As California's politicians struggle with a persistent budget deficit, they might take comfort that they are not alone.
Other Western states are dealing with major budget deficits of their own, not only those caused by a stubborn recession but deeply seated "structural deficits" unconnected to the economy, according to a new study by two think tanks at the University of Nevada, Las Vegas, and Arizona State University.
The exception appears to be Colorado, the study says. It has recession-caused budget problems but no structural deficit, thanks to a rigid state spending limit.
Arizona is the regional basket case, with a 33 percent budget deficit this year, two-thirds of which is structural in nature and related to a series of state tax cuts. But California follows.
"California suffers from more of a spending problem than a revenue problem, a result of permanent spending increases that were introduced during years of economic expansion," the study by Brookings Mountain West and the Morrison Institute of Public Policy says.
During the early part of the last decade, with capital gains revenues booming, the state sharply increased spending on schools and other programs, ramping up baseline spending that backfired when revenues plummeted. Meanwhile, constitutional spending requirements and revenue limits kicked in to create a stubborn structural deficit of around 9 percent. That amounts to roughly $10 billion a year.
The full study can be accessed here.
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