The Great California Federal Funding Ripoff

See why California doesn't get as much as much small states

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Many observers are painfully aware that reduced state revenues in recent years have forced the legislature and governor to make drastic cuts in state budget commitments.

What's less well known is that the state's fiscal problems have been exacerbated by federal allocations that fall short of California's percentage of the national population, according to a new study released by the nonpartisan California Budget Project (pdf).

Data from the past fiscal year tell the story.

During Fiscal Year 2010 which ended September 30, 2010, Californians received $333 billion from the feds for everything from Social Security and Medicare payments to university research to food stamps to unemployment insurance payments.

At first blush, that seems like a lot of money--a huge amount, in fact, given that the state's general fund budget is about $85 billion.

But it's not.

According to the CBP study, California has been shortchanged.

During FY 2010, Californians constituted 11.9 percent of the U.S. population.

During the same year, Californians received 10.2 percent of all federal expenditures. Using the $333 billion overall figure as a measuring stick, that means that Californians received about $30 billion less than we would have had the federal payments equaled the state's percentage of the national population.

Why did other states receive more?

The answers changed with each case. Some states received more funds because they have extensive military presence.

Other states obtained more than their "share" because of national security installations.

Still other states collected more because they have high poverty rates. All these reasons make sense. Still, California has its special needs, too.

Lost in the discussion is that California houses about one fourth of the nation's illegal immigrants.

Also with three of the nation's largest seaports, California has special needs for security against terrorism. And then there's the state's 1,000 mile coastline, surely a factor with respect to protecting the nation.

There's also the matter of significance of California's water system to the nation's agriculture. The simple fact is that the case can be made that California has as many special needs as any other state to justify its full share of national bounty.

Still the state lags, thanks largely to antiquated funding formulas, some of which are decades old.

All this becomes even more compelling, given the pressure on national lawmakers to make drastic cuts in the federal budget in an effort to reduce the national deficit.

Such changes may be long overdue and vital to the nation's fiscal order. Still, if these changes deny even more money to California at a time when the state already lags well below the national average, the state will be even more challenged in its effort to escape three years of serious recession. 

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