The April surprise in state tax returns
this year should be no surprise – except to those who crave the fantasy
of painless solutions over the economic reality of every day
California.
After all, what in the personal income and retail sales
numbers could have spurred this unwarranted optimism?
Sure, the trend is in the "right" direction, but it is still below
zero. Not in the past 40 years has there been year-over-year declines
in total personal income in California. This will reverberate in
California for years to come.
And the basic driver of our economy – and not to mention the standard
of success – job growth, is still languishing far below historic
trends. Recovery will be long and slow.
Sacramento politicians should return to earth and (1) reset the
spending trajectory to meet the actual revenue growth and (2) refocus
their attention on creating an economic environment that will encourage
job growth and new investment.