California: “The Venezuela of North America”

California should be the best place to live in America. It’s on the West coast, it has a fantastic climate, it has some of America’s best known cities like Los Angeles & San Francisco, a massive economy, celebrities galore…it goes on and on. There are so many great things you can say about California.

Despite all that, California’s like a trust fund kid who blew through his inheritance, ruined the family business, and is living in a mansion paid for credit.

It’s no secret that California’s running a massive deficit,

The state has come to symbolize the budget crisis for many people, because of its massive shortfalls and the extreme measures the state has already been forced to take: mandatory furloughs for all state workers, teacher layoffs, aid to the university system reduced by 20 percent, and massive cuts to education, corrections, and social services. It already faces a $6 billion budget gap, and projections from the state’s Legislative Analyst’s Office show that by the time the state has to come up with its next budget, it will have a $20.7 billion budget gap on its hands. On the plus side, the outlook isn’t worsening, and state revenues appear to be stabilizing.

The left-wing government of California, including liberal Republican Arnold Schwarzenegger, have done very little to seriously address these problems and they seem to have no ideas that go beyond massive tax hikes.

Of course, that’s a problem, too, because California’s already such an over regulated, over taxed state that it has just been ranked Worst state for business in 2010:

In Chief Executive’s annual survey of best and worst states for business, conducted in late January of this year, 651 CEOs across the U.S. again gave Texas top honors, closely followed by North Carolina, Tennessee and Virginia. They gave the booby prize for worst state to California, with New York, Michigan, New Jersey and Massachusetts filling out the bottom five-a line-up virtually unchanged from last year.

…“Texas is pro-business with reasonable regulations,” one CEO respondent remarked, “while California is anti-business with anti-business regulations.” Another commented, “California is terrible. Even when we’ve paid their high taxes in full, they still treat every conversation as adversarial. It’s the most difficult state in the nation. We have actually walked away from business rather than deal with the government in Sacramento.”

“The leadership of California has done everything in its power to kill manufacturing jobs in this state,” observed another CEO. “As I stated at our annual meeting, if we could grow our crops in Reno, we’d move our plants tomorrow.”

How is it that the nation’s most populous state at 37 million, one that is the world’s eighth-largest economy and the country’s richest and most diverse agricultural producer, a state that had the fastest growth rate in the 1950s and 1960s during the tenures of Democratic Governor Pat Brown and Republican Governors Earl Warren and Ronald Reagan, should become the Venezuela of North America?

Californians pay among the highest income and sales taxes in the nation, the former exceeding 10 percent in the top brackets. Unemployment statewide is over 12.2 percent, higher than the national average. State politics seems consumed with how to divide a shrinking pie rather than how to expand it. Against national trend, union density is climbing from 16.1 percent of workers in 1998 to 17.8 percent in 2002. Organized labor has more political influence in California than in most other states. In addition, unfunded pension and health care liabilities for state workers top $500 billion and the annual pension contribution has climbed from $320 million to $7.3 billion in less than a decade. When state employees reach critical mass, they tend to become a permanent lobby for continual growth in government.

Bill Dormandy, CEO of San Francisco medical device maker ITC, summed it up: “California has a good living environment but is unfavorable to business and the state taxes are not survivable. Nevada and Virginia are encouraging business to move to their states with lower tax rates and less regulatory demands.”

…By contrast, Texas, the second-most populous state and the world’s 12th largest economy, is where 70 percent of all new U.S. jobs have been created since 2008. Unsurprisingly, it scores high in all the areas CEOs value most. “You feel like state government understands the value of business and industry to create jobs and growth,” observed one CEO. Its tax credits and incentives to business choosing to locate or expand are among the most aggressive. The Texas Enterprise Fund is by far the largest deal-closing fund of any state, with grants totaling $377 million disbursed in 2008.

Little wonder then that while Texas gained over 848,000 net new residents in the last 10 years, according to the Census Bureau, California lost 1.5 million. New York State’s net loss exceeded 1.6 million – the highest of any state. High-tax, big- government New Jersey ranked fourth, with a net loss of almost 460,000, enough to drop it from 10th to 11th place in population.

So, California has a massive deficit, an over taxed populace, and its taxes and regulations are driving its residents and businesses to flee for greener pastures.

There was a time when California was hailed as a liberal laboratory that the rest of the country could learn from. Instead, maybe liberals should take a look at their failed experiment in California and learn some lessons.

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