Philip Greenspun explains California fiscal crisis

In the 26 years I've been a California resident, the drama of drafting a budget has been a perennial event. In just a handful of years, when we enjoyed an unexpected windfall of taxes, is the budget enacted without gimmicks and raiding the funds of other state and local agencies.

It's popular to lay the blame at the foot of Prop 13 and the requirement of a supermajority to pass the budget, but the real cause of our enduring fiscal crisis lies with the 120 members of the State Assembly and Senate.

Our state representatives never saw a spending bill they didn't like. Especially since in political calculus $$ equals votes. It's quite popular to spend money on some crackpot idea then issue a press release bragging how a representative is 'doing something' about the problem.

In the occasional year where we have an unexpected surplus do we use the money to pay down our existing debt or bank it in anticipation of a future rainy day? No, we spend it on new projects, but we don't simply spend it, we float bond issues which obligate us to spend a like amount of money yearly over 30 years. Our base spending level keeps growing. We have no flexability to spend less during a bad year because of entitlements like school spending (which by constitutional amendment consume approx 40% of the budget), existing debt service and third-rail special interest issues.

Our representatives exhibit the drug seeking behavior of addicts, pawning a neighbor's tv to buy their next fix. But, it's not crack or PCP that that has them in it's deadly grip. It's money. Cold. Hard. Cash.

Our elected representatives in California are boxed into a corner. Any move they might take to cut spending risks alienating the special interest groups that dole out the political contributions. Take prisions, for example. In California we incarcerate a larger percentage of our population than most other states (moreso than some countries, even). Our spending on prisions is nearly equal to what we spend on education. (Yet, our prison health care system has been put in the hands of a trustee by the federal courts, since we have been killing one prisoner per day due to inadequate prison health care). Any attempt to cut prision spending (and thus endangering the employment of members of the CCPOA union) brings immediate and harsh retribution by CCPOA.

So, don't blame Prop13 or the supermajority rule. Even if those were not a factor, we'd still be lurching from crisis to crisis, but we'd have tax rates that are double of what they are now...

Joe McGuckin

Can he explain why Harvard loss 22% or 8 billion dollars in its endowment over the last year?