Where Does the Money Go?

By Kevin D. Williamson

Wednesday, September 28, 2016

Fresno, Calif. – The water war in California touches everything: fish and farmers, the Endangered Species Act, political fights between the parties and within both the Democratic party and the state’s rump of a Republican party. But there is one aspect of the problem about which there is broad agreement by everyone from Senator Dianne Feinstein to conservative farmers in the San Joaquin Valley: The state needs more and better water infrastructure.

Question: Why doesn’t it have any?

As Senator Feinstein pointed out in a speech earlier this year, California has essentially the same major water infrastructure today as it did in the 1960s, when the state was home to approximately 16 million people instead of 40 million people — farmers, swimming-pool owners, golfers, lawn-waterers, guacamole-eaters, and other thirsty types. The State Water Project, California’s major water infrastructure, was launched in the 1950s and mostly finished up by the 1970s. Individual water districts have added some capacity over the years, but the major conveyance-and-storage system remains largely unchanged.

Question: Where does the money go?

California, the most populous state, has the nation’s largest tax base. It also has some of the nation’s highest state taxes. State and local government spending adds up to nearly 20 percent of California’s economic output, while thriftier states such as Texas and New Hampshire spend less than 15 percent. It isn’t for want of resources that California has gone thirsty.

There’s the train, of course. California is spending an estimates $68 billion (it will end up costing much, much more than that) on a high-speed rail project, the first leg of which will connect the massive urban centers of . . . Merced and Bakersfield . . . . If all goes according to plan (ho, ho) the high-speed rail will tear through the Central Valley at terrific speeds, connecting Los Angeles with San Francisco in a trip that will take only three hours, rather than the current brutal flight time of one hour and ten minutes.

Dumb, sure. And more than dumb: recklessly stupid, willfully wasteful, self-aggrandizing, corrupt (the bidding process is rigged for the benefit of political constituencies), harebrained, screwy, and preposterous.

But that isn’t really the problem, either.

California isn’t spending its money on trains, just as the Federal Highway Administration does not spend its money on highways, and the Department of Defense does not spend its money on aircraft carriers, military bases, and tanks.

California’s government, like the federal government and most other state and local governments, spends its money on salaries, benefits, pensions, and other forms of employee compensation. The numbers are contentious — for obvious political reasons — but it is estimated that something between half and 80 percent of California’s state and local spending ultimately goes to employee compensation. (Interesting analysis here.) That is where the money goes.

There are two problems with public-sector compensation. The first and smaller problem is that many government workers are paid too much. (I regularly check in on the salary of the city manager of Lubbock, Texas: $235,000 at last check.) In 2012, a Philadelphia police detective took enough in “overtime” to have a six-figure income — and the first of those figures was a three. High salaries for federal workers have driven up the cost of living in the D.C. area dramatically, so the federal government has expanded “locality pay,” i.e., paying them even more, which probably will increase the cost of living in the capital area, which probably will result in calls for still-higher pay, etc.

The second and larger problem with public-sector workers is that there are a whole lot of them. There are more than 2 million federal workers, and more than a quarter of those — more than half a million federal employees — are paid in excess of $100,000 a year. The Air Force has nearly as many civilian employees as it does guardsmen and reserves combined. In the years after 9/11, the Navy’s civilian employment continued to grow even as other positions were cut. University administrations continue to grow at an astonishing rate — both in absolute terms and in per-student terms — even where full-time faculty positions are being cut.

There are two welfare states: One of them is composed of people, mostly poor or old, receiving benefits from the government; the second one is composed of people, mostly high-income, signing those checks and staffing the vast bureaucracies that administer our social-services agencies and other public-sector institutions.

When politicians talk about “investments,” we think they mean bridges and research laboratories and canals to bring water to central California. But what they are investing in is dependency. In California, that means creating a lot of full-time jobs for Democrats while doing relatively little for a water system that dates from the Eisenhower years.

There’s a federal water project in California, too. That one dates from the Roosevelt administration.