06/18/2018

Brownout

The growth that so impressed over the past five years has masked a multitude of policy sins, and as California’s economic engine slows down, the underlying problems are becoming harder to deny. People are moving out in greater numbers than they’re moving in. Rates of job creation—and the types of jobs being created—vary widely according to geography. The high-tech hubs of San Francisco and Silicon Valley have added tens of thousands of well-paying jobs during Brown’s tenure, but the rest of the state hasn’t done nearly as well.

Brown has put California on a fiscally unsustainable path. A disproportionate share of the funds paying for his ever-expanding progressive agenda derive from Silicon Valley’s capital-gains tax revenues and inflation of the state’s coastal real-estate prices. Any slowdown in the tech money machine or drop-off in property values could prove disastrous for Sacramento’s budget—California gets half its revenue from its top 1 percent of earners. According to Pew, this makes it the major American state with the most volatile finances. Both U.S. News & World Report and the Mercatus Center ranked California 43rd among the states in fiscal health. And that was during an economic boom.

Brown’s departure will also remove the last (if only partial) restraint on progressives in the state legislature, who largely do the bidding of California’s powerful public-employee unions and the green lobby. These forces will pressure the next governor to ram through even stricter environmental laws, more onerous labor regulations, and a single-payer health-care system. California’s teachers are even pushing for an exemption from state income taxes.

California was once ground zero for upward mobility. No more. During the new millennium, the Golden State has become increasingly bifurcated between a small but growing cadre of elite workers and a far larger pool of poorer families barely scraping by. Wide disparities have opened up between the ultrarich and a fading middle class. The Brown administration has largely ignored the state’s poor and struggling rural areas as it pursues its agenda of remaking California into a progressive paradise. The bill—socially, economically, and fiscally—is coming due.

View Article