Tuesday, September 25, 2012

Cautionary Tale from California. Golden to Gutted

What has caused California’s transformation from a “pull in” to a “push out” state? The data have revealed several crucial drivers. One is chronic economic adversity (in most years, California unemployment is above the national average). Another is density: the Los Angeles and Orange County region now has a population density of 6,999.3 per square mile—well ahead of New York or Chicago. Dense coastal areas are a source of internal migration, as people seek more space in California’s interior, as well as migration to other states. A third factor is state and local governments’ constant fiscal instability, which sends at least two discouraging messages to businesses and individuals. One is that they cannot count on state and local governments to provide essential services—much less, tax breaks or other incentives. Second, chronically out-of-balance budgets can be seen as tax hikes waiting to happen.

The data also reveal the motives that drive individuals and businesses to leave California. One of these, of course, is work. States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average. Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs. Most of the destination states favored by Californians have lower taxes. States that have gained the most at California’s expense are rated as having better business climates. The data suggest that many cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.
Some acceleration in the exodus from the Land of Lincoln. These numbers are from 2010. What's the story today? 48.
P.S.
... Mr. Madigan's bill, Ms. Purkey's pension How your taxes become your lawmakers' slush fund
Purkey never returned to state government from her private-sector job with the union. But state government hasn't forgotten her. The former IFT lobbyist and spokeswoman, now 58 and retired, collects a state pension of more than $100,000 a year. If she lives to age 78, she'll collect a total of about $3 million in benefits from the State Employees' Retirement System. This despite the fact that her final state salary was $36,800: Her pension instead is based on the average of her four highest salaries during her last 10 years with the union. That average was about ... $195,000.
Oh, Purkey also qualifies for free health coverage.

2 comments:

theraineyview said...

Creeping socialism erodes every economy it touches. I was taking a virtual tour of a town in Central CA a while ago and was surprised at the trash in the streets, the dilapidation, the shells of storefronts, the washed-out, bleak scenes. It was once so lush and green.

Anne said...

Well said. So sad.

Running out of other people's money.