Is California Broken? Lockyer and Levy Say No

In an editorial in today’s Los Angeles Times, Bill Lockyer and Stephen Levy make the case that the state of California isn’t broken.  I know that’s bound to rile up the John-and-Ken crowd, but the duo make a compelling case.

From the opinion: “During the current fiscal year, general fund revenues are expected to total $89.4 billion. Education spending under Proposition 98 will total $36 billion. That leaves $53.4 billion available to pay debt service on bonds — more than eight times the $6.6 billion the state will need.

Our critics say we are addicted to spending. But the numbers show that isn’t true. Thirty years ago, general fund expenditures totaled about $7.43 for every $100 of personal income. In the 2009-10 fiscal year, that ratio was almost $2 less, at $5.52 for every $100 of personal income. In the current fiscal year, per capita general fund expenditures will total $2,246, less than the $2,289 spent 10 years ago and roughly equal to the inflation-adjusted level of 15 years ago.

Moreover, state and local government has grown slimmer relative to California’s population. In 2009, the state had 107 state employees per 10,000 residents, the fourth-lowest proportion in the nation and 25% below the national average. California also has the sixth-lowest combined number of state and local government employees relative to population, 12% below the national average and 16% below Texas.

California’s current budget woes have been caused by the devastation visited on our revenue base by the recession, not a failure to curb spending. In the three fiscal years preceding this one, general fund expenditures fell by $16 billion.

And what about the claim that we have a hostile business climate? Companies build new facilities, and move or close other facilities, all the time. If you compile anecdotes and look only at the folks who leave, it is easy to buy the “business is fleeing” mantra. But the Public Policy Institute of California reports that from 1992 to 2006, business relocations to other states accounted for just 1.7% of California’s job losses. Nationally, an average of about 2% of job loss in states was due to businesses moving out.

From 2000 to 2009, the number of businesses per capita in California held steady, while the number dropped slightly in Texas, Arizona and Nevada.

California’s manufacturing and film sectors supposedly are suffering a job exodus. And it’s true that California has seen huge manufacturing job losses — 600,000 jobs, or nearly 33% of the total since 2000, were lost. But the nation overall has not fared any better. And in some traditional manufacturing powerhouses, the job disappearance has been worse. Massachusetts lost 37% of its manufacturing jobs; North Carolina lost 44% and New York 39%. Meanwhile, California’s share of the nation’s film industry jobs grew slightly from 2000 to 2010, from 44% to 45%.”

Bill Lockyer is the state treasurer of California. Stephen Levy is director of the Center for Continuing Study of the California Economy.

So what do you think?  Is California no longer golden?

  10 comments for “Is California Broken? Lockyer and Levy Say No

  1. cook
    December 20, 2010 at 1:41 pm

    Why not just say “Let them eat cake”?

    What a pair, they should go to the front of the line.

  2. junior
    December 20, 2010 at 2:30 pm

    Lockyer was singing a different tune last year.

    “To the Democrats, we aren’t going to have any tax increases – give it up – figure out how to be more efficient about spending the money we’ve got.”

  3. Bladerunner
    December 21, 2010 at 1:30 am

    It’s more talking to a different audience. The underlying wealth, vitality, and assets of the state are sound. The problem is that the management of those assets has been inefficient, wasteful and without imagination. Many reasons including but not limited to hyper-partisanship, failure to find the right combination of public-private particpation and responsibility, voodoo budgeting and fear of being primaried.

    Lockyer’s comments last year were to the Legislature, primarily the Democrats. Lockyers message this year was more to Republicans who, having gotten electorally punked in the Golden State (much to their embarassment as their GOP brethern west of the Sierras were the punkers, not the punkees), have tuned out many of the facts in order to try and make California look like the Weimar Republic.
    Read together, they give one a more accurate picture on Lockyer’s analysis.

  4. junior
    December 21, 2010 at 6:07 am

    You have it 180 degrees wrong Bladerunner – it is the Republicans who are trying to prevent CA from turning into state where you need a wheel barrow full of billions of bucks to buy a loaf of bread.

    Lockyer goes on to say: “The Republicans can help you (Dems) be more efficient about spending the money we’ve got. They culturally and occupationally know more about efficiencies than Democrats.”

    • RHackett
      December 21, 2010 at 6:26 am


      Your statement is a joke, right? When has the GOP ever proven they know more about efficiencies than Dems?

      Based on what evidence?

      • junior
        December 21, 2010 at 2:12 pm


        That is not my statement. That is a quote from California State Treasurer Bill Lockyer. BTW, he is a Democrat.

        Ask him ….

    • Bladerunner
      December 22, 2010 at 1:19 am

      junior, thanks for providing another example of a Republican ignoring facts. Please try to avoid the pavlovian reaction and re-read what I wrote. I know what Lockyer said to the Legislature and I referenced that it was primarily directed to Democrats. I also acknowledge waste and inefficiencies and a lack of imagination. That being said, the dysfunctional blood is on bi-partisan hands in this state. And even so, the basic foundation of the state is strong. But because those facts don’t fit into the partisan picture you want to paint, Republicans ignore them or, at best, minimize them. Lockyer may be right about Republican efficiencies…but starving the beast is a prescription for mediocrity, not greatness. Hopefully, Brown will truly engage Republicans in the planning and budget process. If we can’t make changes in these tough times I’m not sure they can be made.

  5. cook
    December 21, 2010 at 3:22 pm

    As a government men, these men feel there is plenty of money to cover the Educations mandated share and debt service. These people get paid well, and have extraordinary benefits, and special interest friends who will pay any and all trips, parties, and gifts to their hearts content.

    What is left out of the equation is “Public Services”, after the government people eat up 80 billion plus, there is not a dime for public services without a major tax increase.

  6. Ltpar
    December 21, 2010 at 10:42 pm

    A comparison can be made with the AD64 burning of Rome while Nero fiddled and the dismal status of the State of California. Today, we have Lockyer and Levy, putting out the same tired old propaganda that California’s future looks rosy and our pending demise is not due to gross overspending and mismanagement by both Democrats and Republicans in Sacramento. I suppose it could be worse, Lockyer could be the Governor?

    From what I am reading, Governor Brown has a better grasp on the the firestorm in Rome (California). He is the unenviable position of dealing with the problem in real time frames. From having witnessed Jerry Brown in action in the past, I think we can expect two things. First is drastic cuts in spending, reduction of State Programs and employees and sadly yes, public education. Secondly, will be an array of additional taxes for the people of California to deal with. Not real good for the tough financial times, but Brown and the Democrats will have to fall back on their core voter base who pay little to no taxes, as it is. For the rest of us, it is bend over, grab your ankles and stand by for the pain.

    As an after thought, I wonder if this would be a good time for some proactive elected representatives to develop legislation to get the State out of public school education (K-12) funding all together, letting locals handle it. Then we could decide what quality of education we want for our kids in Irvine and come up with ways to pay for it. Problems are best solved at the lowest common denominator?

    • junior
      December 22, 2010 at 6:22 am

      ltpar said: “I wonder if this would be a good time for … elected representatives to develop legislation to get the State out of public school education (K-12) funding all together ..”

      You would have to remove the ability of the CTEA to make political contributions before this would stand a snowballs chance.

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