Yesterday's Media News Group papers, including the Monterey Herald, ran an article purporting to provide "the answer to where California's tax dollars went" - why we're in a budget crisis. Their answer: California overspent.

A MediaNews analysis of state spending since Republican Gov. Arnold Schwarzenegger took office in late 2003 found that he and the Democratic-controlled Legislature have spent money well beyond the rate of inflation and California's population growth -- $10.2 billion more.

Yet the programs that received most of that money are priorities that Californians broadly support or have demanded at the ballot box: tougher prison sentences for criminals, health care for uninsured children and an aging population, and a cut in the "car tax" that they pay every year to register their vehicles.

The problem, according to a report last week from the state auditor, is that Republican and Democratic politicians in Sacramento have shirked their responsibility for the past decade, papering over shortfalls that started after the dot-com bubble popped in 2001.

Like homeowners paying off one credit card with another, they used accounting gimmicks and more debt, rather than raising taxes or cutting spending, to balance the books.

It's a classic case of journalistic truthiness - some facts and accurate analysis wrapped inside a totally misleading frame. But in making this analysis, and emphasizing that the growth in state spending came from core programs - education, health care, and prisons - they have actually reinforced the argument I made nearly a year ago that we have a structural revenue shortfall. As I explained it:

The real problem is that since 1978 this state has cut nearly $12 billion in taxes. This was done during economically prosperous periods, particularly the 1990s. And that lack of revenue has piled up over the years - the state has fallen further and further behind to the point now that our state's governor is seriously proposing ending public education as we know it.

The MNG story is framed as one of "foolish politicians recklessly overspent our money! if only they'd been more careful!" But within the story itself the truth does emerge:

Schwarzenegger's first act as governor, signing an executive order to cut the vehicle license fee by two-thirds, blew a large hole in the state budget. It saved the average motorist about $200 a year but would have devastated the cities and counties that had been receiving the money. So Schwarzenegger agreed to repay them every year with state funds. That promise now costs the state $6 billion a year, or $2 billion more than the rate of inflation and population growth since early 2003.

MNG claims there was $10.6 billion in "overspending" - but $6 billion of it, or more than half, was Arnold's idiotic VLF cut. The article, which conveniently stops its history at November 2003, doesn't include the other $6 billion in tax cuts that have been implemented since 1993 - cuts that would have allowed state services to be funded at the bare-bones levels we've seen during Arnold's reign.

The article also gives fuel to the wingnut fire that spending should remain within "inflation and population growth." Although the authors acknowledge that an aging population is responsible for much of the growth in health care costs (meaning that using inflation and population growth as a metric to judge spending is even more idiotic than it first appeared), it's not at all clear that they're correct that state spending exceeded inflation and population growth. John Laird certainly doesn't believe that:

"If you factor out voter initiatives and court suits, the remaining part of state government grew at or less than inflation and population growth," said John Laird, a Santa Cruz Democrat who served as Assembly budget committee chairman from 2004 to 2008.

The authors don't stop to peruse that statement, and instead barrel right ahead with these numbers:

· California's general fund under Schwarzenegger's tenure has grown 34.9 percent -- from $76.3 billion in the 2003-04 fiscal year to $102.9 billion in 2007-08.

· But over that same period, population growth and inflation together grew by only 21.5 percent.

· If state spending had grown only at that rate, it would have reached $92.7 billion last year. Instead, Schwarzenegger and the Legislature spent $10.2 billion more.

These numbers were directly challenged here last week by OC Progressive, who cited the Legislative Analyst Office:

Total state spending over the decade 1998-99 through 2008-09 ... Total spending grows over this period from $72.6 billion to $128.8 billion-an average annual growth rate of roughly 6 percent...
* After adjusting for inflation, real spending has grown by roughly 18 percent over the entire period, or an annual average growth rate of roughly 1.7 percent.
* Real per-capita spending-which adjusts for both inflation and population growth-would increase by about 2.2 percent over the period, for an average annual rate of 0.2 percent.

The other key point to keep in mind is that the spending increases that occurred after 2003 were largely restorative in nature - putting back funds that had been cut in 2002-2003 to deal with the prior budget mess.

With the basis of the "omg CA overspends!" argument shown to be built on false logic and bad evidence, all we're left with is ideology. If anything government spending needs to *increase* as President Obama so well explained at his press conference last night. Government alone can lift the state out of a severe economic crisis, and that means more spending.

Advocating for less spending - which is the goal of the MNG article - is an inherently Hooverite stance. Americans don't support it, but it has some power here in California. Progressives need to aggressively push back against this frame, otherwise we could see a hard spending cap and the death of California as we know it.

Voters have it right - they want high levels of government spending. And contrary to public opinion, they are willing to support taxes to pay for it. But the 2/3 rule, whether in the Legislature or in local tax votes, makes it nearly impossible to raise the necessary revenues.

Eliminate the 2/3 rule and voters will be make the right choices.