Alex Cantatore

According to the spooks who put together the CIA World Factbook, California would play host to the 10th largest economy in the world, were it an independent country. That slots The Golden State in right below Brazil, and above nations such as Italy, Spain, Mexico, and Canada.

And yet, somehow, California found itself with a $40-someodd billion budget deficit this year.

Now, I’m usually first in line to disparage our state government, their budget gridlocks, partisan politics, and general inability to fix the problems facing this great state. But I’m feeling rather charitable today.

So, instead, I’m going to point the finger at our federal government, their budget gridlocks, partisan politics, and general inability to fix the problems facing this great nation.

The State of California is a vastly important asset to the United States of America, generating a gross state product of about $1.7 trillion in 2006 according to the Bureau of Economic Analysis. That amounts to about 13 percent of the country’s total GDP.

Because of our state’s tremendous GSP - and massive population, ranking first in the country - California pays more federal taxes than any other state, nearly twice as much as second place New York. And this is what really gets us into trouble.

A 2003 study by the California Institute for Federal Policy Research found that, as of that year, Californians paid $50 billion more to Washington in federal taxes than the state received in federal expenditures. Every man, woman, and child - including you and I - paid $1,409 more in federal taxes then he or she received in federal funds or services.

While data isn’t readily available for the present fiscal year, remember that the State of California was only about $40 billion short for this current budget. If our state was to receive its fair share - rather than the 78 cents per dollar spent as in 2003, the 45th worst rate of return in the nation - we simply wouldn’t be in this mess.

Is California’s reckless spending really the issue here, or is it simply that the state cannot afford to operate with the folks in Washington, D.C., siphoning away our much-needed tax dollars?

The Tax Foundation, a nonpartisan tax research group based in Washington, D.C., finds that 11 states spend more per capita than California does. Alaska, the leader in per capita state spending, spends almost twice as much as California.

Of course, Alaska also receives $1.84 per dollar of federal tax paid, the third best return in the nation. The Land of the Midnight Sun got back almost $5 billion more in federal dollars than they paid out, despite the fact that the entire estimated fiscal year 2009 budget for Alaska tallies just $9 billion.

Just as a side note, not only do those lucky Alaskans not pay income tax or sales tax, but they also receive a check from the state government each year - 2008’s check was for $2,069.00 - as a royalty on oil revenues, just for living in Alaska.

By no means do I argue that the federal government’s reluctance to return a fair share of tax revenues to the State of California is the sole cause for our inability to balance a budget, but it’s worth knowing that our legislators aren’t quite as incompetent as we may think they are.

If the federal government were to spend the amount of money that it should in California, the state would have fewer funding obligations and would generate more tax dollars, quite possibly making enough of a difference to balance the budget with no further tweaking needed.

Yes, California had the sixth highest tax burden in the nation even before the most recent tax increases. Yes, our great state ranked 48th in the Tax Foundation’s Business Tax Climate Index.

But with the federal government taking such a large share of our tax dollars, the state has little choice but to tax citizens and businesses heavily if it has any chance of supporting the services the massive population of California demands.

The pending May 19 Statewide Special Election is just the state’s most recent attempt to make ends meet by jacking up taxes once again and shifting funding away from some needed programs to pay for other, arguably more needed programs, which arguably should be financed with the federal taxes Californians have already paid.

I understand the state must do something to keep its budget in the black. However, before I go, I would like to make one final note to the voters of Stanislaus County.

While the federal government may only pay California 78 cents per tax dollar, the State of California only pays Stanislaus County 11 cents on every property tax dollar collected.

And that, quite frankly, makes the federal government’s fleecing seem almost insignificant.

To contact Alex Cantatore, e-mail acantatore@turlockjournal.com or call 634-9141 ext. 2005.

Originally published in the Turlock Journal 5/8/2009.
Retrieved from the Turlock Journal Web site.