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HANSON: One California — or two?
The middle class is leaving the state to the rich and the poor
Are the recent raves about a new California renaissance true?
Rolling Stone magazine just gushed that California Gov. Jerry Brown has brought the state back from the brink of “double-digit unemployment, a $26 billion deficit and an accumulated ‘wall of debt’ topping $35 billion.”
Unfortunately, California still faces existential crises.
The unemployment rate just went back up in July to 8.7 percent. That is significantly higher than the current national average of 7.3 percent. Such a high rate of joblessness is a bad omen when the Democrat-controlled state Legislature is pushing for the mandatory minimum wage to reach $9.25 in a little more than two years.
The “wall of debt” is not $35 billion. According to the State Budget Crisis Task Force report that was issued in January, California debt ranges from a minimum of $167 billion to a staggering $335 billion.
To close the budget deficit, Mr. Brown cut expenses, but he also just raised already high taxes on incomes, sales and gas to the nation’s top levels. We won’t know the full effect of those costs on either businesses or the ongoing exodus of the more affluent for months to come.
Yet why was California ever in a fiscal crisis at all?
World food prices are soaring. California has the best soils, weather and farmers in the world. Silicon Valley hosts Apple, Google, Intel and Facebook. The state hosts some of the nation’s largest corporations, such as Wells Fargo, Chevron, Hewlett-Packard and Safeway.
The movie industry in Hollywood, tourism from Disneyland to Yosemite, the Napa wine industry, and vast deposits of gas and oil should make California more prosperous than Switzerland. Its top five universities — Caltech, Stanford, UC Berkeley, UCLA and USC — usually rate among the top 20 worldwide.
Yet despite what God and man in the past have given the state, California has often squandered its inheritance. For all its costly investments in wind and solar power, California electricity rates are the steepest in the nation.
The tab falls most heavily not on the green elites of the affluent coastal communities, but on the poor and middle classes concentrated in the hotter and colder interior. For many in Fresno or Bakersfield, keeping on the air conditioning when August temperatures hit 100 is a fantasy from a bygone age.
Californians pay among the highest gas prices in the country. Again, those astronomical costs seem surreal, given that the state sits atop huge untapped deposits of gas and oil.
The California paradox of having among the highest taxes and among the worst services is also echoed in state-by-state rankings of public-school test scores. California continues to place near the bottom.
Do those sky-high California gas taxes translate into superb roads? Not yet, at least. Reason Foundation’s 20th annual highway report ranked California roads 47th in the nation.
About the Author
By Donald Lambro
Growth spikes are little more than trend-free anomalies
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