I have written about the "has-been" state before. A study by the Federal Reserve Bank of San
Francisco revealed that California’s non-farm employment growth has lagged that
of low tax, low cost states like Texas substantially. The bank’s president said, “Economies
of states ranked high on tax-and-cost indexes [meaning lower taxes and
costs]… tended to grow faster than the
states ranked lower”.
California is not alone as a high cost state. On my recent visit to the Finger Lakes region
of NY, I watched CNBC diva Maria Bartiroma emcee the presentation of over $700M
in state government grants to developers throughout the state. Presumably, these are projects that did not
offer sufficient return to attract private capital. The Finger Lakes (western NY) garnered the
largest share, $96M, which was cheered by local business leaders – you know,
those free market Republicans who don’t like government interference. Those I spoke with pointed out that the
region got none of last year’s freebies.
As for the free market? “Well,
they’re going to give it away anyhow. At
least we got our share,” said one.
New York has the highest amount of public debt per capita in
the country, over $13,000 for every man, woman and child who lives in the state. It’s a shame that no one thought of the
option of keeping $700M in the state treasury and either lowering taxes or
paying off some debt.
Meanwhile, Californians are headed for the exits. Despite high tax rates, state revenues are falling and Spectrum Location Solutions, a company that tracks corporate
relocations, has documented over 250 corporate departures last year. In addition, they have cited a loss of more
than 15% of financial services jobs in both Los Angeles and San Francisco that
have been transferred to other states.
In fact, all of our high cost, high tax traditional financial centers –
New York and Chicago in addition to the two California cities – are losing such
jobs according to a report by Moody Analytics.
Meanwhile, states like bordering Arizona are targeting
California companies to convince them to relocate to their low-cost, low-tax
state. But, they may be late to the
party. The US Census Bureau reported
that California’s coastal cities – San Francisco, Los Angeles and San Diego –
have lost over 2.3M people people since the turn of the century. The Orange County Register cited high cost
of living, high taxes and onerous business regulation as the key drivers of the
trend. To make matters worse, the state
has passed a new land use law (SB375) that will force people to live in densely
populated areas to reduce sprawl and pollution.
The law requires housing density of at least 20 units per acre and easy
access to mass transit.
The tyranny of a one party government – no matter the party
or which government – generally leads to folly.
In the case of California, the folly is Blue State utopia.
Well, at least the weather is great.
