California is facing nearly The Toughest of Times.
We face historically high unemployment, perennial budget crises and
more. Don’t think it could get any worse? Think again. If Jerry
Brown is elected, in one short stroke, he could deal a potentially
crippling blow to the California economy before it gets a chance to get
back on its feet.
Even for a
committed political observer, volunteer and commentator such as myself,
it seems implausible – but true – that the stakes for elections grow
with each successive election. For
California, the 2010 gubernatorial election unquestionably could be the
most important election ever – and not necessarily for a good reason.
If Jerry Brown is elected, he and his fellow Democrats could deliver a
devastating blow to California.
We well know that California’s unemployment rate is above 12%. We
also know that well over 100,000 people are leaving California on a
yearly basis. Beyond that, California faces an exodus of businesses –
large and small alike. So it can be no surprise that state revenues
have declined nearly $40 billion over the last three years as a result
of the declining taxpayer base.
We also well know why California is having a tougher time than many other states. In
recent years, California is consistently ranked near the bottom of
states in which to do business. According to Joseph Vranich, president
of JV Executive Consulting Inc. in Irvine: "It’s no mystery what
causes companies to leave California: High taxes, undue regulation,
workers’ comp costs, a legal environment stacked against businesses and
lengthy and costly construction permitting requirements." Indeed,
California finished tied for last in the Country in Forbes’ Overall Tax Burden survey measuring tax burdens and structure.
Could thinks get worse? Under a Brown Governorship, the answer would have to be: YES.
Keep in
mind that Brown has no published or unpublished plan for dealing with
California’s many crises – and that uncertainty hurts California
businesses as much as anywhere else. But
that won’t be the worst of it. If Jerry Brown is elected Governor,
every business owner in California can be sure that Democrats under
Brown would roll back worker’s compensation reform in California to
pre-2004 rates.
California small businesses and large employers simply cannot afford the cost explosion that that would entail. Recently,
a Bay Area business owner told me that his company’s workers comp rates
rose from $650,000 to $4 million per year before the reforms were
passed. Now his rates are around $950,000 per year in his labor
intensive business. Already facing cash flow issues, he believed that
any workers comp roll back would more than jeopardize the jobs of his
workers. Obviously, his company is not alone in that predicament.
Don’t think the Democrats would do such a thing? Know
that they have pushed at least partial rolls backs every year since
workers comp was reformed. Or perhaps you would like to ask the
Central Valley, which features cities with unemployment rates more than
double the state average, just how bad government policy can be.
Don’t think Jerry Brown would allow it to happen? Well,
given that the unions are funding his campaign and the negative ads on
Meg Whitman – do you really think Brown could say no to them? Are you
willing to take that chance?
In sum, the environment for California employers could get much worse if Jerry Brown is elected – much worse. The
resulting higher unemployment and higher deficits (even higher than
today)could leave California in deep trouble for at least another 6
years – four years of Brown and at least 2 more to recover from that.
Can your business afford that? Can
you afford that? In my view, California can’t and so we cannot afford
Jerry Brown under any circumstances – this year or any other.