Why California Spends More


It's conventional wisdom: California is a big spending state. While our reputation as spenders and taxers are exaggerated, the state does spend more than the average state.


A new report from the Public Policy Institute of California explains. For one thing, California's fiscal system is centralized, with money destined for school districts and local governments coming through Sacramento. The state's spending levels look high, but not nearly as high when one understands that three-quarters of state spending goes to these local governments. In other states, local governments raise more of their own revenues -- and keep it local, instead of sending it through Sacramento.

California also has larger caseloads and more generous benefits in some areas. Part of this has to do with demographics--California has more school-age children and low-income families than most states, and thus spends more. The state also makes more people eligible for some programs than other states.

But California also saves money, PPIC notes, by being very efficient in how its administers programs. In Medi-Cal (the state version of MediCare) and CalWorks (the welfare to work program), California's expenditures per case are lower than the average in other states.

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