How Big Will State Government Be?

Hardly a day passes without some paper or website telling us that this year’s budget fight is about what kind of state California wants to be.

At one level, the cliché had some truth in it. There’s a fork ahead in the budget road as mapped by Gov. Jerry Brown. The path to the right—rejecting an extension of current tax levels—portends huge cuts in public services most Californians want. The path to the left—extending current tax levels—means merely big cuts in services.

But what the cliché ignores is that the choice Brown offers is between two versions of public austerity. As the chart below shows—it is a graphic version of the data in Schedule 6 of the Governor’s budget summary—the choice comes down to this:

Will California state government shrink to its smallest share of the state economy since the 1973-74, when Ronald Reagan was governor.

Or will it shrink to the size of the government of 1966-67, the last budget signed by Jerry Brown’s father, Pat Brown?

(Click to enlarge.)

One important thing to note. In neither 1973-74 nor 1966-67 did state government have the primary responsibility for funding K-14 education, a role that it assumed in the wake of the passage of Prop 13 in 1978. Also, state government’s health care role was much smaller. Medi-Cal was only being created in 1966, a year after passage of the federal Medicaid law. In 1973-74 Medi-Cal was still in its infancy, and health care inflation had not yet exploded.

Today, schools and health care are the two largest segments of the state budget.