Gov. Jerry Brown will tout fiscal progress in Thursday’s “State of the State” address to the Legislature. But which state exactly? Sunny, happy, wealthy, blue coastal California? Or smoggy, parched, reddish inland and rural California?
I’ve done my share of naysaying about the so-called California Renaissance, but there can be no denying that the Golden State has enjoyed impressive job growth over the past three years. Our economy is the eighth largest in the world again, and we might overtake Brazil for seventh place this year.
About 10 years ago, John Barna, the executive director of the California Transportation Commission, told me he liked to see traffic congestion because it meant goods were moving and people were commuting to work. Is it me, or has traffic gotten a lot worse lately?
But as California Chamber of Commerce CEO Allen Zaremberg and others have pointed out, it’s an uneven economic recovery. The coastal enclaves are thriving while inland and rural California continue to play catch-up. We’re doing great when it comes to high-end, high-tech jobs and low-end service and tourism industry and work. What’s missing are the upwardly mobile, middle-class jobs in manufacturing and construction.
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And our progressive paradise still leads the nation in poverty and income inequality. The Golden State accounts for roughly 12 percent of the U.S. population, but is home to 30 percent of the nation’s welfare recipients.
Here’s another question for Brown: Can you really celebrate a projected $11.5 billion “surplus” with a mountain of unfunded public-employee retirement benefits looming large?
An Associated Press story on Tuesday carried the deadpan headline, “California retirement liabilities remain despite surplus.” In fact, the state’s unfunded pension and health care liabilities currently stand at $220 billion, according to the most conservative estimate. That would seem to suggest a surplus in name only, would it not?
Brown’s $171 billion budget is quite a bit more liberal in its spending this year than in years past, which is inevitable, I suppose. The state treasury still depends too much on the Dow Jones industrial average pointing upward. Have you seen the market lately? As the Legislative Analyst’s Office noted with typical reserve in its latest fiscal outlook, the projected surplus depends on a hunky-dory economy and a happy stock market. The governor would do well to encourage the Legislature to take another whack at tax reform to ease some of the revenue volatility.
And finally, there is the nontrivial matter of California’s drought. El Niño’s storms have brought welcome relief – maybe a little too much relief in places such as San Diego and Humboldt County, where mudslides and flooded streets and fields have made the locals feel nostalgic for last winter.
But these storms will only ease the drought, not end it. Brown has been making the case for his $15 billion Delta tunnels plan, which would also restore habitat in the San Joaquin Delta, calling it “absolutely necessary for California’s future.” The state has already spent $100 million on the project without actually building anything.
What we need, of course, is a realistic water plan that accounts for historic droughts like this one. At the risk of stating the obvious, you can’t have a civilization without water.
“Storage or conveyance alone will not solve all of our problems,” Brown said last week. Maybe not, but it sure would be nice if we could start making up for the State Water Project’s 30-year drought in construction – all of those water storage projects set aside during Brown’s first administration, also in the name of environmental protection.
This Democratic governor understands, perhaps better than most of the shortsighted legislators in his party, that you can’t very well have a gargantuan welfare-client state if you run short of tax revenue – which makes his insistence on building a rainy-day fund so weirdly commendable.
What we need is a water infrastructure that includes a non-rainy-day allowance to keep the state’s economy from collapsing. Everything else is secondary.
Ben Boychuk is associate editor of the Manhattan Institute’s City Journal. He can be contacted at email@example.com.