Is Texas the new California?

Originally published in the Orange County Register on June 24, 2011

Chart courtesy Esmael Adibi, Chapman University

Written by Brian Calle

Is Texas the new California? A bustling economy, housing at affordable levels and some of the most aggressive examples of business-friendly public policies in the country make Texas desirable not only for entrepreneurs and retirees but also right-leaning voters desperately searching for some hope for a fiscally responsible public-policy renaissance and a new face for a Republican Party that needs one.

California, once a Republican stronghold (believe it or not), helped steer national political discourse and boasted its viability as an economic leader among states. But with a mass exodus of both business and job seekers, a confining regulatory infrastructure and a high cost of living, California appears to be riding off into the sunset, economically speaking.

Today, Texas is the big state leading the pack and, based on its public policy approaches, it should. The parallels though between today’s Lone Star State and the Golden State of the 1960s, 1970s and 1980s are apparent. So much so, in fact, Texas seemingly has become the new California – that is, the economic engine of the country, the innovation capital and perhaps, its political powerhouse, too.

Comparisons of the politics, economics and public policy of California and Texas have become en vogue, and rightly so. Both states are big, iconic and yes, eccentric. California is the largest state by population in the United States; Texas is second. By area, Texas is the second largest state and California is third. (Alaska is first.) Both states have significant (and growing) Latino populations. And both states share a border with Mexico.

In some ways, both states represent the broader future, and possible directions, of the nation – demographically, politically and economically. One a blue state. One a red state. One liberal in public policy, the other conservative in political approaches. One faltering, the other thriving. While the Gold Rush has seemingly ended for California, Texas is in high growth mode. In fact, since the start of the nation’s economic recovery, more than one-third of new jobs came from Texas, according to the Federal Reserve Bank in Dallas.

Texas governor Rick Perry put it this way in a email to me: “Here in Texas, we’ve worked hard to create an economic environment that allows people to risk their capital and get a good return on their investment by focusing on keeping taxes low, maintaining a reasonable and predictable regulatory climate and fair legal system – which was further strengthened with the passage of loser pays legislation this session – and developing a skilled workforce. These principles, combined with competitive investments from the Texas Enterprise Fund and Texas Emerging Technology Fund have helped attract investment dollars and thousands of jobs to our state, and top researchers to our universities.”

As Chapman University economist Esmael Adibi recently noted, since California’s 2007 employment peak, the state has lost nearly 1.4 million payroll jobs. Meanwhile, Texas is boasting a job boom of more than 200,000 new jobs the past two years. From 2000-10, California has seen a net employment loss of 100,000 jobs whereas Texas saw a net gain of 1.4 million payroll jobs. Moreover, from 2005-09, California saw a net loss of 870,000 residents. People are leaving the state for three reasons, according to Adibi: jobs, housing prices and taxes, both state and local – all factors that play to the advantage of Texas.

California is a notoriously high-tax state, 49th in the United States in overall taxation (New York is 50th). California inflicts a flurry of taxes on residents including a state sales tax that is the second-highest in the nation and the third-highest state income tax, according to an analysis by the Tax Foundation. By comparison, Texas ranks ninth overall; it has no state income tax; and ranks 14th of 50 states for sales tax. To be fair, California scores better than Texas on property taxes because of Proposition 13, which became law in 1978, when the state was at least somewhat fiscally sane.

Even though property taxes are less-high in the Golden State, housing is not nearly as affordable as in the Lone Star State. During Chapman University’s recent economic forecast update, Adibi said that housing in Texas costs a fraction of what it does in California. The median 2009 home price in Austin was $187,400, compared with Orange County’s 2009 median home price of $477,200. “In other words, the median home price in Austin is about 60 percent cheaper than what it is in Orange County,” Adibi said in an email.

Unemployment in Texas is at 8 percent, below the national of 9 percent – while California has the second-highest rate of joblessness, 11.7 percent in May, according to the U.S. Bureau of Labor Statistics.

Regulation also plays a major role in whether a state declines or surges. California’s onerous labor standards, especially for overtime pay, are a disincentive for businesses to come to the state, or to stay and grow. For instance, California requires overtime pay after eight hours in a day; the federal law allows more flexibility, starting the overtime clock after 40 hours in a work week. Texas’ overtime laws are in line with federal standards. Texas is also a right-to-work state, meaning workers cannot be required to join a union or pay dues or fees to a union; California is not.

The cherry on top for Texas, though, is the recent passage of loser-pays legislation, which tends to curb frivolous lawsuits and will likely attract new businesses, especially in the medical field.

Even politically, California has lost ground and influence to Texas, especially within the Republican Party. In the 1960s, ’70s and ’80s California Republicans helped set the tone for national policy and political discourse. Two Republican presidents were elected (two times each) in that time frame from the Golden State – Richard Nixon and Ronald Reagan. The most recent Republican president, though, is from Texas and given recent events, perhaps the next one will be as well.

The Nixon and Reagan eras of the presidency parallel political realities today. The Watergate scandal’s impact on the Republican Party, including Nixon’s resignation, led to Jimmy Carter winning the presidency in 1976. Carter won Texas that year while Republican President Gerald Ford won California. (How times have changed.) Four years later, Reagan ousted Carter and became the 40th president, perhaps a testament to the ideological and public policy leadership from California politicos at the time.

Fast forward to more recent presidential politics: President George W. Bush’s time in the White House ended with a public seemingly fed up with the leadership of the former Texas chief executive and the broader Republican Party, perhaps not to the extent it was with Nixon, but still enough to help usher in the presidency of Barack Obama – a president, some would argue, who is in the same mold as Jimmy Carter.

Current Texas Gov. Perry appears to be weighing a presidential run. If he does decide to announce his candidacy, some, including me, believe he would become the instant front-runner. Not only because the rest of the presidential field is, well, bland, but because Texas, which Perry has governed 10 years, enacted sane economic policy and conservative approaches to government – and is thriving.

While California legislators of the past few decades should serve as examples of how not to govern, Texas is perhaps one of the best examples of how more free-market, fiscally conservative approaches to public policy work to propel economies. It is a message that needs exposure, especially now, and perhaps the best endorsement for a Perry presidential campaign.

Of course, Texas is not without its challenges nor is Perry without his questionable policy choices, but when comparing the failed policies of California, those akin to the type of big government philosophy President Obama has brought to Washington, to the taxpayer-friendly approaches deployed in Texas, the choice is clear: Texas, Texas, yeehaw!

Brian Calle is an Opinion Columnist and Editorial Writer for the Orange County Register, a Senior Fellow at the Pacific Research Institute, an Unruh Fellow at the Jesse Unruh Institute atthe University of Southern California and editor of the California Political Review. He can be contacted at [email protected].

What will it take to wake up an apathetic CA … prisoner release?

As the U.S. budget exploded with the twin trillion dollar TARP and Stimulus bills, Cash for Clunkers and $440 billion in losses at Fannie and Freddie, the voting public responded with the Tea Party movement that swept through America in 2009 and 2010. During the 2010 election cycle, while the nation was electing 80 (of 435) new representatives, California voters paid no heed, returning 96% of incumbents to office – a record that would have made the old Soviet Politburo proud.

This same West Coast voter apathy has allowed a $26 billion budget deficit to remain unresolved for years. Rather than solve the fiscal spending crisis, Governor Brown has proposed tax hikes to close the gap, while protecting the all powerful labor unions in California, whose pension, pay and healthcare tabs have placed many California cities in near bankruptcy. California voters have responded with typical apathy to the Brown tax hike proposal paying little attention and raising no alarm. The same cannot be said for the United States Supreme Court which ruled 5-4 in Brown vs. Plata that California must release up to 46,000 inmates from California prisons citing deplorable conditions which caused “needless suffering and death” and “amounted to cruel and unusual punishment”. Will Californians remain apathetic when tens of thousands of convicted felons are released to the streets and neighborhoods of their communities?

That conditions in California prisons are deplorable cannot be debated. The state’s prisons, which were built to hold 80,000 inmates, hold 143,335 inmates today, according to Matthew Cate, secretary of California’s Department of Corrections and Rehabilitation.

Supreme Court Justice Anthony M. Kennedy, a Sacramento native, spoke of suicidal prisoners being held in “telephone booth-sized cages without toilets” and others, sick and in pain, who died before being seen by a doctor. As many as “200 prisoners may live in a gymnasium, and as many as 54 may share a single toilet,” he said.

Justice Anton Scalia, delivering his own dissent, said the majority had affirmed “what is perhaps the most radical injunction issued by a court in our nation’s history.” He added, “Terrible things are sure to happen as a consequence of this outrageous order.”

Los Angeles County Dist. Atty. Steve Cooley agreed, stating, “Citizens will pay a real price as crime victims, as thousands of convicted felons will be on the streets with minimal supervision.”

How long can Californians remained apathetic to their political and fiscal problems? In 1999, California pols wasted the $25 billion “tobacco settlement” to pay for its current spending instead of “health care through 2025” as was planned. After recalling Gray Davis for running a $30 billion deficit in 2003, they paid scant attention as politicians built another deficit hole that the Legislative Analysts Office reports will be “$20 billion per year for years to come”.

If such fiscal insanity could not stir the California electorate, as it did Tea Party members across America, the release of 46,000 convicted felons may awaken a sleeping giant. California’s 23 million registered voters cleaned up their streets and neighborhood with a no-nonsense “three strikes” policy that put repeat offenders behind bars while creating the nation’s largest prison population. Releasing 46,000 felons, 30% of its inmates, to its relatively safe communities and neighborhoods will undoubtedly cause a spike in crime that may finally gain their attention.

But California voters, if they awaken at all, will quickly learn that they may be too late. City employee pensions, pay and healthcare have also been allowed to spike during the spending binge, resulting in city deficits and lay-offs of police, fire, and probation officers. At the very time when they are most needed, their cities will be forced to lay off these critical employees.

Will California voters remain apathetic, or will this epical Supreme Court decision trigger California’s own Tea Party movement?

About the author: Robert J Cri sti ano PhD is the Real Estate Professional in Residence at Chapman University in Orange, CA, a senior Fellow at the Pacific Research Institute in San Francisco, CA and President of the international investment firm, L88

 


California To End Carpool Lane Benefit For Hybrid Owners

From 2005 through 2007, the state of California made a pretty tempting offer to get drivers behind the wheels of hybrid cars: Buy one and you’ll get a sticker that allows you to cruise in the carpool lane without having to have that annoying other passenger (or mannequin) next to you. It was like a VIP pass on the highway. But those halcyon days are about to end.

On July 1, that yellow stickers adorning around 85,000 hybrid cars in California will only serve as a reminder to those drivers that they too once had access to the speedier carpool lane.

“I’m dreading July 1,” one Prius driver who commutes 90 miles a day tells the L.A. Times. “We’re all going to feel the full wrath of the L.A. traffic beast.”

Read More at Consumerist By Chris Morran, the Consumerist

What a Public Bank Could Mean for California

California is the eighth largest economy in the world, and it has a debt burden to match. It has outstanding general obligation bonds and revenue bonds of $158 billion, largely incurred for infrastructure. Of this tab, $70 billion is just for interest. Over $7 billion of California’s annual budget goes to pay interest on the state’s debt.

As large as California’s liabilities are, they are exceeded by its assets, which are sufficient to capitalize a bank rivaling any in the world. That’s the idea behind Assembly Bill 750, introduced by Assemblyman Ben Hueso of San Diego, which would establish a blue ribbon task force to consider the viability of creating the California Investment Trust, a state bank receiving deposits of state funds. Instead of relying on Wall Street banks for credit — or allowing Wall Street banks to enjoy the benefits of lending its capital — California may decide to create its own, publicly-owned bank.

On May 2, AB 750 moved out of the Banking and Finance Committee with only one nay vote and is now on its way to the Appropriations Committee. Three unions submitted their support for the bill — the California Nurses Association, the California Firefighters and the California Labor Council. The state bank idea also got a nod from former Secretary of Labor Robert Reich in his speech at the California Democratic Convention in Sacramento the previous day.

Read More at Huffington Post by Ellen Brown, the Huffington Post

 

California Card Check Aims to Abolish Secret Ballots

IRVINE, Calif., May 16, 2011 /PRNewswire-USNewswire/ — Western Growers President and CEO Tom Nassif released the following statement on today’s passage by the California State Assembly of the United Farm Workers-sponsored Senate Bill 104.

“If Governor Jerry Brown signs the card check bill, SB 104, he will effectively abolish a farm worker’s exclusive right to vote by secret ballot in a state-supervised election process. We doubt the governor has forgotten what he and Cesar Chavez fought for in the Agricultural Labor Relations Act of 1975—the secret ballot as the exclusive means of determining the true wishes of the workers. With a card check system, every worker’s vote is made public to the employer, the union organizers and co-workers. Union organizers trying to get signatures would be able to shove the cards in front of a worker with no one else around. This clearly exposes workers to unwanted pressure and possible intimidation by the union. This legislation is not about advancing the cause of farm workers; SB 104 is only about advancing the cause of a union that cannot persuade workers to vote for it without having a union organizer looking over the worker’s shoulder.”

About Western Growers:
Western Growers (www.wga.com) is an agricultural trade association whose members from Arizona and California grow, pack and ship 90 percent of the fresh fruits, nuts and vegetables grown in California and 75 percent of those commodities in Arizona. This totals about half of the nation’s fresh produce. Western Growers is headquartered in Irvine, Calif.

Read More at the Sacremento Bee by Western Growers Association, the Sacramento Bee

Foreclosures share of California sales inches down in April

Properties previously foreclosed on in the last year made up 36.6% of the California market in April, down from more than 38% one year ago, according to DataQuick.

Foreclosure’s share of the market reached an all-time high in February 2009 at 58.5%.

Overall sales in the state reached 35,202 in April, down 6.1% from one year ago and 3.3% down from March. Sales for the month of April remain below the historic average of roughly 44,000, dating back to 1988.

Read More at HousingWire by Jon Prior, HousingWire

 

Study: Valley among state’s ‘struggling, forsaken’

A new quality-of-life study of California finds that Central Valley counties either fit into a “struggling” 38% of the population or are among “The Forsaken Five Percent” with residents “bypassed by the digital economy.”

The new study released today is from the American Human Development Project, an initiative of the Social Science Research Council with financial support from the Conrad N. Hilton Foundation. Called “A Portrait of California,” the study explores “well-being and access to opportunity across the Golden State.

The report uses the American Human Development Index, a composite measure of health, education and standard of living, and uses a 0 to 10 scale. Topping out among the state’s five most populous metro areas, San Francisco’s HDI measure is 6.97, while Riverside-San Bernardino is at the bottom at 4.58.

Read More at the Business Journal

Judge: California law applies in Toyota case

SANTA ANA A federal judge said that California law could be applied to the economic-loss lawsuits against Toyota.

Some Toyota owners claim that sudden-acceleration defects in their cars negatively impacted the value of their vehicles. Last year, attorneys for the owners filed a mass economic loss complaint. The claim alleges sudden-acceleration problems in Toyota vehicles are due to defects in the vehicles’ electronic throttle-control systems.

Toyota disputes the allegation and blames sudden acceleration on sticky pedals and faulty floor mats.

Read More at OC Register By Vik Jolly, The Orange County Register

California’s “Jungle Primary” System Gets Its First Test Today

Tuesday’s special election in California’s 36th District is a prequel to what will likely be the main event on July 12. If no candidate gets a majority of votes cast — highly unlikely in the crowded 16 person field — the top two vote-getters will advance to a runoff in the first test of the state’s new “jungle primary” system.

The Frontrunners: Los Angeles City Councilwoman Janice Hahn jumped into the race almost immediately after now-former Rep. Jane Harman announced in February she’d step down to head the Woodrow Wilson Center. Hahn and Harman are close, and while Hahn doesn’t have the former congresswoman’s official endorsement, Harman did provide her with a heads-up she was leaving. Hahn comes from a well-known political family — her brother, James, served as the city’s mayor from 2001 until 2005, and her father, Kenneth, was a county supervisor for forty years.

California Secretary of State Debra Bowen took a bit longer to officially decide, but since her entrance, the two women have been at the top of a very crowded pack in the all-party primary. Hahn quickly rolled out endorsement after endorsement of other Members of the state’s Congressional delegation, Sen. Dianne Feinstein, and even former House Minority Leader Dick Gephardt. She’s also garnered most of the labor endorsements in the race.

Read More at the Atlantic By Jessica Taylor, the Atlantic

Facebook fights California privacy push

Computerworld – California is considering legislation that would tighten Facebook’s privacy practices, and the social network is not happy about it.

The bill, Social Networking Privacy Act (SB 242), would require Facebook and other social networking sites to make big changes to the way they handle users’ privacy. Industry analysts say social networks like Facebook could be wary of this move for fear that it will lead to a slippery slope of government control and privacy rules.

“Facebook has been very passive about security . They put the onus on the user to figure the security out on their own,” said Zeus Kerravala, an analyst at Yankee Group. “Now it would automatically be more secure.”

Read More at ComputerWorld By Sharon Gaudin, ComputerWorld