Green energy boondoggle raises costs while killing jobs and birds

You have to wonder if most California politicians simply can’t stand the notion of a thriving economy.  In a move that will have a devastating effect on jobs and on the pocketbooks of regular citizens, Jerry Brown recently signed legislation that will dramatically increase the amount of costly “green” energy California’s citizens will be forced to purchase.

In this time of record high unemployment, the political class should focus on stimulating the economy to create jobs.  Instead, the politicians have imposed a new mandate called “renewable portfolio standard” or RPS which decrees that 33% of our energy needs to be green by 2020 – as of right now, we have not even met the 20% target that was set for 2010.

Statistics from the Department of Energy show that renewable energy, as defined by the RPS mandate, can cost three or four times as much as traditional energy on a per-megawatt basis.  Higher electricity bills will further strain taxpayers’ budgets and lead to even more job losses.  The US Bureau of Statistics just released a report saying California lost 572,400 manufacturing jobs over the last decade, and our unemployment is now a full two percentage points worse than Michigan, a state famous for Detroit and its poorly performing economy.

In fact, California’s environmental regulations are so extreme that the majority of the renewable power we will be forced to buy will not even be produced in this state but imported from Mexico, Canada and other states.  While the political class likes the idea of green energy, getting any type of power plant built in California is difficult in a state as tangled in government red tape as ours.

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Don’t Let Rural Jobs in CA become Extinct

If a tree can’t be cut down on rural property because of unjustified federal rules, and no one’s around to hear the owner’s frustrated grumbles, do they make a sound?

The question occurred when I read the headline on a magazine item about the regulatory manacles imposed on landowners by the U.S. Endangered Species Act: “Boring but important”

It’s true that the minutiae of environmental restrictions on farms, forests and undeveloped land is not the sexiest of subjects, even for many conservative/libertarian activists who are passionate about opposing the advance of big government.

But attention needs to be paid. If we want California to become a land of promise again, we need to liberate not just the over-encumbered entrepreneur, the overburdened employer, and the overtaxed working men and women in our cities and suburbs, but also the enterprises rooted in the soil — the forestry, agriculture, timber and land-development industries that were the foundation of the state’s prosperity from the beginning.

– Item: Record snowfalls blanketed the Sierras this year — but farmers in the agricultural Central Valley were still squeezed on water supplies for much of the winter.

The reason: federal “fish before people” policies under the Endangered Species Act. Over the past two years, a misguided scheme to revive a declining three-inch fish, the Delta smelt, caused draconian cutbacks in pumping from the Sacramento-San Joaquin Delta into the San Joaquin Valley and Southern California. Hundreds of thousands of farm acres were fallowed and thousands of jobs went down the drain.

Although the media now tell us “the water crisis is over,” that’s only half right. If the drought of snow and rain has ended (for now), the regulatory crisis continues. In explaining why water users still aren’t getting their full allocations, the California Department of Water Resources fingers the feds: a May 2 DWR press release said that a 100% allocation is “difficult to achieve even in wet years due to pumping restrictions” for ESA-protected fish.

Those regulations flow from “sloppy science,” Fresno-based Federal Judge Oliver Wanger found. No wonder that the smelt population has continued to evaporate. All that was achieved was to turn green fields brown in one of the most fertile agricultural regions in the world and a historic backbone of California’s economy. Look for more of the same in future dry years, if the feds’ don’t flush their scorched-earth formula for fish protection.

Item: In 2006, a federally commissioned study concluded that the valley elderberry longhorn beetle no longer needed ESA coverage, and land-use limits could be lifted on private property up and down Central California, from Redding to Bakersfield. Five years later, the feds still haven’t acted; the beetle remains designated as “threatened” – flouting their own scientific findings.

The victims include businessman and environmentalist Bob Slobe, who wants to put up a small, environmentally sensitive office park in Sacramento County. His land has been labeled “critical habitat” for the beetle, so he can’t disturb a bush or tree without paying a massive sum for “mitigation.”

Slobe spends his time and resources shooing away and cleaning up after transients who camp on the land that he’s forbidden from putting to productive use.

The beetle regulations also bug flood-control agencies. They can’t easily fix or build levees where elderberry bushes are present. Levee improvements in Yuba County were delayed for months last year, and the current cost to mitigate for one bush along a Sacramento levy exceeds $160,000.

Says Rep. Dan Lungren: “There is no failure to thrive on the part of the beetle, only a failure to act on the part of [federal officials]. We could not afford it five years ago, and we certainly cannot afford it now.”

Item: Federal officials insist on keeping the California gnatcatcher on the ESA protected status – even though the small, insect-eating bird can be shown to be part of a species that flourishes in Mexico.

The listing ropes off nearly 200,000 acres in San Diego, Orange, Riverside, San Bernardino, Los Angeles, and Ventura Counties. The Fish and Wildlife Service admits that the economic hit from these restrictions is nearly $1 billion – quite a price to safeguard a species that isn’t in peril.

All these useless regulations offer a reminder: The recovery route for the Golden State has to run through Washington, D.C. Unless the federal government adopts a more balanced, people-friendly – and scientifically defensible – approach to environmental protection, California’s rural economy – and probably the state’s larger economy as a result – will linger on the endangered list.

Harold Johnson is an attorney for the Pacific Legal Foundation

Why California is Losing the Competitiveness Race in Education

California’s education establishment dislikes competition but the most recent research shows that, in the education marketplace, competition works.  A March 2011 study by the Foundation for Educational Choice (FEC) analyzed the results of all empirical studies that used the best scientific methods to measure how school-choice vouchers affect the academic outcomes of participating students.  The results should serve as a beacon as California policymakers debate ways to improve the state’s poorly performing government-run school system.

Under voucher programs, a state attaches funding to a student, which he or she can take to the public or private school of his or her choice. The study concluded, “Contrary to the widespread claim that vouchers do not benefit participants and hurt public schools, the empirical evidence consistently shows that vouchers improve outcomes for both participants and public schools.”

According to the FEC study, nine out of the 10 studies found that vouchers improved student outcome measurements such as test scores in the core subjects and graduation rates.  In addition, by increasing competition between public and private schools, voucher programs forced public school systems to improve.

Eighteen of the 19 empirical studies that looked at how vouchers affect public schools found that public schools improved their performance in the face of the increased competition fostered by vouchers.  In fact, every empirical study conducted in states with voucher programs, such as Wisconsin, Ohio and Florida, has found that “voucher programs in those places improved public schools.”  The FEC study said that while there are a variety of reasons why vouchers might improve public school performance, “The most important is that competition from vouchers introduces healthy incentives for public schools to improve.”  Yet, California has erected barriers to widespread competition in education.

Over the last few years, voucher and other pro-school-choice legislation have died in the state Legislature.  Now, with Democrats controlling the Assembly, Senate and the governor’s office, liberal legislators have unleashed a flood of anti-choice bills.  For example, AB 401 by Assemblyman Tom Ammiano (D-San Francisco) caps the number of charter schools, deregulated public schools started by parents, teachers and community organizations.  Ammiano’s bill targets charters despite the reality that they are four times more likely than regular public schools to be among the top 5 percent of schools statewide in student achievement.  Current California regulations also block students from choosing online and virtual education alternatives.

[Read more…]

Redistricting commission dodging questions

During its press conference Friday announcing the release of redistricting maps, the Citizens Redistricting Commission evaded tough questions and refused to explain why one commissioner, Michael Ward of Fullerton, voted earlier in the day against moving all of the final maps to the public for review.

At the podium, Ward declined to explain his vote, but in a short interview with CalWatchdog afterwards said that he had explained his concerns at the appropriate time earlier in the day and was not sure about the legal ramifications of his sharing his concerns. According to published reports, Ward said “I’m sad to find myself compelled to vote no. In my opinion, the commission failed to fulfill its mandate to strictly apply constitutional criteria and consistently applied race and ‘community of interest’ criteria and sought to diminish dissenting viewpoints.”

Ward made it clear to CalWatchdog that he stands by such concerns and is waiting to see how the process proceeds. The commission will vote to adopt what they call “preliminary final maps” in an Aug. 15 meeting. Other commissioners who spoke said that the commission has exhausted its public review process and will indeed vote to approve the new district lines for U.S. Congress, state Senate, Assembly and Board of Equalization.

As the commission explains on its Web site, “In November 2008, California voters authorized the creation of the Citizens Redistricting Commission when they passed the Voters FIRST Act, which appeared as Proposition 11. Prior to 2008, California legislators drew the districts.” The goal was to take partisanship out of the redistricting process, yet the new commissioners have been dogged by allegations of inappropriate political activism and conflicts of interest.

An exclusive CalWatchdog series by reporter John Hrabe “reveals that at least one commissioner, Dr. Gabino T. Aguirre, has made multiple political campaign contributions to Democratic candidates — contributions that were previously undisclosed to the Commission; a long history of political activism in support of Latino causes; and an extensive web of connections to a special interest group that has submitted its own redistricting proposals to the commission.”

Hrabe also revealed that “a second member … ,  Jeanne Raya, failed to disclose financial contributions made within the past 18 months to a state political campaign committee . …” Somehow, a commission designed to be nonpartisan and charged with designing fair election districts, allowed left-wing political activists with an apparent political agenda to be among its members and to allegedly use the process to create districts that favor their political outlooks.

Based on the CalWatchdog revelations, California Republican Party Chairman Tom Del Beccaro called on Aguirre to resign from the post for what he termed “gross misconduct in office.” Del Beccaro questioned the fairness of a commission that failed to disclose the political activism of its members.

When one reported asked about allegations of impropriety by Aguirre, Galambos Malloy said, “All of our commissioners have conducted themselves with the utmost integrity and impartiality.” They did not address any of the specific concerns raised by the news reports and by the Republican leadership.

The commission also has been criticized by minority activist groups for not putting together enough Latino-dominant districts and not paying sufficient attention to African-American “communities of interest,” even though the commission must legally follow the federal Voting Rights Act, which dictates rules that enhance minority voting power.

At the press conference, commissioners refused to answer tough questions and focused mainly on their own sacrifices. “If anything was sacrificed in the process, it was our personal lives,” said Michelle DiGuilio of Stockton, referring to the long hours and the time spent away from her children. Vincent Barabba of Santa Cruz added that the rewards were worth the sacrifice and told a touching story about the way that Californians have embraced their diversity.

But when it came to questions about dissent, they kept repeating the mantra about this being an open and transparent process. It seemed more like a photo op than an opportunity to provide details about the inner workings of a commission that has much to say about the future politics of this state.

Jon Fleischman, publisher of the conservative Flashreport, argued Friday morning that the “The commission is likely to spend a good portion of today patting themselves on the back for a job well done. They certainly do deserve credit for spending as much time as they did on this project over the past eight months . …  However, the process was not a smooth one at all.” Fleischman points to self-interested agendas of commission members, unclear handling of Voting Rights Act rules and cast doubts on the much-touted openness of the process.

Commissioners seem to be gearing up for legal challenges and public scrutiny, and those surely will come in the ensuing weeks. Barabba argued that if the lines are that bad, then Californians can challenge them through the state Supreme Court or can launch a referendum drive. Those challenges surely are coming, and it will be interesting to hear what Ward has to say as redistricting critics get into gear.

 

This was originally posted and investigated by our friends over at CalWatchdog.

A tale of two states: California and Wisconsin

Governor Scott Walker took office in Wisconsin on January 2, 2011. He declared Wisconsin “open for business” and initiated numerous business friendly reforms. He was immediately labeled Public Enemy #1. TV screens showed massive labor protests and the Capitol was occupied. Posters of Walker with a Hitler mustache popped up and frightening headlines were everywhere. A Huffington post article by Steven Cohen, Executive Director, Columbia University’s Earth Institute stated, “Governor Scott Walker is attempting to destroy public sector unions in Wisconsin”.

Fast-forward to August 3, 2011 –seven months into Walker’s term. The protesters and signs have disappeared. The headlines have changed. “Wisconsin has added 39,300 private-sector jobs since Governor Walker declared Wisconsin open for business,” said Scott Baumbach, Department of Workforce Development Secretary. Wisconsin has 7.6% unemployment, far below the national average. Wisconsin’s total private sector job growth of 1.7% has been almost twice the national rate.

Compare that to California. Governor Jerry Brown also took office on January 3, 2011. In January, there were 2,246,073 Californians out of work (12.4%). According to the Economic Development Department, 2,183,100 Californians remain out of work (12.1%). Underemployment and those who have given up make the figures much worse. There are no pictures of Brown with Hitler’s mustache. There are no scary headlines of Brown destroying the public sector, nor protestors occupying his Capitol. That is because Brown is seen as an agent of the public employee unions that dominate California politics.

Business is less enthusiastic about Governor Brown. Chief Executive Magazine ranks California as the worst place to do business for seven years. “California, once a business friendly state, continues to conduct a war on its own economy,” the magazine reported. Companies are “disinvesting” in California at a rate five times greater than just two years ago, said Joseph Vranich, a business relocation expert based in Irvine.

In response to announcements that PAYPAL and CARL’S JR. would take their businesses and employees elsewhere, Lt, Governor Gavin Newsome has set out to alter the “perception” that California is anti-business. Lorraine Yapps Cohen, a San Diego Conservative Examiner, responded, “Oh, this is priceless! In hopes that he would get the message that the state of California overtaxes, overburdens, over-

regulates, and overwhelms business, we discover that it is the “perception” of those maladies that need to be changed.  Not the maladies themselves!”

Will California awaken from its slumber and recognize what other states like Wisconsin have learned, or will the Golden State continue its inexorable slide to a future of never ending financial crisis like Greece and Portugal?

 

Robert J Cristiano PhD is the Real Estate Professional in Residence at Chapman University in Orange, CA, Senior Fellow at The Pacific Research Institute and President of the international investment firm, L88 Investments LLC. He has been a successful real estate developer in Newport Beach California for thirty years.

Jerry Brown hating on small businesses

Jerry Brown hates me.

Hates me.

We’ve never met.  It’s not like I ever caused him any personal harm or grief.  It’s not like I hit on Linda Ronstadt or anything.

But the guy just hates my guts.  I think he wants to destroy me.

I’m not paranoid.

I’m just a California business owner.

On some level, Jerry Brown must hate all of us.

I call it payroll envy.  It’s the feeling that people who have spent most if not all of their lives in government have about people who actually start a business, work really hard, hire people, and meet a payroll every two months.

People in government feel as though they’re missing out on that experience, which I consider one of the most important life experiences an individual can have.

It’s not just that we business owners get to create our own destiny, make all the money we can, and bring about wonderful lives for ourselves, those we love, our employees and their families, our communities, and the charitable organizations we support.

It’s the sense of building something.

It’s the sense of creating something that actually serves people and makes money at the same time.

This isn’t to say that government has never done anything for the people.  If it weren’t for our government, we wouldn’t have a military, although why we are busily defending borders thousands of miles from our nation instead of eighty miles from my home in Orange County is a mystery to me.

If it weren’t for government, we wouldn’t have freeways, although when you look at the state they’re in, you start to wonder whether government is the best guarantor of our nation’s infrastructure.

If it weren’t for state government, we wouldn’t have the UC system, perhaps the finest public education system ever created in the history of man.

What’s wrong with a little California-style hyperbole?  Anyway, it’s probably true.  The problem is that when government exceeds its responsibilities to protect us, help us get from point A to point B in our cars, and educate our kids effectively, it gets into trouble.

Pretty much every single time.

It rewards people who do not deserve to be rewarded, like teachers who are not dedicated to teaching, unions that are more interested in protecting pensions than serving the state, and all of the other shenanigans that we know all too well.  When government lacks sufficient resources to take care of its own citizens and yet opens its borders, its schools, its hospitals, and other expensive and vital resources to anyone old enough to break into the country, something’s wrong.

That’s why I think Jerry Brown must hate me.  All I’m doing is running a business, meeting a payroll, and wondering what obstacle government will throw up in my path next.

Governor Brown has lived in a state where Hollywood is located, so maybe he’s been influenced too much by what he sees on TV and at the movies.  The number one villain, year in year out, on the small screen and the big screen, isn’t terrorists, or foreign agents, or any other murderous bad guys.

It’s business people.

Hollywood loves, loves, loves to make movies and TV shows about larcenous business owners, thieving corporate executives, and greedy Wall Street types.

Of course there is excess and chicanery in the business world.  We live in the real world, and in the real world, sometimes people do bad things.

But business can’t be all bad.  The governor, and the legislators in Sacramento, like the cars they drive (or are driven in), the five-star hotels where they stay, the expensive restaurants where they dine, the movies they view, the basketball games they attend from luxury of their business-related donors all these goods and services are the products of businesses, and most all of this happens on our dime as taxpayers.

The point is that you can take all the potshots you want at business, but at the end of the day, Governor, you need us.  You need us to create things.  You need us to create jobs.  You need us to create tax revenue.

And we’re not stupid.  We can read balance sheets—both ours and yours.  Don’t tell us that the California budget is so complicated that only a few people can understand it and that we taxpayers are too dumb to figure it out.  We know when you are spending more than you’re taking in.  We know when you’re pandering to the unions, to illegals, and to other shortsighted special interest groups that are more interested in the question of “Where is mine?” than the question of “What’s right?”

Governor Brown, stop hating me just because I own a business and I make a payroll.

And if you’re going to tell me that you don’t hate me, that’s terrific.  But let your actions demonstrate that you’re not trying to choke business owners like me.

Without us, there won’t be any tax revenues for you to distribute to your friends and supporters.

And unlike your friend in Washington, you can’t just print more money to solve your problem.

Governor Brown, you don’t have to love me.  All I ask is that you leave me alone.

(New York Times bestselling author Michael Levin runs BusinessGhost.com, which provides books for business owners to distinguish themselves in their crowded marketplaces.)

Fail-ifornia: Other Than the Weather, What’s So Golden about California?


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Restoring California Competitiveness

California was a place originally known for its opportunities, beauty, wilderness, open roads, Gold Rush mentality, freedom, and innovation. Eureka, the state’s motto, means “I have found it!”  But this place of dreams is now the land of wishful thinking: a consummate nanny-state of over-regulation, command and control.  From the profoundly and absurdly huge ideas (saving the planet from climate change while China and India march to a different tune) to the silly (mandating fitted sheets in hotel rooms).  And we’re so over-regulated, that I guarantee, right now, you are breaking some California law this very minute.  (Did you install your CO2 monitor required in every home July 1? No? $200 fine is on its way.)

Where unemployment at over 12% is one of the highest in the nation–two million people out of work–the state’s bond ratings flirt with junk status, and private investors are wary of a constantly changing and uncertain regulatory environment.  Where governors from other states proactively seek and invite the relocation of our best businesses.  And what’s to stop business from leaving? California has ranked 49th or 50th on numerous national lists as the worse place to do business for the last several years.  According to Dun & Bradstreet, 2,565 businesses with three or more employees have relocated to other states since January 2007 and 109,000 jobs left with those employers.

How can we restore California’s competitiveness?

With less.

Less government, less regulation, less mandate, less taxes.  We need to “let my people go!” as Moses would say.

One of the most difficult challenges posed by legislators to the weary regulated community is to name which offending regulations to change.  There are so many—each individually and independently approved with such good intentions—but piled one on top of the other, have produced a morass of laws and prohibitions that stifle investment, strike fear into the hearts of small business start-ups, and ultimately kill jobs before they’re even offered.

How many folks lost the opportunity for employment because—instead of hiring–thousands of hotels must now buy replacement fitted sheets for flat sheets?  Yes, that’s the law now proposed.

Let my people go.  Let my people work.  Simply, until businesses can predict with relative certainty what regulations they will be subjected to, (and litigated) and what their tax burden will be, at all government levels, they will not invest or grow or hire.  If business isn’t investing, growing or hiring, the state isn’t receiving tax revenues.  If business isn’t investing, growing or hiring, public employee pensions like CalPERS aren’t earning fair returns on their portfolio, entirely invested in stocks, bonds, mutual funds, real estate:  in BUSINESS!  The more elected leaders forget these time-honored facts, propose more taxes to fund government, or favor the flavor of the day in eco-thought without regard to economic benefit, the more this state will sink into a black hole of red ink.

To return California to economic competitiveness, every regulator at every level must do one thing now:  any proposed regulation must be subjected to an independent economic impact analysis.  What laws will it affect?  What jobs will it create/destroy/impact?  What other departments or agencies have competing or conflicting regulations?  What is the true cost/benefit analysis?  How does this relate to competing/complicit federal regulations?  You get the picture.

The independent economic impact analysis must be paid for by the agency or lawmaker proposing the law.  Don’t have funding to do this?  Don’t propose the regulation.  The economic impact analysis must be done by an outside, independent company—not by the lawmaker or agency in-house.  This analysis must be on the same level of sophistication as a CEQA environmental impact report for a proposed real estate development project, including formal public review, peer review and comment processes.

Southern California Association of Governments (SCAG)—the metropolitan planning organization for two-thirds of the state’s population—recognized this year that planning for future growth meant nothing without a strong economy.  Earlier this year, under the work of seven economists, developed its first ever Southern California Economic Recovery and Job Creation Strategy (www.scag.ca.gov) concentrating specific recommendations to expand the region’s economic base and increase the flow of funds driving the regional economy.  Fundamental to the strategy is the maxim that “stronger economic growth will help every community.”

To their members’ credit, SCAG approved this strategy unanimously.  190 cities and counties–with the strong support of the business community–threw down the gauntlet with job-creating action strategies that include:

(1) Oppose new legislation that negatively impacts jobs in the private sector;

 

(2) Support legislation that allows agencies…the flexibility to finance early delivery of project and at the same time create jobs;

 

(3) Eliminate or reduce regulations that inhibit expedited project delivery; and

 

(4) Require new state regulations be accompanied by an independent economic impact analysis…Any legislation considered to significantly impact jobs would be opposed;

 

This is outstanding work that recognizes California’s return to competitiveness begins with jobs that result from less government.  The State has both the need and wherewithal to develop a comparable strategy to create jobs, stimulate the economy, reduce regulations, and ultimately increase California’s competitiveness. Let my people go.

 

(Lucy Dunn is President and CEO, Orange County Business Council)

Amazon Tax backfires

 

As is now the expected norm in California, the State Legislature and Governor do not want to leave money on the table.  And a budget shortfall of $28 billion is giving them plenty of incentives to stick taxes into every corner of the state economy that they can.

Democratic lawmakers passed ABX1 28, the “Amazon Tax”, which was signed by Jerry Brown on June 29th in an effort to raise $200 million from online retailers who sell products through Amazon.com.

But as is the case with “revenue generation” in Sacramento, it never takes into consideration that businesses, people, capital, and incentives are fluid.  Businesses can leave.  Employment can and will rise and fall as a direct result of spending decisions decreed by Sacramento.  The weather is great, but nobody is forced to stay in California and fight for decreasing job opportunities.  In fact, lawmakers should know this, as they met in Texas to find out why California companies relocate there mere months ago.

Amazon.com has a network of retailers who use the well-recognized company to sell products.  For example, if you were a small business owner who wanted to sell apparel online, you could set up an account with Amazon.com to allow online users to find your apparel and purchase it online.  The payment is facilitated by Amazon.com, you earn a profit, and the buyer is shipped the good.  This is great for California.  With such a high cost of living, it affords entrepreneurial citizens and taxpayers the ability to earn an above national average standard of living in California and while having access to literally a world of consumers.

Under ABX1 28, Amazon.com and other online retailers like Overstock.com (who has even spent money to have their name on the Overstock.com Coliseum in Oakland) have to collect the 7.25% from anyone purchasing a good from California because Amazon.com’s affiliates are located in California (not Amazon.com, located in Seattle).  So in an effort to not pay taxes, Amazon.com has severed it’s ties with over 10,000 smaller business in the state to be free of the economically disastrous laws of California.

Lawmakers state that they want an even playing field for both online retailers and brick-and-mortar retailers like Wal-Mart.  Of course, as Charles Dudley Warner said, politics makes strange bedfellows.  The only way Sacramento would defend Wal-Mart is to justify a supposedly $200 million revenue stream to the capitol.  It’s an excuse that is intended to sound fair.

And here’s where outcomes become less than stellar.  With Amazon.com severing ties, the state will collect significantly less than anticipated because the online transactions that drive sales revenue will not take place.  The products from those retailers will not be available to the online world of consumers.  Individual firms will lay off staff, which, on top of less than anticipated online sales tax revenue, equates to less state income taxes collected.  And with continual job destruction in a state with an unemployment rate of 11.7% (as of May 2011), further income uncertainty will lead to less discretionary spending and, thus, less sales revenue, on brick-and-mortar retailers in the state.  And property values, both commercial and residential, fall as a result of falling aggregate incomes.  Consider this on top of California ranking as the worst state to do business and the 47th most expensive state to do business.

Every municipal, state, and federal government needs to realize that job creation is the root of economic problems.  Creating jobs leads to increased revenues to the state.  While balancing budgets are a noble and right goal, squandering future economic opportunity to pay for a budget shortfall today and keep public employee unions happy only kicks the ball down the road when economic growth looks grim.

Amazon.com and online retailers can fight the law in court, stating that having affiliates does not constitute a physical presence of the company and fight the interpretation of a “long-arm statute” by the State Board of Equalization.  But in an effort to hedge against a legal system run by the same California political class, Amazon.com is now collecting signatures to qualify a measure on the February 7th ballot to overturn the law.

When issues like these are no longer considered politics as usual, California will be making progress.

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].com.