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I wonder where the money went. California is the 5th largest economy in the world ranked by GDP, while it has merely 40M people. It couldn't recoup too much pro

I wonder where the money went. California is the 5th largest economy in the world ranked by GDP, while it has merely 40M people. It couldn't recoup too much property tax due to Prop 13, but it cuts its teeth into income tax, sales tax, and gas tax. Yet the government is crying for more spending. So, how was our money spent?

not2b 5y ago
It has 39.5 million people. And the budget currently has a surplus and it looks like some of that money will be refunded to taxpayers.
- hintymad 5y ago
  Thanks. Updated to 40M
- ccn0p 5y ago
  whether CA puts income limits on those refunds remains to be seen.
- dahdum 5y ago
  The surplus is an illusion, California has over $1T in unfunded pension liabilities. $74k per taxpayer.
  - danans 5y ago
    $1T is the debt if you assume a discount rate of 3%, which is lower than the rate of return on long term government bonds, and far lower than the rate of return on what the state pension programs actually invest in. A far more standard discount rate of 7% results in a debt of $310B. https://www.pensiontracker.org/ https://www.pensiontracker.org/
inferiorhuman 5y ago
Where's the money go? Voters. California loves its populist bullshit. The majority of the California budget is already allocated via all sorts of enticing ballot box measures that are powered by unfunded mandates. There's comically little discretion involved. Per Prop 98 K-12 education is the single biggest chunk. That sounds great until you realize that on lean years you can't cut K-12 funding at all. https://ebudget.ca.gov/2022-23/pdf/BudgetSummary/SummaryCharts.pdf https://ebudget.ca.gov/2022-23/pdf/BudgetSummary/SummaryChar...
- oneoff786 5y ago
  That still doesn’t sound that bad?
- ccn0p 5y ago
  ya and the problem is much of the surplus is driven by a tech and real estate boom that may not continue unlike the spending.
- User23 5y ago
  Also a huge amount of that funding is captured by the administrative bureaucracy and never gets anywhere near a classroom. The state is spending around $375,000 per year on a class of 25 students and $450,000 per year on a class of 30 students. I picked those numbers based on this[1]. Teacher salaries range from about $50,000 to about $100,000[2]. Let's assume benefits and other costs of employment double that. With those conservative assumptions, a small class has $175,000 or $7000 per student per year that isn't being spent on instruction. I seriously doubt California schools are providing students with $7,000 worth of supplies every year. I'm confident that a significant percentage if not a majority of California parents would prefer to get a $15,000 tax credit per school age child per year than the education the public school system is offering. For a family of four, that's an additional $30,000 in after tax money. That's enough to be a single income household even in California. [1] https://nces.ed.gov/surveys/ntps/tables/ntps1718_fltable06_t1s.asp https://nces.ed.gov/surveys/ntps/tables/ntps1718_fltable06_t... [2] https://www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp https://www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp
- ggm 5y ago
  Cutting K-12 would be insane. "lean" is an odd word. MMT pretty much says there are no lean years, only different degrees of willingness to pay, now or later. You really think CA can't "afford" to spend largesse on its citizens?
  - nonameiguess 5y ago
    MMT says that about governments that issue the currency their debt is denominated in. California doesn't issue currency, and most states are constitutionally forbidden from running a budget deficit. California has a particular problem due to Prop 13, which forces it to rely more heavily on income tax, which is much more income elastic than property tax. Any year with a recession hits their budget much worse than most other states. Conversely, they do a lot better during booms, but since voters hate states having rainy day funds and prefer getting the excess refunded, that doesn't help, either.
a11r 5y ago
The State Controller's office publishes detailed reports: https://www.sco.ca.gov/ard_state_acfr.html https://www.sco.ca.gov/ard_state_acfr.html

not2b 5y ago

It has 39.5 million people. And the budget currently has a surplus and it looks like some of that money will be refunded to taxpayers.

hintymad 5y ago
Thanks. Updated to 40M
ccn0p 5y ago
whether CA puts income limits on those refunds remains to be seen.
dahdum 5y ago
The surplus is an illusion, California has over $1T in unfunded pension liabilities. $74k per taxpayer.
- danans 5y ago
  $1T is the debt if you assume a discount rate of 3%, which is lower than the rate of return on long term government bonds, and far lower than the rate of return on what the state pension programs actually invest in. A far more standard discount rate of 7% results in a debt of $310B. https://www.pensiontracker.org/ https://www.pensiontracker.org/

inferiorhuman 5y ago

Where's the money go? Voters. California loves its populist bullshit. The majority of the California budget is already allocated via all sorts of enticing ballot box measures that are powered by unfunded mandates. There's comically little discretion involved. Per Prop 98 K-12 education is the single biggest chunk. That sounds great until you realize that on lean years you can't cut K-12 funding at all. https://ebudget.ca.gov/2022-23/pdf/BudgetSummary/SummaryCharts.pdf https://ebudget.ca.gov/2022-23/pdf/BudgetSummary/SummaryChar...

oneoff786 5y ago
That still doesn’t sound that bad?
ccn0p 5y ago
ya and the problem is much of the surplus is driven by a tech and real estate boom that may not continue unlike the spending.
User23 5y ago
Also a huge amount of that funding is captured by the administrative bureaucracy and never gets anywhere near a classroom. The state is spending around $375,000 per year on a class of 25 students and $450,000 per year on a class of 30 students. I picked those numbers based on this[1]. Teacher salaries range from about $50,000 to about $100,000[2]. Let's assume benefits and other costs of employment double that. With those conservative assumptions, a small class has $175,000 or $7000 per student per year that isn't being spent on instruction. I seriously doubt California schools are providing students with $7,000 worth of supplies every year. I'm confident that a significant percentage if not a majority of California parents would prefer to get a $15,000 tax credit per school age child per year than the education the public school system is offering. For a family of four, that's an additional $30,000 in after tax money. That's enough to be a single income household even in California. [1] https://nces.ed.gov/surveys/ntps/tables/ntps1718_fltable06_t1s.asp https://nces.ed.gov/surveys/ntps/tables/ntps1718_fltable06_t... [2] https://www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp https://www.cde.ca.gov/fg/fr/sa/cefavgsalaries.asp
ggm 5y ago
Cutting K-12 would be insane. "lean" is an odd word. MMT pretty much says there are no lean years, only different degrees of willingness to pay, now or later. You really think CA can't "afford" to spend largesse on its citizens?
- nonameiguess 5y ago
  MMT says that about governments that issue the currency their debt is denominated in. California doesn't issue currency, and most states are constitutionally forbidden from running a budget deficit. California has a particular problem due to Prop 13, which forces it to rely more heavily on income tax, which is much more income elastic than property tax. Any year with a recession hits their budget much worse than most other states. Conversely, they do a lot better during booms, but since voters hate states having rainy day funds and prefer getting the excess refunded, that doesn't help, either.

a11r 5y ago

The State Controller's office publishes detailed reports: https://www.sco.ca.gov/ard_state_acfr.html https://www.sco.ca.gov/ard_state_acfr.html