Letters to The Times

Over the years, The Times has consistently urged government to invest enough in schools, transportation networks and other public services to keep pace with California’s phenomenal growth. Its hope has been for public services that would nurture commerce, industry and people and to protect the unique natural resources that make California the Golden State.

In a recent letter, Gov. George Deukmejian complained that The Times’ editorial policies call for growth in government programs but never describe where government can put its hands on the money necessary to support those programs. He challenged The Times to “put up or shut up.” It is a fair challenge that The Times accepts.

Today’s editorial is the first of a series of three in which The Times will examine the need for new and expanded programs for schools, universities, health care, transportation and all others essential to the state’s future. Consistent with the challenge, the series will specify the programs that California needs to grow and prosper, the cost of the programs and the tax increases it would take to finance them.

THE TIMES’ RESPONSE

Fulfilling the Promise

Gov. George Deukmejian is correct when he says that few places on Earth can match California’s quality of life and opportunities for personal fulfillment. But he is wrong when he says that his Administration is maintaining a superior level of public services, let alone making the investments that will allow California to forge into the 21st Century with a healthy economy and a vibrant society.

We will accept Deukmejian’s statement that California has enjoyed a 73% increase in state revenues and a 65% increase in expenditures during his six years in office, roughly tracking the cost of living and population growth. To settle for such levels is to relegate California to a constant, losing battle of trying to keep up with demands for services and facilities.

Never before has California been willing to settle for average.

California’s problems do not respect statistical curves and averages such as those cited by the governor and imposed by the Gann limits on state spending, adopted by voter initiative in 1979. School enrollment is growing faster than the general population, and will accelerate in coming years as baby boom children move through the system. The prison population has nearly tripled since 1980.

Deukmejian budgets, and particularly the 1989-90 budget of $46 billion that was the focus of the Feb. 17 editorial to which the governor refers, have scrimped on critical programs ranging from a $4.5-billion shortfall in transportation spending over the next five years to the governor’s proposed elimination of the state Office of Family Planning at a saving of $36 million. The family planning cut might help balance the budget, but it would cost the state compounded millions in coming years. The University of California estimates that every dollar invested in family planning saves $6.60 in future social services, welfare and health costs.

One reason California is suffering severe financial problems is that voters over the years have squeezed the system with initiative measures such as Proposition 13 of 1978 and Proposition 4 of 1979, which imposed the Gann spending limits. Voters understandably found the opportunity to cut taxes and limit spending appealing. They could not know at the time--judging the measures in isolation--the destructive effect the initiatives ultimately would have on public services they count on.

The future provides California with not only the promise of economic growth and jobs, but also the chance to develop a unique society of cultural, educational, technological and artistic diversity. To do so, California must invest now in the necessary public support structure. Few jobs will be created if Californians cannot get to them on clogged freeways. Talented people will not move to California if they have no hope of buying a house, and many are leaving the state now for this reason, not to mention air pollution, congestion and others. The new immigrant Californians will not realize their potential if they cannot obtain adequate health care or if they have special difficulties making their way into and through the public education system.

Government spending is not the solution to all of California’s problems. Nor are all the current problems Deukmejian’s fault. But unless state government acts aggressively now to correct the deficiencies of recent years, California cannot boast of the services that are essential if the Golden State is to lure new businesses and their employees.

As a minimum investment in a program of returning to excellence, The Times proposes this basic spending plan, including a state gasoline tax increase and about $1.3 billion in new general fund revenues to offset proposed 1989-90 budget reductions:

TRANSPORTATION--California is suffering a transportation crisis. The proposed new budget has a $700-million highway construction and maintenance shortfall, and there is a $4.5-billion deficit in the 5-year State Transportation Implementation Program of priority projects.

Deukmejian has opposed an increase in the present 9-cent-a-gallon state gasoline tax, the traditional and logical source of transportation funds, which has been raised only once since 1963--by 2 cents in 1982. The California tax now is 5 cents a gallon less than the national average, and California ranks 50th among the states in transportation finance as a proportion of personal income. Delays and congestion cost California an estimated $800 million a year--a conservative estimate, some experts contend--and safety becomes a concern as roads deteriorate. There has been no significant expansion of a freeway system built for 20 million residents in the late 1960s although the state’s population has grown by nearly 10 million since then. Transportation planners say that freeway speeds in Southern California will decline from an average 31 m.p.h. now to 11 m.p.h. by the year 2010 under existing construction schedules.

The state urgently needs a 10-cent-a-gallon increase in the gasoline tax, producing an estimated $15 billion to $20 billion over the next decade. The deficit in state transportation finance during that period is expected to be about $20 billion.

EDUCATION--California has pumped large amounts of new money into education for pupils in kindergarten through the 12th grade during the Deukmejian years. And, finally, the improvements are being reflected in slightly better grade scores. Still, California spends less per pupil than the national average. There are special problems in California because so many of the 140,000 additional students entering the system each year are immigrant children who speak little or no English. Class size is a disgrace: Only Utah burdens its teachers with a larger average class size. Teachers need to be paid more. Many school districts do not have enough money to buy new texts. Per-pupil spending has leveled off, and further improvement in the state’s system will be difficult or impossible without more money.

California still is known for its excellent higher- education system, but both the University of California and California State University are facing tremendous problems in maintaining that reputation, with 63,000 additional students expected at UC by the year 2005 and 60,000 at Cal State. Part of this year’s costs would be offset by increasing application fees and student fees at both systems. This ought not be done. Also, California’s 1.1-million community college system must have more money to institute necessary reforms approved by the Legislature.

The Times proposes that the education budget be increased by $412 million to restore program reductions, eliminate the student fee increase and to advance community college reforms.

HEALTH CARE/SOCIAL SERVICES--In the past, state budget cuts used to hurt mostly poorer Californians. Recently, however, the entire population has suffered from the overcrowding, closure or threatened closure of hospital emergency rooms and trauma centers for lack of funds, affecting as many as nine Los Angeles hospitals at one point last summer. The key element in the health safety net in California is the Medically Indigent Services Program through which the state helps counties pay the costs of poor people. Measured against the medical inflation rate, state financing for this program has declined $474 million in the past six years. Uncollected hospital charges during 1986-87, the last year for which figures are available, exceeded costs by $1.1 billion. Fees paid by Medi-Cal, the state-federal program of health care for the poor, are compensating doctors--those who still will treat Medi-Cal patients--at only about 40% of their normal charges, and hospitals, 68% of their costs.

The governor’s new budget also would eliminate $272 million in normally routine cost-of-living increases in Medi-Cal; county health services; supplemental income for the aged, blind, disabled and welfare recipients. The budget for the new workfare program, GAIN, has been cut by $65 million. These and other reductions should be restored at a cost of $857 million.

GENERAL GOVERNMENT--Because of the Gann spending limit, government programs cannot grow to meet demands and needs. Whenever a program does expand, the funds must come from elsewhere in the budget. For one example, with the cost of operating the prison system expected to double to $3.1 billion in the next five years, other portions of the budget would have to be reduced by $1.5 billion if the Gann limits remain in place. This would be devastating to some programs that already have been cut back or held static. For example, the state park system has the same number of rangers as it did in 1980, even though park visits and acreage both have increased by nearly one-third. The new budget would increase the pesticide regulation program by only 1.3%. The program to investigate and halt ground water contamination would be reduced by $1.8 million and 27 staff positions would be eliminated. The budget of the California Arts Council would be cut 19%, to just $12.6 million. The cost of restoring these and other programs would vary and depend on the amount of new revenue available.

REVENUE--The 1989-90 budget cuts can be offset in part by using some of $1 billion the governor proposes for immediate restoration of the state’s emergency fund. We would replenish the fund over several years, thus freeing at least $500 million for the 1989-90 budget. About $300 million more would be raised by conforming state law to the most recent federal tax law changes--something Deukmejian briefly proposed to do last year.

Then, the Legislature should pass a general tax increase such as Senate Bill 520 sponsored by Sen. Alfred Alquist (D-San Jose) to restore the 11% bracket of the state income tax, which was reduced to 9.3% in 1987. The 11% levy, applicable only to taxable income of $100,000 or more, would raise at least $600 million.

Other major sources of new state funds could be realized without putting an undue burden on California taxpayers or the business and corporate community. They include the closing of loophole-exemptions in the state sales tax, a partial restoration of the inheritance tax, taxing certain services such as lawyer’s fees, and the creation of a split roll so that businesses could pay a higher level of property tax than homeowners.

A modest investment of new revenue in California’s future will pay untold dividends for years to come. Failure to do so now will mean the state is abdicating its reputation for excellence and its tradition of building together so the California dream can be a reality.

BY THE NUMBERS

With one exception, the percentage increase in state spending has declined over the past five years (below left), while the state’s population has grown at a relatively even pace (bottom left). As a result, state spending is spread too thin.

Services do not lag because the state cannot afford them. California’s share of national income is higher than it was a decade ago (below right).

The chart at bottom right compares a budget that The Times calculates would provide adequate growth in services with the budget proposed by the governor. Annual Percentage Change In General Fund Expenditures In 1985 dollars 1985-’86 through 1989-’90 1985-’86: 8.5 1986-’87: 5.4 1987-’88: 1.3 1988-’89: 2.9 (Estimated) 1989-’90: 1.2 (Projected) Source: Legislative Analyst California’s Share of U.S. Personal Income 1978 through 1990 1978: 11.9 1989: 13.1 (Estimated) 1990: 13.1 (Projected) Source: Department of Finance Annual Growth in Population Percent increase 1985: 2.24 1986: 2.44 1987: 2.41 1988: 2.39 1989: 2.11 (Estimated) 1990: 1.94 (Projected) Source: Legislative Analyst The Times Recommendation

The governor proposed a budget for general revenues of $38 billion for fiscal 1989-’90, represented by the column on the left. The Times proposed an increase in that budget of 3.4% ($39.3 billion) as represented by the column on the right, to fully fund essential public services.

Sources: Governor’s Budget, Los Angeles Times