It only took another 4 years to add another $40 Billion.

That's a problem.  A big problem.

The Depth of California's Budget Problems

California's Legislative Analyst Office put together a "State of the Budget" presentation for the joint legislative session.  Pages 2 & 3 of the presentation are especially revealing:  almost $30 Billion in deficits over the next three years.  There are also a couple of interesting slides showing potential remedies if using only tax increases v. only spending savings.  Then it provides a summary of Governor Schwarzenegger's plan.

One issue I have with the presentation is that it seems very basic.  I think there are 3 possible explanations:  

1. Either the LAO isn't capable of providing more sophisticated analysis, 
2. The CA legislature isn't capable of understanding a more complex analysis, or
3. They didn't want to put the really scary stuff in print.

Regardless, none of those options bodes well for figuring out this mess we're in.