Troubling Numbers for California’s Future

Russ Steele

There are growing signs that California, the once Golden State, is in serious trouble. Tax revenues are in decline and the educated middle class is fleeing the state for more job friendly locals. The Governor’s solution is to double down on green energy projects which are raising energy prices,  which will push more manufacturing and other blue-collar energy users out of the state.  Here are some of the scary numbers culled from my morning reading:

From the Summary Findings of the LAO Report on 2012-2013 budget

  • Franchise Tax Board collections are a couple of billion short.
  • Employment Development Department is $250 million short.
  • Personal Income tax is over $2 billion short.
  • Corporation taxes are $150 million short or 10% below predictions.=

Joel Kotkin writing in the Daily Beast

  • California energy costs are 50 percent above the national average, and expected to rise
  • Middle-skilled jobs (those that require two years or more of post-secondary education) increased by a mere 2 percent compared to a 5.3 percent increase nationwide, and almost 15 percent in Texas over last ten years.
  • In the science-technology-engineering and mathematics field the state has lost its edge, growing just 1.7 percent over the past 10 years compared to 5.4 percent nationally and 14 percent in Texas.
  • The middle class is proportionately smaller and has shrunk more than elsewhere. Adjusted for cost of living, it stands at 47.9 percent in California compared to nearly 55 percent for the rest of the country.
  • Nearly two-in-five Californians pay no income tax, and one in four receive Medicaid.

The Governor solution to these growing problems is to increase income and sales taxes, increase energy costs at the pump by mandating low carbon fuels, mandate more unreliable high cost renewable energy for the manufacturing sector, and implement cap and trade to raise the cost doing business in the state.

It is clear that California economy is not going anywhere but down, and the fall will be accelerating with the next round of housing foreclosures already in the pipeline.

How do we get out of this economic death spiral?

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About Russ Steele
Freelance writer and climate change blogger. Russ spent twenty years in the Air Force as a navigator specializing in electronics warfare and digital systems. After his service he was employed for sixteen years as concept developer for TRW, an aerospace and automotive company, and then was CEO of a non-profit Internet provider for 18 months. Russ's articles have appeared in Comstock's Business, Capitol Journal, Trailer Life, Monitoring Times, and Idaho Magazine.

7 Responses to Troubling Numbers for California’s Future

  1. sean2829 says:

    Russ,
    I think you are missing one of the biggest drags on the CA economy and that is the decline in California’s education system. Middle class parents for years have paid extra to live in a place that has good schools. The lack of revenue coupled with an overly generous retirement system is gutting funding for elementary and secondary education. The state university system was a great deal until a few years ago. Now its almost as expensive as going out of state and the regents are running it like a private school giving precedent to out of state student who pay full tuition. The state of California is telling young families to go elsewhere as quickly as they can and they are obliging.

  2. Dena says:

    The federal government claims an unemployment figure of a little over 8%. The truth is more like what you will find on this web site http://www.shadowstats.com/alternate_data/unemployment-charts. With California having a higher that the national average unemployment, the numbers for California would be higher than what this web site indicates. No wonder people are baling out of the state. With numbers that could be over 30%, there just isn’t any work in California unless you work for the government!

  3. margaret berger says:

    To answer Russ’ question the death spiral will end when the economy goes “Splat”. As far as education goes Russ addressed that issue when he pointed out that the middle class is leaving the state. No matter how much money you throw at education if you don’t have a middle class you won’t have a successful educational system.

    • Russ says:

      Margaret,

      Insightful comments. When do you think that “Splat” with happen? How long do we have until we become a ward of the federal government?

  4. Arthur M. Day. says:

    The Democrats are a tragic though interesting position. Their procedures are destroying CA, they will not survive the destruction. If they admit they are destroying CA, they will not survive the admission. I can’t indulge in schadenfreude, I have family and friends in CA.
    Art Day, NCHS, Class of ’50

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