News

The Dow Jones industrial average has closed above 16,000 for the first time, marking yet another milestone for a stock rally that has surprised even some of the most bullish on Wall Street.

California’s finances are bouncing back after a lengthy recession, and tax revenues are primed for strong growth over the next several years, according to a report issued Wednesday by the Legislature’s budget analyst.

California’s budget is on track for multibillion dollar surpluses in the coming years, the Legislature’s nonpartisan fiscal analyst said Wednesday in an upbeat assessment of the state’s fiscal picture.

A $1.47-billion proposal to add toll lanes to a traffic-clogged 14-mile stretch of the 405 Freeway from Long Beach to Costa Mesa has met with wide opposition from officials and residents in the six cities along the route. Civic leaders said they fear the plan could be a harbinger of more toll roads to come.

It’s still just a speck on the horizon, but getting closer by the second: the point at which California’s oldest pension fund — and the only real retirement security for more than 800,000 educators — will, without a major infusion of cash, be flat broke.

Calpers, as the fund is known, said it paid 130 employees and executives $7.7 million in bonuses last year, more than twice the $3.6 million in the previous year. Chief Investment Officer Joe Dear got $321,750 in addition to his half-million dollar base pay. Three investment officers were paid more than $200,000 each, according to data provided by the fund.

California’s Internet sales tax has brought in more than 260 million dollars since it was implemented about a year ago.

Nationwide, pension costs are eating up more of city general funds, leaving less money to spend on day-to-day needs, such as garbage pickup or parks maintenance. The median spending on pensions among the country’s 250 largest cities rose to 10% of general budgets in 2012, up from 7.75% in 2007, according to data provided to The Wall Street Journal by Merritt Research Services LLC.

The biggest rally in five years in California debt has some investors balking on concern that the state’s finances are increasingly vulnerable to swings in the economy and tax revenue.

Welcome to  SolarCity, the latest booming green company that has never recorded a profit. The startup’s stock price has soared by 600% since its IPO last December—it closed on Monday at $57 a share—and spiked after the company announced a couple of weeks ago that it expects business to grow by 70% to 90% next year. Yet the company, based in San Mateo, Calif., and specializing in deploying rooftop panels, ended the first six months this year $61 million in the red. Ordinarily, that sort of number might disconcert investors. But SolarCity’s business model is powered by government subsidies, which also fueled the 500% stock run-up and turn to profit this year of the electric-car maker Tesla. Steering both companies is Elon Musk.

Stan Druckenmiller makes an unlikely class warrior. He’s a member of the 1%—make that the 0.001%—one of the most successful money managers of all time, and 60 years old to boot. But lately he has been touring college campuses promoting a message of income redistribution you don’t hear out of Washington. It’s how federal entitlements like Medicare and Social Security are letting Mr. Druckenmiller’s generation rip off all those doting Barack Obama voters in Generation X, Y and Z.

California continued to see strong job growth in August, though the unemployment rate rose for the second straight month. Permits and sales for multi-family units continued to support recovery in the real estate market.

On both sides of the Atlantic, and in advanced Pacific Rim economies like Singapore and Japan, the swift decline of childbirth drives some of the world’s most serious social problems. Virtually all Americans understand at this point that the crises in our public and private pension systems and in old age programs like Medicare are largely a result of the baby bust. Our entitlement programs were based on the assumption that each generation would be larger than the last. As that assumption has been proven untrue, many of our most important social programs are becoming unaffordable.

More than one-quarter (27 percent) of the nation’s major urban roads– Interstates, freeways and other arterial routes – have pavements that are in substandard condition and provide an unacceptably rough ride to motorists, costing the average urban driver $377 annually, a total of $80 billion nationwide. In some areas, driving on deteriorated roadways costs the average driver more than $800 each year. Driving on roads in disrepair increases consumer costs by accelerating vehicle deterioration and depreciation and increasing needed maintenance, fuel consumption and tire wear.

The modern market is characterized by mobile capital and labor, with all types of business, small and large, tending to locate where they have the greatest competitive advantage. The evidence shows that states with the best tax systems will be the most competitive in attracting new businesses and most effective at generating economic and employment growth. It is true that taxes are but one factor in business decision-making. Other concerns, such as raw materials or infrastructure or a skilled labor pool, matter, but a simple, sensible tax system can positively impact business operations with regard to these very resources. Furthermore, unlike changes to a state’s healthcare, transportation, or education systems which can take decades to implement changes to the tax code can quickly improve a state’s business climate.