California government spending is on a roll. Even with recent tax cuts, each state budget enacted for the past three years has ended up about $4 billion bigger than the previous year. Local governments, which had floundered in recessionary red ink for years, have now also begun to expand.

This month, Cal-Tax has updated its ongoing analysis of government spending compared to other states, and even though the national figures used in the report are several years old (1994-95), they show that the $145 billion spent by California state and local governments was an all-time high, even after adjusting for economic growth. Although California was barely one year out of the recession in 1994-95, spending grew by 5 percent over the $137 billion spent in 1993-94.

These most recent spending figures amount to 19.5 percent of Californians' personal income, ranking below only New York and Hawaii among the high-income states (excluding Alaska, as its oil and gas revenues skew its ranking).

So California state and local governments spend a lot of the people's money. What's the significance in that? A closer look reveals what Californians get for their taxes; or what the priorities are for what amounts to $4,600 in spending for each man, woman and child in the state.

The numbers show that our policy makers have placed a high priority on public safety. We are at the top of the list in fire protection and prisons and second highest in police and in funding the courts. California also is higher than most comparable states in welfare, health, housing, natural resources, and financial administration.

Ironically, the numbers show that, here in the quintessential commuter state, we are failing to invest in highways, ranking dead last among all the states. We are also low in K-12 education spending and about average in higher education and libraries. However, recent increases in education spending, including class-size reduction, are not reflected in these figures. It is likely that our education ranking will improve with newer data.

What can California do better? We need more forward-looking policy that invests our tax dollars in infrastructure or services that will pay off with a higher quality of life and a better economy in the future. Recent commitments to increased education spending will help, as long as the money is used in ways that are shown to produce better educational outcomes. Transportation funding needs greater attention. The state highway fund has a large and rapidly increasing balance because the state is having difficulty getting new highway projects designed and started. Money is available, and even more is on the way with the new multi-year federal highway funding bill passed this year.

There are plenty of tax dollars available, and California policy makers can do much to increase our economic and social well-being. It is a matter of setting priorities within the generous amount of resources already provided by taxpayers.

- Stephen Kroes is director of research for the California Taxpayers' Association.

Stephen Kroes