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February 18, 2011

The Sad State of the State of California

By S. Fred Singer
Many must be wondering whether the state of California is beyond repair.  This is particularly true after the November 2010 elections when its citizens voted for the same politicians that have brought them the same failed policies.  As deficits mount and taxes increase, productive people and enterprises are leaving California for more hospitable states.  Inevitably, there will be a tipping point when the state divides between a large welfare population that controls the vote and the rich who live in gated communities but whose tax revenues cannot support the state's obligations.

Good indicators of the outward migration are the prices of U-Haul vehicles.  To rent a 26-foot truck one-way from San Francisco to Austin costs $3236, and yet the one-way charge for that same truck from Austin to San Francisco is just $399.  Even so, U-Haul has to pay its employees to drive the empty trucks back from Texas.

According to CEI, California is a state where public employees have three times the pension benefits of private employees and 20% higher pay, in addition to secure jobs.  This becomes quite evident when one looks at the salaries paid to California's university administrators, where deans can make over $300,000 per year, according to the LA Times.  Keep in mind also that the California education system is super-heavy with deans, provosts, and other administrators.  Having served as a dean, I can vouch for the fact that deans are mostly paper-shufflers who have abandoned teaching and research. 

It is not surprising that the politics of the UC faculty is heavily skewed.  According to the LA Times, the ratio of political donations in 2008 to Democratic vs. Republican candidates was 800 to 1 for UC Berkeley -- and even higher for some of the smaller campuses. 

Wrote Jack Pitney, a professor at Claremont McKenna College, on the National Review's blog. "California voters approved of President Obama's performance by a 10-point margin, whereas the national electorate disapproved by nine points."  "It's a different kind of state," he said.  That may be the understatement of 2010.

A large part of the state's Democratic tilt comes from its massive Latino population, who voted for Democrats two to one. The Los Angeles Times noted that it made up 22% of the voting pool, "a record tally that mortally wounded many Republicans."

How bad has it gotten in the erstwhile Golden State?  According to Investor's Business Daily:

  • Some 2.3 million Californians are without jobs, for a 12.4 percent unemployment rate -- one of the highest in the country.
  • From 2001 to 2010, factory jobs plummeted from 1.87 million to 1.23 million -- a loss of 34 percent of the state's industrial base.
  • With just 12 percent of the U.S. population, California has almost a third of the nation's welfare recipients; meanwhile, 15.3 percent of all Californians live in poverty.
  • The state budget gap for 2009-2010 was $45.5 billion, or 53 percent of total state spending -- the largest in any state's history.
  • Unfunded pension liabilities for California's state and public employees may be as much as $500 billion -- roughly 17 percent of the nation's total $3 trillion at the state and local level.

California is rapidly approaching bankruptcy, a new experience for states, with New York and Illinois not far behind.  According to the Wall Street Journal (Nov 8, 2010), California has $70 billion of general obligation debt -- and that does not include the $500 billion unfunded pension liability.  At some point, will it ask Congress for a bailout, and how likely is that with the new Republican majority?

Assistant editor of opinionjournal.com  Allysia Finlay (a lapsed Californian who still wears Birkenstocks) writes:

"...your government is run by a brothel of environmentalists, lawyers, public sector unions, and legislative bums...When you inevitably crash and burn, don't count on us to bail you out."

Columnist George Will has a few choice things to say in a Dec 26, 2010 essay: "80 cents of every government dollar goes to government employees' pay and benefits."  He cites an example: "A typical San Francisco resident with one dependent pays $953 a month for health care, while the typical city employee pays less than $10."  He too warns against any kind of federal bailout.

William E. Simon Jr. relates in the online Wall Street Journal:

"California faces its most serious budget crisis since the Great Depression.  Newly inaugurated Gov. Jerry Brown is inheriting a deficit that is expected to be at least $28 billion over the next 18 months.  Nonpartisan legislative analysts project a long-term structural gap of some $20 billion per year between revenues and expenditures in the state's general fund, on an annual budget that is now $93 billion."

I have just returned from a lecture tour of the glamour spots of Southern California: Pasadena, Bel Air, Newport Beach, La Jolla.  But there is also the other side: Victor Davis Hanson, who grew up on a farm near Fresno, describes the problems in California's rural heartland, which is beginning to look more and more like a Third World slum in National Review-online 2010:

"[I see] former small farms - the vineyards overgrown with weeds, or torn out with the ground lying fallow. ...  I don't think I can remember another time when so many acres in the eastern part of the valley have gone out of production, even though farm prices have recently rebounded. Apparently it is simply not worth the gamble of investing $7,000 to $10,000 an acre in a new orchard or vineyard.

On the western side of the Central Valley, the effects of arbitrary cutoffs in federal irrigation water have idled tens of thousands of acres of prime agricultural land, leaving thousands unemployed.  ... California coastal elites may worry about the oxygen content of water available to a three-inch smelt in the Sacramento-San Joaquin River Delta, but they seem to have no interest in the epidemic dumping of trash, furniture, and often toxic substances throughout California's rural hinterland."

In a letter to his children, Hanson suggests they prepare themselves for leaving California:

"-since the chance of political change is becoming less likely by the year: The recent election demonstrates that the voters simply refuse to face up to the task of throwing out the politicians who are directly responsible for the state's problems.  Hells bells, back in the 1970s, Jerry Brown was the governor who let state employees organize in unions, and set the state retirement system on the road to its present actuarial disaster.  Incredibly, he just got elected governor again, along with a complete slate of candidates who have spent their political careers furthering the policies which got California into the social, economic, fiscal and regulatory mess it's in right now."

On top of all this, California suffers from the activities and malfeasance of CARB, the California Air Resources Board, run by Mary Nichols, a former assistant EPA administrator in Washington.  Further, the unelected CARB governing board is democratically unaccountable.  CARB has worked to impose a cap-and-trade program for CO2 emissions, a tighter set of automobile efficiency standards, and to top it off, a renewable electricity standard requiring utilities to purchase 20% of their electric power from solar and wind by 2020.  Any of these programs if enacted, would raise the cost of living, and would affect primarily low-income groups -- except that those groups are all covered by welfare programs.  So guess who pays for all this? 

In addition, CARB has conducted a vendetta against whistleblowers who have exposed fraud and cover up at CARB; it has pressured UCLA to fire environmental health sciences professor Dr. James Enstrom, who has worked there for 35 years.  The specific dispute involves the CARB plan to impose an unreasonable pollution standard on Diesel exhausts, not backed by scientific evidence.  It would also put out of business California's trucking industry, a major part of the state's economy.  The CARB actions, and UCLA, have been criticized by California newspapers from San Diego to San Francisco.

The latest from CARB is their effort to impose a cap-and-trade policy that even the legislature has never been able to pass.  Just last week, a San Francisco Supreme Court judge issued a ruling that would stop CARB from implementing its plan.

As Conn Carol recounts in Energy and Environment (Feb 7 2011), the plaintiff was a group called the Center on Race, Poverty, and the Environment.  They object to any market-based system of pollution control, believing that industries will be able to pay for pollution allowances and thus keep emitting "dangerous" CO2.

California also boasts an energy commission, created by Jerry Brown during his first term as governor.  Its lead website headline, as Schwarzenegger was leaving, was an FAQ about "new light bulb standards."  Chuck DeVore, 2010 Republican candidate for the US Senate, writes:

This says it all about Schwarzenegger's energy policies: completely beholden to environmental fantasy. ...  one of Schwarzenegger's self-identified "legacies" was his signing of AB 32, the California Global Warming Solutions Act of 2006.  AB 32 will soon lead to further increases in California's already nation-leading electricity and transportation fuel costs.  The George C. Marshall Institute estimates that AB 32's low-carbon fuel standard and cap-and-trade scheme will hit California families for an additional $570 to $6,500 per year in higher transportation costs."

S. Fred Singer is professor emeritus of environmental sciences at the University of Virginia.  He lectured in California on energy policy and climate change.
on "The Sad State of the State of California"