Sunday, November 11, 2012

The not so Golden State






"Don't you think we are just rearranging deck chairs on the Titanic?"

William Vickrey
Well it was yet one more historic election for California. Before I get started on my rant, let me make a true confession. I love California. I have traveled there many times on vacation and also business trips. I was stationed in San Diego for boot camp. There is something magical about the state, no matter what part you are visiting. I love the weather, I love the "vibe". To castigate this state is not easy for me, but I feel there are things that need to be said.
In January 2011, The American Dream published these tidbits about the health of the Golden State:
  •  The California state government is facing a potential state budget deficit of 19 billion dollars in 2011.
  •  The state of California currently has the third highest state income tax in the nation: a 9.55% tax bracket at $47,055 and a 10.55% bracket at $1,000,000.
  •  California has the highest state sales tax rate in the nation by far at 8.25%.
  •  Residents of California pay the highest gasoline taxes (over 67 cents per gallon) in the United States.
  •  20 percent of the residents of Los Angeles County are now receiving public aid of one kind or another.
  • The number of people unemployed in the state of California is approximately equal to the populations of Nevada, New Hampshire and Vermont combined.
  • Residents of California pay some of the highest electricity prices in the entire nation.
  • According to one survey, approximately 1 out of every 4 Californians under the age of 65 have no health insurance. The farther you look into the future, the worse California's financial problems become. According to the WSJ, California's unfunded pension liability is estimated to be somewhere between $120 billion and $500 billion.

Holy cow, that all sounds pretty bad. But lets face it, that was almost two years ago, and things must be better now. Based on the general and state election from last week, here are the results of some ballot initiatives:

  • Proposition 30, which imposes a small increase on sales taxes (which is the already the highest in the nation) and increases taxes for the state's wealthiest residents (which is already third highest in the nation) passed.
  • Proposition 38, which would have raised taxes on all residents, lost.
  • Proposition 32, which would have curtailed the power of labor unions, lost.
In addition the above propositions, enough Democrats are now in the state legislature to give Governor Brown a veto proof majority. Whatever the Governor and the state house want, they will get. One rule government has finally arrived. No disagreements, no checks and balances, nothing.

According to Joel Kotkin, a famous demographer and California resident, "Today the state's  fastest-growing entity is government and its biggest product is red tape. Californians are increasingly pursuing happiness elsewhere."

Mr. Kotkin continues, "Nearly four million more people have left the Golden State in the last two decades than have come from other states. This is a sharp reversal from the 1980s, when 100,000 more Americans were settling in California each year than were leaving. According to Mr. Kotkin, most of those leaving are between the ages of 5 and 14 or 34 to 45. In other words, young families. While many middle-class families have moved inland, those regions don't have the same allure or amenities as the coast. People might as well move to Nevada or Texas, where housing and everything else is cheaper and there's no income tax."

There is more, much, much more about the dire condition that California has found itself it. The bluest of a blue state is now on the fast track to become our own Greece, right in our back yard. The wagon has become too heavy, with too many riders and too few pullers. There is not enough money in Sacramento, not enough tea in China, to fund this budget. The crash is coming, maybe as early as this year. Washington will try to help, but their piggy bank is also empty. It will be a mess of historic proportions and we will all be able to watch it unfold every night on the news.

Perhaps it is good for us if California fails. Hopefully, it will give the rest of us insight that it can also happen nationally. The Golden State many of us fell in love with, has turned out to be a pariah instead of a dream.


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