Why California Is Exporting Jobs By The Thousands

California is in trouble.  Big trouble.  The Golden State, blessed with eye-popping natural beauty and abundant natural resources--including the richest agricultural valley in the world--is laboring under decades of fiscal mismanagement unlike anything ever seen in the history of our Union.  It has all hit the fan during the past ten years, with problems so intractable that many believe California is ungovernable.

Now many will tell you that all California needs is the repeal of the now-infamous Proposition 13.  What is Proposition 13?  In 1978, a voter initiative was passed by California voters in the form of a constitutional amendment limiting the amount by which property taxes could be levied against Californians to 1% of the cash value of the property.  Proposition 13 sent shock waves across the nation, and initiated a tax revolt in many other states in the years that followed.

Ever since the passage of Proposition 13, progressives in the state have worked diligently to try to overturn the law, which was upheld by the U.S. Supreme Court in 1992.  One of the things which absolutely has the progressives tied up in knots is a provision of the law which requires a two-thirds vote of both houses of the state legislature in order to raise tax rates.  The liberals in the legislature--and the state house, for that matter--chafe at this.  They claim that it is only through their ability to 'enhance revenue' through increased taxes that they have any prayer of balancing the state's budget, which is currently running an estimated $20 billion deficit.  But history belies this.  Consider the following:

• In the ten years from 1998-2008, California's revenue increased by 75%, from $58.6 billion to $102.6 billion.  At the same time, California's expenditures rose by 78%.  By comparison, the Consumer Price index over the same ten-year period increased by just 29%.  Clearly, the state's legislators spent a decade adding lots of new entitlements to its budget--as well as seeing existing entitlements grow much faster than the CPI.
• The fact that expenditures grew nearly in lock-step with revenues strips bare the liberals' claim that increased tax revenues will bail California out of its fiscal mess.  Liberals can't help themselves.  When new revenues are received, they--like a child with a dollar in his pocket--have to find a way to spend the money.  And the result is an ever-rising budget that burdens the taxpayer.
• California's debt rating was dropped in July 2009 to BBB, just a step above junk status.  This, of course, increases the cost of borrowing, putting further burdens on California's taxpayers.

So who's to blame for this debacle?  California's last two governors--Gray Davis and Arnold Schwarzenegger--have done nothing to get the state's spending under control.  To his credit, the Governator did have a brief dalliance with fiscal responsibility in 2004 when he supported ballot initiatives which would have put a lid on school funding, restricted redistricting through gerrymandering, and limited the size and scope of the state government.  All of these initiatives failed, and Schwarzenegger was roundly pilloried in the press after the election.  He never made a serious attempt at fiscal discipline after that.

But it's not just Davis and Schwarzenegger.

The Democrats have controlled the California legislature since 1974.  During that time, the state's spending has increased by more than eight times.  By contrast, the CPI has increased by a factor of four.  California has been living the dream of the Progressive movement in America.  And thanks to its fantastic universities, its mild climate, its abundant natural beauty, and the rise of Silicon Valley, California businesses thrived through the Eighties and Nineties--thanks to a strong tailwind from the federal government's tax policies.  But fiscal discipline is not a part of the vocabulary of the liberals who control the legislature.  And now that America's economy has a bad cold, California's economy is on life support.  In fact, there's a very good chance it will become the first state in the nation's history to declare bankruptcy.

Employers are leaving the state in droves.  Why?  A heavy tax burden for both individuals and corporations; California's corporate tax burden ranks 3rd highest in the country.  A brutal regulatory environment, with agency oversight from the state, regional bureaus, counties, and municipalities.  And the toughest environmental laws in the country.

The result is that the tax base is shrinking precipitously just as California's legislators are looking for more revenue.  This creates a vicious cycle, driving even more employers out of the state.

What a disaster.  What a shame.  What a story of fiscal irresponsibility on a massive scale.