Roots of California's money dysfunction

SACRAMENTO, Calif. — In this economy, every state is hurting. Unemployment is in double digits, tax receipts are taking a dive and deficits are piling up. But once again California seems to be in a class of its own when it comes to financial dysfunction. The problems here eclipse those elsewhere.

California has the distinction of being the only state that is constantly running out of cash. California is the only one pleading with the federal government to backstop an emergency borrowing plan. California is the only state that never completely closed its deficit from the last economic downturn — the one that began in the beginning of the decade — with the hangover from that neglect hobbling efforts to solve the latest crisis.

The state has become a laboratory for what not to do when it comes to managing finances. The online news journal Stateline.org, which state government wonks look to for news on the latest policy trends, recently published a guide of sorts for bureaucrats and analysts who want to keep their state from becoming another California. Rest assured, the piece advised, most states are not likely to find themselves as troubled as the Golden State any time soon.

Size is a factor. "You are talking about the eighth-largest economy in the world, so the numbers involved are just so monumental," said Sujit CanagaRetna, a senior fiscal analyst with the Council of State Governments in Atlanta. "The largeness of the problem makes it more intense."

But there is so much more.

The oft-cited waste and abuse is a problem, but the deficit is bigger than the entire state bureaucracy. California could fire every state employee — including those well-paid prison guards and university professors — close every government office, stop all travel and even cease the purchase of paper clips without closing the budget gap. The government would be gone but the deficit wouldn't.

"When you have a budget gap of $20 billion plus, cleaning up waste and abuse just isn't going to fix it," said Susan Urahn, managing director of the nonprofit Pew Center on the States.