Governor Jerry Brown recently took offense with Governor Mitt Romney’s comment recently, jokingly comparing California’s economic condition to that of the debt-burdened European countries of Greece, Spain or Italy. In an effort to protect his image and work, Brown immediately put on his rose-colored glasses and went into damage control. “Just silly,” Brown said during a visit to a Frito-Lay facility in Los Angeles.
Romney’s point was that entrepreneurs and businesspeople know that California’s Democratic leadership is simply blind as to how the state government’s behavior is killing jobs and stifling economic growth, just as the governments in the aforementioned European nations have done. California business owners know this reality all too well, and recognize Romney’s statement as not so much ‘silly’ as it is painfully true.
Here are some of the realities faced by California’s small business community:
5. Lowest Credit Rating in the Nation: Standard & Poor’s has given California the lowest credit rating in the nation. S&P analysts call the state’s budget operation “dysfunctional” and “deficient” and note that “a lot of times its budget gimmicks don’t work out.” (“S&P: California Can’t Afford to Bungle Budget,” Elizabeth MacDonald, Fox Business, 6/11/2012)
4. High-Speed Spending Spree: The Governor and Legislative Democrats just authorized spending to begin on a $70 billion high-speed rail system, even though nobody’s yet agreed on where exactly the tracks will go or who exactly will ride it, or where exactly the remaining $60-plus billion to finish building it will come from. The interest payments alone, which come out of the General Fund, will cost taxpayers $380 million per year. (Joel Fox, “No on Prop 30 Video Reveals — How Sacramento Politicians Spent Their Summer Vacation,” Fox & Hounds, 8/9/2012)
3. 3rd Highest Unemployment Rate in the Nation: California has the third highest unemployment rate in the nation. Even though it has dipped slightly from the 11.9 percent peak last June to the current rate of 10.7 percent, California’s unemployment rate remains 23 percent higher than the national average of 8.2 percent. (California Employment Development Department, “California’s unemployment rate decreases to 10.7 percent,” 6/20/2012)
2. Taxes, Taxes, Taxes (and Fees): The people of California will face a myriad of tax measures on this November’s ballot, including a soda tax, a sales tax, an income tax and several dozen fee increases. (Editorial, “California Voters Face A Very Taxing Ballot Election Day,” Riverside Press Enterprise, 8/8/2012)
1. The Wall of Debt – Pension Liability: Legislative Democrats are stalling on making any reforms to taxpayer-financed retirement plans for public employees – reforms proposed by a Democratic governor, no less. The bipartisan Little Hoover Commission found that the top 10 public employee pension systems in California faced a combined $240 billion shortfall as of 2010. “California will pay about $3.7 billion for state employees’ pensions in its next fiscal year, more than it now pays but less than the state set aside for retirement-related expenses in the prior fiscal year….” (Jim Christie, “State Employee Pensions To Cost California $3.7 Billion,” Reuters, 5/16/2012)
Comparing California to Greece is far from “silly.” Our self-imposed problems have California on the road to economic ruin. That is a very serious truth.