Your figures are off, pdq.

The 1998-1999 CA state budget was $76+ billion for 32 million residents or $2375 per resident
The 2002-2003 CA state budget is $98.9 billion for 35.5 million residents or $2786 per resident

At 4% inflation per year, a budget that adjusted for inflation only would be $88.9 billion. Adjusting for popultation would increase that figure to $2778 per resident.

However, CA budgets were slashed to emergency spending levels in the early '90's during the recession that hit CA pretty hard. We have a legacy of crumbling schools and lagging infrastructure that still hasn't been overcome. CA may have serious budget issues, but the truth is that we've never had the leadership to recover from the last recession and stash some money away during the good times, and now it's come home to roost when times are hard again.