California has always been synonymous with the American Dream. “Go west, young man, go west,” they said, and people did. From the Gold Rush until today, California has been the place people aspired to achieve their dreams. We have been the global center of innovation, technology, and entrepreneurship.
In the Golden State everyone had a shot at making a better life. The hardest working and most creative people found success here and made California their home. They established the nation’s best schools and universities, built cutting-edge infrastructure and revolutionary high tech, biotech, entertainment, agriculture and defense industries. Californians made our state the envy of the world.
Unfortunately, those accomplishments are becoming distant memories. Today, California is renowned for record unemployment, budget deficits, and a massive job exodus from the state. While the global economic recession is certainly a factor in the convergence of those negative trends, much of the blame goes to state policies that have knocked the luster off the golden state.
In the past decade, Sacramento’s annual expenditures increased from $53 billion in the late 1990s to $103 billion in 2008. Little thought was given to saving money to sustain California during economic down turns, and unlike smart investments in the past, very few of these dollars were directed to infrastructure or higher education. When revenue eventually fell and could not meet spending, the taxpayers were made to foot the bill. Taxes were increased and real reductions and reforms ignored.
A tax foundation study released this week ranks California 48th our 50 states for the job fostering tax climates. We have near the highest rates of taxation in critical areas like sales tax, business tax, and income tax. But it gets worse. A second study this week, commissioned by the legislature to examine the cost of regulatory compliance for California’s small businesses, shows the dire effects of our regulatory system on small business in California.
For years business owners have been telling us that Sacramento’s regulatory environment is the enemy of economic development. This new study backs up that claim. According to the study, regulations cost California $493 billion dollars in lost production revenues. That’s almost five times California’s annual general fund budget. Divided among California’s small businesses each takes roughly a $134,000 annual hit to maintain regulatory compliance. Imposed regulations are shown to cost Californians jobs—3.8 million in all, more than the entire population of San Diego County.
The combination of one of the nation’s highest tax burdens with excessive regulation has given rise to another startling number—12.2%. That is our latest unemployment rate—again an unfortunate leader in America. This means there are 2.24 million Californians who are struggling and can’t find work in the small business capital of the world. With our legacy of contributions to innovation and industry, this should not be the case in California.
Job creation needs to be job number one in the state legislature. I strongly urge the legislature to convene an emergency session on economic recovery. We must take a hard look at regulatory and tax structure with a single focus on job creation. Any California regulation currently on the books needs to be assessed to gauge cost-effectiveness, and sunset dates and measurement tools need to be imposed. Picking up where Governor Pete Wilson’s Council on California Competitiveness left off is exactly the kind of undertaking Sacramento should champion. By coming together in a bi-partisan fashion we can act to ensure the greatness of California’s past serves as the foundation for our future.
Mark Twain wrote that “The lazy and slothful didn’t come to California. They stayed home.” Now we need a state government that works just as hard as our people, one that encourages and rewards continued innovation and job growth in economic hubs like San Diego’s high technology and biotechnology cluster. Californians are still the source of hope for our future, and our state and economic prosperity should be returned to their capable hands.