The Other California: A Flyover State Within a State

Joel Kotkin
Editor of and Presidential fellow in urban futures at Chapman University

California may never secede, or divide into different states, but it has effectively split into entities that could not be more different. On one side is the much-celebrated, post-industrial, coastal California, beneficiary of both the Tech Boom 2.0 and a relentlessly inflating property market. The other California, located in the state’s interior, is still tied to basic industries like homebuilding, manufacturing, energy and agriculture. It is populated largely by working- and middle-class people who, overall, earn roughly half that of those on the coast.

Over the past decade or two, interior California has lost virtually all influence, as Silicon Valley and Bay Area progressives have come to dominate both state politics and state policy. “We don’t have seats at the table,” laments Richard Chapman, president and CEO of the Kern Economic Development Corporation. “We are a flyover state within a state.”

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Courts Jump on Revenue Raising Bandwagon

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Tax and revenue increases are piling up on Californians–passed by voters, approved by legislators, and now the courts are getting into the act.

On the same day that the legislature passed the $52 billion gas tax, California’s Third District Court of Appeal on a 2 to 1 vote upheld a lower court ruling that businesses paying for auction allowances in the cap-and-trade program were not being subjected to an illegal tax. The California Chamber of Commerce and others filed the lawsuit claiming the cap and trade allowance cost amounted to a tax, which required a two-thirds vote, something the law that created cap-and-trade did not achieve.

The court reasoned that businesses voluntarily took part in the program and were not compelled by government to do so. However, the decision goes deeper than the cap-and-trade program and potentially opens the door to getting around the tax vote requirements demanded by Proposition 13.

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Business Owners, Grassroots Supporters and Lawmakers Stand Together to Stop Shakedown Lawsuits

Maryann Marino
Regional Director, California Citizens Against Lawsuit Abuse

They would have preferred staying home to tend to their stores, shops and services. But they had to be there to stand up for their economic livelihood and to protect the jobs of their loyal employees.

More than 150 small business owners and supporters gathered for a boisterous rally April 4 on the lawns of the State Capitol. They had travelled there to issue a public call for new legislation to stop abusive and frivolous lawsuits.

The fancy way of describing their request is that they are seeking fair-minded legal reforms to bring significant relief from lawsuits and litigation that often result in expensive, unwarranted settlements. 

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Dissecting San Jose Unified

David Crane
Lecturer and Research Scholar at Stanford University and President of Govern for California

Normally, California school districts don’t face financial stress when state revenues are robust. Usually that stress arises only when state revenues shrink as a result of declining stock markets. But schools in California are experiencing stress right now despite record revenues from a long bull market and a tax increase. One illustration is the San Jose Unified School District, which just issued a report required of all districts by the Education Code*. To start, look at SJUSD’s expenditures in fiscal year 2013–14:

crane sj

Notice the $58.557 million expense for “Employee Benefits,” which are payments for pensions, retiree healthcare and other benefits. Next, look at the same chart for the following fiscal year:

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Will Democrats get Another Supermajority Vote that could Raise Gas Prices?

Julie Cart
Reporter, CALmatters

The power of the California Democratic party’s ‘supermajority’ was mightily tested Thursday, with the nail-biting passage of a $52 billion transportation package, that will add 12 cents to the price of gasoline.

What does that bode for the other big lift coming up in the legislature, the reauthorization of the the state’s landmark climate change legislation, cap-and-trade? The carbon auction system survived a court challenge Thursday—with the California appeals court affirming the legality of the program—but it’s an open question whether cap and trade can survive a bruising political battle and the likelihood of tacking on more to the price of gas at the pump.

The transportation bill was a squeaker, passing Thursday with a bare minimum of votes in both the Senate and Assembly. Last-minute concessions dragged the package over the line, but at the cost of exhaustion and, for some, distasteful compromise.

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Ugly Lawmaking on Display for All to See

Joel Fox
Editor of Fox & Hounds and President of the Small Business Action Committee

Laws are like sausages, it is better not to see them being made. Otto von Bismarck

Californians saw the how gas tax sausage was made last night. Hopefully, they enjoyed the show because they will be paying for it to the tune of over $5 billion a year.

Promises were made to a number of legislators to spend money in their districts to secure their votes, such as the $400 million set aside for a commuter rail line to capture the lone senate Republican yes vote from Anthony Cannella. The spending promises added to the budget bill—if they are fulfilled—will put an added strain on the state’s finances.

But the fight, long into the night to get the necessary two-thirds vote—three Democrats held back their votes until succumbing to arm-twisting by Democratic colleagues—is not over.

Here’s a problem for those who voted for the tax: Elections will come up before many road fixes start but after taxes are being collected.

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The Pointless Prop 54

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

Prop 54 didn’t last long.

The bill was approved last year overwhelming, with all right thinking Californians, good government types and newspaper editorialists backing it as a necessary reform. Only a few of us dead-enders – we were accused of being against mom and apple pie – dared speaking against it.

Prop 54 was going to end all the late, dirty dealing. There would be no late rushed bills before a deadline. There would be sunshine and open debate and transparency, because all bills would have to be in print 72 hours before people voted on them.

The transportation deal put the lie to all those claims, effectively showing Prop 54’s failure, less than six months after its passage.

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Misguided State Policies Lead To More Companies Leaving California

Kerry Jackson
Kerry Jackson is a Fellow at the California Center for Reform at the Pacific Research Institute.

This spring marks the first anniversary of the announcement that Carl’s Jr., a California burger icon for more than six decades, was relocating its headquarters to Nashville. It’s yet another business that has quit California in what was once an almost quiet exodus of companies but now looks more like a stampede.

The list of businesses abandoning California for more hospitable business environments reads like a roll call of top companies. Toyota is in the process of leaving Torrance and will complete the move of its U.S. headquarters to Dallas by the end of 2017. Also having left for Dallas is Jacobs Engineering Group, $6.3 billion firm formerly based in Pasadena that has more than 230 offices across the world, employs 60,000 and generates $12 billion in annual revenue.

Other companies that have left, or are pricing moving van rates, are Nestle (leaving Glendale to reboot its U.S. headquarters in Rosslyn, Va.), Nissan North America (left for Nashville a decade before Carl’s Jr. did), Jamba Juice (traded San Francisco for Frisco, Texas), Occidental Petroleum (prefers Houston over Westwood for its headquarters), Numira Biosciences (Irvine, no – Salt Lake City, yes) and Omnitracs, a software firm (goodbye San Diego, hello Dallas).

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Golden Gate Bridge Train Service? It’s Time to Get On Board

Joe Mathews
Connecting California Columnist and Editor, Zócalo Public Square, Fellow at the Center for Social Cohesion at Arizona State University and co-author of California Crackup: How Reform Broke the Golden State and How We Can Fix It (UC Press, 2010)

If California is as serious about public transit as its urban leaders claim, why isn’t there a commuter rail service running over the Golden Gate Bridge?

There’s no good reason why our state’s iconic span must devote all six of its lanes to cars. For more than 50 years, engineering studies have shown that the bridge could accommodate trains.

And now would be the perfect time to establish a rail line across the Golden Gate. On the level of symbol, train service would send a powerful message to the whole state and to the world that California offers more than just car culture. And, practically, the dense and traffic-plagued Bay Area would benefit immensely from a rail connection between San Francisco and the North Bay counties of Marin and Sonoma.

As our major regions plot new transit investments, there is no more glaring hole in California public transportation than the one across the Golden Gate Bridge.

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For CA, The End of the Asian Era

Joel Kotkin
Editor of and Presidential fellow in urban futures at Chapman University

For the past 40 years, the Pacific Rim has been, if you will, California’s trump card. But now, in the age of President Donald Trump and decelerating globalization, the Asian ascendency may be changing in ways that could be beneficial to our state.

Rather than President Barack Obama’s famous “pivot to Asia,” it now might be more accurate to speak of Asians’ pivot to America. Once feared as a fierce competitor, East Asia is facing an end to its period of relentless growth, and now many interests appear to find that the United States offers a more secure, and potentially lucrative, alternative.

This era reflects profound changes in East Asia’s prospects. They increasingly are coping with many of the demographic, social and economic challenges that have bedeviled the West since the 1970s — competition from cheaper countries, technological obsolescence, a demoralized workforce and diminishing upward mobility. The verve of the late 20th century is being supplanted by the anxieties of the early 21st.

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