State Fiscal Crisis

Health Costs Threaten to Bust California's Budget

In addition to state worker salaries and benefits

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California's recent announcement that it had balanced its budget for the first time since the 2007-08 fiscal year received broad coverage. Yet next to nothing has been said about the change in the state's spending priorities over that six-year period.

Despite a 30 percent increase in the top income tax rate, higher sales taxes and fees, and greater total revenue, the state is spending less on education, transportation, courts, welfare and parks than it was six years ago. The reason: State spending on health care, employee compensation and benefits, interest, and prisons is greater than it was six years ago.

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