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The Associated Press September 13, 2010, 3:43PM ET

AP Enterprise: Whitman exaggerates Brown spending

Among the attacks Republican gubernatorial candidate Meg Whitman repeatedly levels against Democrat Jerry Brown is that he oversaw an irresponsible growth in spending during his previous tenure in the governor's office.

She says spending skyrocketed under the former governor and promises to be a better steward of taxpayers' money.

"Government spending increased 120 percent under his watch, and we became rated among the very worst states to do business in," Whitman said in a speech to the California Republican Party convention in August.

But a database analysis of Brown's eight years in office by The Associated Press, using statistical controls commonly employed by economists, finds Whitman's characterization to be misleading.

The AP analysis found that real state spending under Brown grew far less than Whitman says it did and was almost identical to the spending level under Brown's predecessor, Republican Gov. Ronald Reagan.

Whitman, who has a bachelor's degree in economics, an MBA from Harvard and is the former eBay Inc. chief executive, uses the simplest calculation to arrive at her number, merely comparing total spending during Brown's first full budget year in office with total spending when he left office.

She omits the two key factors that economists consider crucial when examining and comparing government spending levels - population growth and inflation.

"It's not that Meg Whitman doesn't understand this," said Thad Kousser, an assistant political science professor at the University of California, San Diego. "But if you give voters a quantitative comparison controlling for everything else, you don't have an attack ad."

Adjusting for inflation and population growth, state spending under Brown rose 12.3 percent during his eight years as governor, from 1975-83. That's about the same as his immediate predecessor, Reagan, who oversaw a spending increase of 12.6 percent during his two terms, according to the AP analysis.

It also is slightly above the overall spending increase under former Republican Gov. Pete Wilson, who is Whitman's campaign chairman, and is just half the spending by former Republican Gov. George Deukmejian, who followed Brown.

Whitman's criticism could be more aptly applied to Brown's father, Democrat Pat Brown, who was governor from 1959 to 1967. The governor who is credited with building much of California's modern-day infrastructure oversaw a period of rapid growth, with state government spending rising 53 percent during his tenure.

The AP calculated total state spending, starting with the budgets the governors inherited, by incorporating state Department of Finance population figures and inflation data compiled by the U.S. Bureau of Economic Analysis for state and local governments.

The inflation numbers are particularly important because they track and represent the increase or decrease in how much state and local governments pay for goods and services, health care costs and wages. Population growth reflects how many more people state government must serve.

"Inflation is the way that we measure real changes in spending," said Steve Levy, senior economist at the Center for Continuing Study of the California Economy. "It looks like Brown spent all that money, but he actually ended up spending less money."

Understanding the influences of inflation and population on state spending is crucial to understanding the competing campaign narratives provided by the two candidates about Brown's tenure as governor.

Brown has characterized his governorship as one of an "era of limits," whereas Whitman has described him as being fiscally irresponsible and thus unable to fix the state's current budget woes.

Whitman campaign spokesman Darrel Ng defended Whitman's calculations, saying Brown's spending record was six times higher than the average budgets of the last three governors.

"We use a different metric. Our point is that Jerry Brown increased spending," Ng said. "The use of raw numbers is one metric that everyone understands."

On the campaign trail and in her brochures, Whitman describes Brown as a big spender. Yet if she applied the same accounting method to previous Republican governors, Reagan and Deukmejian also would be classified as being loose with the public purse. Under Whitman's method, which begins with the first budget approved by governors, straight spending rose 105 percent under Reagan and 91 percent under Deukmejian. It rose 33 percent under Wilson.

The AP analysis of government expenditures reached back half a century, to the beginning of Pat Brown's term, and generally found that the amount of money spent by government mirrors the economic reality of the time.

One of the biggest shifts in government spending under Jerry Brown came in response to voters' adoption of Proposition 13 in June 1978. The landmark property tax-cutting measure substantially reduced funding to schools and state and local governments.

After voters adopted Proposition 13, Brown issued an executive order to all agency heads to hold spending increases to less than 10 percent so government expenses would not outpace growth in personal income. He also froze government salaries and welfare grants, and slashed $3 billion from his $18 billion budget.

Brown and the Legislature then spent the state surplus, which he had allowed to grow for "storms ahead," as a way to bail out local governments and schools dealing with the immediate fallout from Proposition 13.

Sacramento sent nearly $4.4 billion back to local governments and schools in the 1978-79 fiscal year, according to historical budget documents issued by the state's nonpartisan Legislative Analyst's Office.

"Because of Prop. 13, local government either had to shrink, including schools, or the state had to play a bigger role, and the state decided to play a bigger role," said Jerry Nickelsburg, an economist with the Anderson School of Management at the University of California, Los Angeles.

At the time, the move was praised by tax-cut crusader Howard Jarvis, who sponsored Proposition 13, and was supported by Republicans in the Legislature.

Whitman has said the move to backfill the local tax revenue lost after Proposition 13 was irresponsible. She said Brown instead should have realigned government spending.

"If the people vote and they want a tax cut, what you need to do is align the cost structure of California to manage that," Whitman said when asked recently if her criticism of Brown's spending record was unfair.

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