Spending Caps and Fiscal Responsibility

Daniel Weintraub says that Arnold's ready to unveil a spending cap that he'll present to voters in March. Many people on both sides said that a Republican governor would have no chance enacting his policies when opposed by the Democrat-controlled legislature, but by going directly to the voters Arnold will bypass the legislature and use his massive popularity to push through his agenda.

The limit, drafted by Assemblyman John Campbell and Howard Jarvis Taxpayers Assn. President Jon Coupal, would cap spending growth at the rate of inflation plus population growth and dedicate any excess revenues to paying off the deficit and building a reserve that would grow to 10 percent of the general fund. The idea is to smooth out the ups and downs in the growth in government and provide a buffer for bad economic times. Any revenue beyond what was needed for a 10 percent reserve would be rebated to taxpayers.

If you're familiar with the California budget debacle, you'll know that the cause of our shortfall wasn't a lack of revenue, but reckless spending. There are only 3 numbers you need to know to back up this assertion:

1. 21% -- Over 1998 and 2002, the population growth rate and inflation combined would have led to a 21% budget increase to maintain 1998 levels of service.
2. 28% -- Between 1998 and 2002, state revenue rose 28% (faster than population and inflation combined, you'll note).
3. 36% -- From 1998 to 2002, state spending increased by 36%, far faster than population and inflation together, and far faster than revenue.

21%, 28%, 36%. If the Democrats in control of the state had increased spending along with population and inflation, we'd be sitting on a huge budget surplus right now. If they had merely increased spending with the increase in revenue, we could at least have broken even. But instead they spent far more money than was taken in, and have left our great state with a ridiculous, humiliating, shortfall.

That's why spending limits are necessary: we just can't trust the legislature not to go crazy withour money. Bill Hobbs points to this white paper he wrote about Tennessee's Taxpayers Bill of Rights that also gives a great history of the modern Tax Revolt, starting with California's own Prop 13 in 1978.

Update:
This SacBee article informs me that the legislature will need to approve the proposed amendment by 2/3 in order for it to show up on the March ballot.

It would take a two-thirds vote in the Legislature to put a spending cap on the ballot as early as March. Lawmakers are scheduled to convene in special session Nov. 18, the day after Schwarzenegger takes office.