California Leading the Way

California has always been a leader in commerce, science and culture. Recently it has fallen on hard times economically. The resulting decline in tax revenue has also coincided with huge increases in state government expenditures and future obligations.

The War Over California - by Ross Douthat

The argument about what went wrong with California is really an argument about the future of America. To the right, the Golden State’s ongoing crisis is a case study in liberal failure: A big-spending state that lived far beyond its means, and let its public-policy priorities be dictated by the appetites of liberal interest groups instead of the common good. To the left, it’s a case study in how a malign nexus of conservative intransigence and institutional sclerosis can thwart good governance. The problem in California isn’t the spending, liberals argue: It’s the supermajority requirements that prevent a liberal majority from raising the taxes necessary to pay for it.

The Big-Spending, High-Taxing, Lousy-Services Paradigm - by William Voegeli

Unpacking the numbers is even more revealing—and, for California, disturbing. The biggest contrast between the two states shows up in “net internal migration,” the demographer’s term for the difference between the number of Americans who move into a state from another and the number who move out of it to another. Between April 1, 2000, and June 30, 2007, an average of 3,247 more Americans moved out of California than into it every week, according to the Census Bureau. Over the same period, Texas saw a net gain, in an average week, of 1,544 people. Aside from Louisiana and Mississippi, which lost population to other states because of Hurricane Katrina, California is the only Sunbelt state that had negative net internal migration after 2000. All the other states that lost population to internal migration were Rust Belt basket cases, including New York, Illinois, New Jersey, Michigan, and Ohio.

Failed State - by William Voegeli

Adjusted for inflation, California's per-capita outlays increased by 21.7% between 1992 and 2006; the increase for the other 49 states and the District of Columbia was 18.2%....

A few counterfactuals show that these different growth rates matter—a lot. If constant-dollar, per-capita expenditures by California's state and local governments had grown by 18.2% between 1992 and 2006, the rate for the rest of the country, rather than 21.7%, California's public sector would have spent $10.6 billion less than it actually did in 2006. While California government expenditures grew faster than the national average, even states not famous for the parsimony or integrity of their public sectors, such as New York (16.4%) and New Jersey (12.8%), grew more slowly. If California's outlays had grown only fast enough to keep pace with population growth and inflation from 1992 to 2006, public spending would have been 17.8% less in 2006, $300 billion rather than $365 billion. The resulting level of per-capita government outlays in 2006 would have equaled neither Somalia's nor Mississippi's, but...Oregon's, which is rarely considered a hellish paradigm of Social Darwinism.

Public Employee Unions Are Sinking California - Steven Greenhut

Approximately 85% of the state's 235,000 employees (not including higher education employees) are unionized. As the governor noted during his $83 billion budget roll-out, over the past decade pension costs for public employees increased 2,000%. State revenues increased only 24% over the same period. A Schwarzenegger adviser wrote in the San Jose Mercury News in the past few days that, "This year alone, $3 billion was diverted to pension costs from other programs." There are now more than 15,000 government retirees statewide who receive pensions that exceed $100,000 a year, according to the California Foundation for Fiscal Responsibility.

Many of these retirees are former police officers, firefighters, and prison guards who can retire at age 50 with a pension that equals 90% of their final year's pay. The pensions for these (and all other retirees) increase each year with inflation and are guaranteed by taxpayers forever—regardless of what happens in the economy or whether the state's pensions funds have been fully funded (which they haven't been).