Wednesday, December 02, 2009

Texas vs. California

From "America’s Future: California vs. Texas" in Trends Magazine:

What's the worst state to do business in? According to readers of Chief Executive magazine, it's California. In the same poll, Texas won first place as the best state in which to put your headquarters. As reported in The Economist, the two largest states in the nation have very different philosophies and very different success rates.

What’s wrong with California, and what’s right with Texas? It really comes down to four fundamental differences in the value systems embodied in these states:

1. Texans on average believe in laissez-faire markets with an emphasis on individual responsibility. Since the '80s, California’s policy-makers have favored central planning solutions and a reliance on a government social safety net. This unrelenting commitment to big government has led to a huge tax burden and triggered a mass exodus of jobs. The Trends Editors examined the resulting migration in “Voting with Our Feet,” in the April 2008 issue of Trends.

2. Californians have largely treated environmentalism as a “religious sacrament” rather than as one component among many in maximizing people's quality of life. As we explained in “The Road Ahead for Housing,” in the June 2009 issue of Trends, environmentally-based land-use restriction centered in California played a huge role in inflating the recent housing bubble. Similarly, an unwillingness to manage ecology proactively for man’s benefit has been behind the recent epidemic of wildfires.

3. California has placed “ethnic diversity” above “assimilation,” while Texas has done the opposite. “Identity politics” has created psychological ghettos that have prevented many of California’s diverse ethnic groups and subcultures from integrating fully into the mainstream. Texas, on the other hand, has proactively encouraged all the state’s residents to join the mainstream.

4. Beyond taxes, diversity, and the environment, Texas has focused on streamlining the regulatory and litigation burden on its residents. Meanwhile, California’s government has attempted to use regulation and litigation to transfer wealth from its creators to various special-interest constituencies.

MP: The 4.2% difference in October jobless rates (12.5% in CA vs. 8.3% in TX) tells the story (see graph above). In fact, California's unemployment rate has been more than 4 percent above the rate in Texas every month this year except for January, and that is the first time in state jobless rate history back to 1976 that there has ever been a 4-point difference in the unemployment rates between those two states.

HT: Enterprise Blog


At 12/02/2009 3:59 PM, Anonymous Benny Man said...

Psychological ghettos? This is nonsense--Californian Hispanics, Asians and whites blend seamlessly and easily with another, in business and social circles. Intermarriage is so common as to be the norm. This writer never set foot in SoCal.
Curiously, it is in Texas that county tax assesors routinely increase business property taxes, as they have the right to tax property at rates consistent with "highest and best use."
You may want to keep your land a parking lot in Texas, but the assessor can and does tax it as a land perfect for, say, a high-rise office tower.
In California, due to Prop 13, a commercial property is not reassessed unless sold. Some corporations have not had their properties reassessed since 1978 (or their property taxes meaningfully increased).
There is some truth to the complaint about land-use restrictions. For example, in Newport Beach, in the heart of Orange County, the local law is that Newport Beach voters have to approve any property development of more than 100,000 square feet. You will never be able to build a high-rise condo tower in Newport Beach, although you are welcome to in downtown Los Angeles.
BTW, Newport Beach is staunchly Republican, and downtown Los Angeles is Dem country.
So go figure who is truly pro-business.

At 12/02/2009 4:28 PM, Anonymous Machiavelli999 said...

I completely disagree. The only reason Texas is in decent shape is because oil rebounded.

At 12/02/2009 4:55 PM, Anonymous Anonymous said...

Plundering California

... in Orange County, where I had been a columnist for the Orange County Register, the average pay and benefits package for firefighters was $175,000 per year ... Firefighters, like all public-safety officials in California, also receive a gold-plated retirement plan: a defined-benefit annual pension that offers 90 percent or more of the worker’s final year’s pay, guaranteed for the rest of his life (and the life of his spouse).

The Sacramento Bee coined the term “chief’s disease,” for example, to refer to the 82 percent (in 2002) of chief’s-level employees at the California Highway Patrol who discovered a disabling injury about one year before retiring. That provides an extra year off work, with pay, and shields 50 percent of their final retirement pay from taxes.


... the real scandal is a two-tier society where government workers enjoy benefits far in excess of those for whom they supposedly work.

City Journal

At 12/02/2009 4:57 PM, Anonymous Anonymous said...

Texas has cheap real estate and hydrocarbons (shale gas & oil).

At 12/02/2009 4:59 PM, Anonymous Anonymous said...

California debt may be half a trillion dollars‏

The earmark-laden bond issue, the package's single most controversial element, raises an interesting question: Just how deeply in debt are our state and local governments?

The answer: No one knows for certain, since debt is scattered through myriad agencies in many forms, but well over a half-trillion dollars is a fair estimate.

Lockyer's warning pertained to the state's "general obligation debt," which currently stands at $59 billion, and there are an additional $50-plus billion in general obligation bonds that have not yet been sold. The biggest chunks of debt, however, are the unfunded obligations for pensions and health care of retired public employees.

The latest annual pension report from the state controller covers 2006, when the unfunded liability was $64 billion. But since then, state and local pension funds have lost at least $150 billion on investments, so a reasonable estimate of today's unfunded liability is $200-plus billion. A state commission, meanwhile, says the state-local liability for retiree health care is about $100 billion.

Sacremento Bee

At 12/02/2009 5:01 PM, Anonymous Lyle said...

Interestingly wind became so important in Texas because the land is privatly owned. To a rancher wind turbines on his land is free money. (5 to 10k/turbine per year) One of the recent wind farms happened when a guy from Roscoe saw all the wind farms south of Sweetwater, and said I want some and promoted up what is now the largest wind farm in the world.
Actually in Texas it is the law that all property be assessed at current market value, so your home kept going up also. (Also it can go down as mine in Houston did in the 1980s).
More generically than human land use restrictions nature provides many more restrictions in CA than in Texas. Except in the Big Bend area and west, almost all land is developable, i.e. at most rolling or low hills no mountains as in CA.
If you want the max in developer friendlyness go to Houston where there is no zoning, all there is are deed restrictions, so if you can get ahold of some unrestricted land you can build what you want (within limits of what the streets and sewers will stand).
Texas does protect those over 65 from rising property taxes with a freeze, but not those under 65.

At 12/02/2009 5:09 PM, Blogger KO said...

In the last several years, I've seen several light manufacturers go out of business in California. Even more including prospective clients.

What gets a lot of them is they're competing against companies in other states that aren't burdened by the outrageous worker's comp expenses, environmental constraints, and high taxes. It can give the competitors an easy 10% to 15% (of gross) cost advantage. So you're staring at 5% net income for them while you're 10% in the hole at the same prices.

Companies that go toward an import model with a warehousing can compete. One moved production to Tijuana, others bring in from overseas, and one other is hanging on because they have lots of inherited land to burn through. But that land is impossible to develop since if falls under the California Coastal Commission so they can't even get a serious loan on that. There are of course houses and businesses all around it.

At 12/02/2009 5:10 PM, Anonymous Anonymous said...

Who Killed California?

To address a $42 billion shortfall in February of this year, the legislature enacted a package that included the largest state tax increases in American history, leaving California with the highest sales and personal income-tax rates in the country ...


As if that weren't apocalyptic enough, California's short-term ­financial difficulties pale in comparison to its long-term obligations. In the most recent fiscal year, the California Public Employees' Retirement System and the California State Teachers' Retirement System, the state's two largest pension plans, lost a combined total of nearly $100 ­billion — about a quarter of their value — in the market downturn. If legislators thought tackling a $60 billion deficit was trying, they are sure to love the challenge of making good on California's fixed pension obligations ...

And fiscal troubles are just the tip of the iceberg. California's percentage of adults without at least a high-school education is the second-highest in the nation (and the fact that 72% of those without diplomas are immigrants only fuels the state's growing problem of social stratification). The Commonwealth Fund has ranked the quality of California's health care lowest of the 50 states. The state has the highest rate of criminal recidivism in the country. It has six of the ten worst cities in the country in air pollution. Los Angeles and San Francisco have some of the most congested roads in the nation, which costs the state's employers billions in lost productivity each year. The state is seriously discussing mandatory water rationing, and has in recent years experienced severe disruptions of its electricity supply. Unemployment is over 11%, and a recent survey of corporate CEOs ranked California the worst state in the country in which to do business. It is losing native-born ­citizens faster than any other state.

National Affairs

At 12/02/2009 5:20 PM, Anonymous Anonymous said...

The Golden State isn't worth it‏

... the Census Bureau's latest data show that state and local government expenditures for all purposes in 2005-06 were 46.8% higher in California than in Texas: $10,070 per person compared with $6,858. Only three states and the District of Columbia saw higher per capita government outlays than California, while those expenditures in Texas were lower than in all but seven states.


According to a report issued earlier this year by the consulting firm McKinsey & Co., Texas students "are, on average, one to two years of learning ahead of California students of the same age," even though per-pupil expenditures on public school students are 12% higher in California.


In what respects, then, does California "excel"? California's state and local government employees were the best compensated in America, according to the Census Bureau data for 2006.


California's interlocking directorate of government employee unions, issue activists, careerists and campaign contributors has become increasingly aggressive and adept at using rhetoric extolling public benefits for all to deliver targeted advantages to itself. As a result, the political reality of the high-benefit/high-tax model is that its public goods are, increasingly, neither public nor good. Instead, the beneficiaries are the providers of the public services, and certain favored or connected constituencies, rather than the general population.

The LA Times

At 12/02/2009 5:23 PM, Anonymous Anonymous said...

California has 12 percent of the nation’s population but 30 percent of the people on welfare

Still, what California does often takes on outsized significance because the state’s welfare rolls are outsized. In July, while looking for budget cuts, Mr. Schwarzenegger complained that California had 12 percent of the nation’s population but 30 percent of the people on welfare.

As elsewhere, California’s welfare rolls plummeted after the 1996 national overhaul of welfare, from 921,000 families in 1995 to 466,000 families in 2008, but they did not fall as much as in most states. In the recession, rolls have climbed and are projected to reach 557,000 families in 2010, or about 1.3 million individuals.

The New York Times

At 12/02/2009 5:25 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...

One problem seldom discussed in CA is that we are splitting up our families. The productive young are leaving the state for better business climates and lower taxes.

I speak from experience. My 30 year old son, a CA native who loves his home San Diego -- educated at deeply discounted prices in the UC system -- is a 6 figure corporate consultant who can live where he wants. He has chosen income-tax-free Texas (Austin).

He'd rather live here. And his PARENTS would rather he lived here. Instead, it looks like he's gonna marry some Texas Belle.

Then my grandchildren won't even speak English! And I don't speak Texan.

At 12/02/2009 5:26 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...

Breaking Bad: California vs. the Other States
by Richard Rider, Chairman, San Diego Tax Fighters
Version 1.51 Revised 20 November, 2009

Here’s a depressing comparison of California taxes and economic climate with the rest of the states. The news is breaking bad, and getting worse (I keep updating this article):

California has the 2nd worst state income tax in the nation. 9.55% tax bracket at $47,055. 10.55% at $1,000,000

By far the highest state sales tax rate in the nation. 8.25%. 7% is next highest (does not include local sales taxes) Table #15

California corporate income tax rate is the highest in the West (our economic competitors). 8.84% Table #8

2010 Business Tax Climate ranks 48th in the nation.

Fourth highest capital gains tax 9.55%

At 12/02/2009 5:29 PM, Anonymous Anonymous said...

Study: Regulation costs California economy almost $500 billion‏

This study measures and reports the cost of regulation to small business in the State of California. It uses original analyses and a general equilibrium framework to identify and measure the cost of regulation as measured by the loss of economic output to the State’s gross product, after controlling for variables known to influence output. It also measures second order costs resulting from regulatory activity by studying the total impact – direct, indirect, and induced. The study finds that the total cost of regulation to the State of California is $492.994 billion which is almost five times the State’s general fund budget, and almost a third of the State’s gross product. The cost of regulation results in an employment loss of 3.8 million jobs which is a tenth of the State’s population. Since small business constitute 99.2% of all employer businesses in California, and all of non-employer business, the regulatory cost is borne almost completely by small business. The total cost of regulation was $134,122.48 per small business in California in 2007, labor income not created or lost was $4,359.55 per small business, indirect business taxes not generated or lost were $57,260.15 per small business, and finally roughly one job lost per small business.

Cal State Sacramento

At 12/02/2009 5:29 PM, Blogger KO said...

Anonymous said...

Plundering California

... in Orange County, where I had been a columnist for the Orange County Register, the average pay and benefits package for firefighters was $175,000 per year ... Firefighters, like all public-safety officials in California, also receive a gold-plated retirement plan: a defined-benefit annual pension that offers 90 percent or more of the worker’s final year’s pay, guaranteed for the rest of his life (and the life of his spouse)...

You can go on and on about how good the public employees have it. Just listening to friends talk about how the union protects them is astonishing. They all live in nice houses and will be retired 10 to 15 years before me. The LA Sheriff has money management classes for new recruits because many of them will clear 6 figures their first year due to overtime. A CHP friend says there are lots of towns where the nicest house is owned by a CHP officer since their wages are not adjusted to the local area.

LAPD has, or had, a 3/12 work week. 3 days of 12 hour shifts and 4 days off. I remember someone getting 4/10s at my old firm, which basically meant Friday off, since all of us were doing more than 10 hour days anyway. He was such a slacker he ended up quitting anyway. Now he works for the US government and has an even better work arrangement. That's not a joke.

At 12/02/2009 5:29 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...


Highest gasoline tax (averaging 65.8 cents/gallon) in the nation (October, 2009). When gas hits $3.00/gallon, we are numero uno – because unlike many states, we charge sales tax on gasoline purchases (built into the price).

Fourth highest unemployment rate in the nation. (October, 2009) 12.5%. National rate 10.2%.

One of the highest state vehicle license car taxes. 1.15% per year on value of vehicle, up from 0.65% in 2008.

California’s 2009 “Tax Freedom Day” (the day the average taxpayer stops working for government and start working for oneself) is again the 4th worst date in the nation – up from 28th worst in 1994.

To offset lower state revenues, 29 states are proposing 2009 state tax and fee increases totaling $24 billion. California, with 12% of the nation’s population, is proposing 47% of that increase (6/5/09).

1 in 5 in LA County receiving public aid.,0,4377048.story

California has 12% of the nation’s population, but 36% of the country’s TANF (“Temporary” Assistance for Needy Families) welfare recipients – more than the next 7 states combined. Unlike other states, this “temporary” assistance becomes much more permanent in CA.

At 12/02/2009 5:30 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...


California prison guards highest paid in the nation.

California teachers easily the highest paid in the nation. (CA has the second lowest student test scores)

California now has the lowest bond ratings of any state, edging out Louisiana.

California ranks 44th worst in “2008 lawsuit climate.”

In 2005 (latest figures), for every dollar Californians sent to D.C. in taxes, we got back 78 cents – 43rd worst.

America’s top CEO’s rank California “the worst place in which to do business” for the fourth straight year (3/2009). But here’s the interesting part – they think California is a great state to live (primarily for the great climate) – they just won’t bring their businesses here because of the oppressive tax and regulatory climate.
Consider this quote from the survey (a conclusion reflected in the rankings of the characteristics of the state): “California has huge advantages with its size, quality of work force, particularly in high tech, as well as the quality of life and climate advantages of the state. However, it is an absolute regulatory and tax disaster.”

California, a destitute state, still gives away college education at fire sale prices. Our community college tuition is by far the lowest in the nation. How low? Nationwide, the average community college tuition is 4.5 times higher than California CC’s. This ridiculously low tuition devalues education to students – resulting in a 30+% drop rate for class completion. In addition, 2/3 of California CC students pay no tuition at all – filling out a simple unverified “hardship” form that exempts them from any tuition payment, or receiving grants and tax credits for their full tuition.

On top of that, California offers thousands of absolutely free adult continuing education classes – a sop to the upper middle class. In San Diego, over 1,400 classes for everything from baking pastries to ballroom dancing are offered totally at taxpayer expense.

California residential electricity costs an average of 35.4% more than the national average. For industrial use, CA electricity is 56.2% higher than the national average (2007).

It costs 38% more to build solar panels in California than in Tennessee – which is why European corporations have invested $2.3 billion in two Tennessee manufacturing plants to build solar panels for our state.

At 12/02/2009 5:31 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...


Consider California’s net domestic migration (migration between states). From April, 2000 through June, 2008 (8 years, 2 months) California has lost a NET 1.4 million people. The departures slowed in 2008 only because people couldn’t sell their homes.
These are not welfare kings and queens departing. They are the young, the educated, the productive, the ambitious, the wealthy (such as Tiger Woods), and retirees seeking to make their pensions provide more bang for the buck. The irony is that a disproportionate number of these seniors are retired state and local government employees fleeing the state that provides them with their opulent pensions – in order to avoid the high taxes that these same employees pushed so hard through their unions.

As taxes rise and jobs disappear, we lose our tax base, continuing California’s state and local fiscal death spiral. This spiral must stop NOW.

NOTE: If you would like to receive my free periodic “Richard Rider Rant” e-newsletter with more of this type of information and analysis, just drop me an email at To see the latest version of this “Breaking Bad” column, plus samples of my free “Richard Rider Rant” e-newsletter, go to my blog at

At 12/02/2009 5:42 PM, Anonymous Anonymous said...

When liberal Democrats took control of the California Legislature in 1998 , the state treasury had a surplus approaching $12 billion. State spending in 1999 was $57 billion. By 2003, not only was the $12 billion surplus gone, but annual spending exceeded $77 billion. In just four years, the liberal majority squandered the surplus and drove up annual spending by $20 billion (36 percent)! Today, California is on the verge of bankruptcy, it's schools and infrastructure in disarray. This is what Obama and Pelosi have planned for the entire country. Fasten your seatbelts.

At 12/02/2009 5:57 PM, Blogger Unknown said...

The original article is a press release from Rick Perry Governor of Texas. Possible minor bias here. He's the guy that advocates that TEXAS secede from the USA
Texas is good for business not necessarily good for the employees of corporations moving to Texas. High property taxes, water/sewerage bills,insurance and electricity. Terrible traffic congestion, Pollution problems, poor education and health care. Nasty politics favoring business with little consumer protections. Better than California on some counts but not the paradise that Rick Perry suggests. Of course he's a Republican conservative governor so he gets a free pass from JMP.

At 12/02/2009 6:26 PM, Blogger montestruc said...

I think you neglected a rather important point.

Texas state government is in the black, as in we have a balanced budget and money in the bank.

At 12/02/2009 6:37 PM, Anonymous Anonymous said...


Typical leftist tool.

Try reading some of the other posts. In fact, just try reading.


At 12/02/2009 6:45 PM, Anonymous Anonymous said...

High property taxes, water/sewerage bills, insurance and electricity.

Texas has lower insurance rates than California, no personal income tax, low sales taxes and as far as electricity:

Since roughly 1935, the majority of Texas utilities have opted to isolate themselves from interstate connection and thus from federal regulation over rates, terms and conditions of electrical transmission. Managed by the Electric Reliability Council of Texas (ERCOT), they now provide more than 85 percent of the state's electrical load, covering 75 percent of its land area. For utilities, that makes energy a straightforward market to do business in, and it allows them to be more nimble and innovative with new energy sources. It also vastly expedites the process for renewable energy developers that want to plug in to state transmission lines.

"If you go to either of the other two grids you've got to get 20-something state utility commissions to agree on something," B.J. Stanbery, the founder of the Austin-based solar manufacturer HelioVolt, says. "In Texas, we've only got one to persuade. Now, that's a big benefit." As a result, Texas has, in very short order, erected enough wind turbines to become the national leader in wind-energy production—by a wide margin. If it were a country, Texas would rank sixth in wind power.


Texas is now a net importer of energy, and its industries have a particularly voracious appetite for electricity—the state consumes more power than any other. So there's a huge price-sensitive market located comfortably within its own border. Until recently, Texas's consumers also enjoyed electrical rates that were among the lowest in the nation. Then the price of natural gas spiked and fuel-free electricity began to look mighty appealing. "People that use a lot of electricity are smart to hedge their costs, and I think there's a lot of smart businessmen in Texas," Stanbery told me. So right now, Texas has a lot of incentive to remain, if not a sovereign republic, every bit as independent.

Popular Mechanics

At 12/02/2009 7:13 PM, Anonymous Anonymous said...

Texas came into the Union with the legal right to divide itself into as many as 5 states. If they did it right, they could add 8 conservative Senators and put an end to Obamunism. Remember the Alamo!!!

At 12/02/2009 7:20 PM, Anonymous Lyle said...

To elaborate on Richards comment about families breaking up, welcome to the midwest farming communities. This has been happening there for a couple of generations as few young people stay in the small towns and move off to the big city.
CA will likely have to go thru a down cycle like New England did and the Midwest is doing, until its costs get down to where the climate compensates for them. I have expected this because at some point the climate and having mountians and sea nearby don't provide enough psychic pay for the costs.
Of course if you really want low costs there are IA,Ne,Mn and the Dakotas.

At 12/02/2009 7:28 PM, Blogger Richard Rider, Chair, San Diego Tax Fighters said...

As to TX having high utility costs. I think CA water rates are equally as high or higher. But I've yet to find a good state-to-state water rate comparison.

Concerning electricity -- I here repeat a piece of my earlier "Breaking Bad" post:

California residential electricity costs an average of 35.4% more than the national average. For industrial use, CA electricity is 56.2% higher than the national average (2007).

At 12/02/2009 7:52 PM, Anonymous Anonymous said...

If you correlate oil prices with employment for Texas, there is an obvious answer. They also tanked when oil prices were low and the rest of the country had lower unemployment.

California tax nuts are digging themselves a big hole. I have a friend who pays $997 a year in property taxes on property worth $5million due to Prop 13. Go figure.

At 12/02/2009 8:24 PM, Blogger Marco P. said...

This comment has been removed by the author.

At 12/02/2009 8:35 PM, Blogger KO said...

Anonymous said... ...
California tax nuts are digging themselves a big hole. I have a friend who pays $997 a year in property taxes on property worth $5million due to Prop 13. Go figure.

There's no doubt that Prop 13 set up some weird tax comparisons, but as has been pointed out California makes up for that through high rates for almost every other tax out there.

Spending is the real problem. California ranks somewhere around 10th to 12th in per capita government spending. That's quite an accomplishment given it's the most populous state. Texas with the 2nd highest population, ranks 50th in per capita government spending.

At 12/02/2009 8:38 PM, Blogger Timmay said...

You are so right on about Texas. I was born in California and lived there until I was 30. I moved to Texas this January after working here for six months. My family is so much happier here! There is just a different attitude here. Strangely, there is so much more acceptence and diversity than in California. In California common sense is taken over by politically correct lefty thinking which does not allow any room for disagreement on anything. The economy is more stable here and housing prices are incredible. We bought a house more than twice the size of our house in Sacramento for less than half the price, in a good neighborhood with an excellent school. Thank you Texas! There is also a pervasive negative feeling about Texas that we noticed from the so-called "open-minded" people of California. When we said we were moving the most common reply was "oh.... WHY? I'm so sorry!"

At 12/02/2009 8:50 PM, Blogger KO said...

Ok, I found what seem to be a more updated source and looks like California ranks 4th at $11,600 per person. (5th with DC included) Texas is 45th at $7,900 per person.

At 12/02/2009 9:11 PM, Anonymous Anonymous said...

The California tax nuts really damaged the state budget.

Because of Prop 13, the state budget has had to assume local costs.

Today, 70% of California state expenditures are for local activities.

When you see California budget numbers per person, that is the state budget excluding local budgets. Apples to apples comparisons are difficult because California has had to assume local expenditures because of prop 13.

Stupid state. Stupid prop 13 and their tax nuts.

At 12/02/2009 9:32 PM, Blogger PeakTrader said...

Machiavelli999 said: "I completely disagree. The only reason Texas is in decent shape is because oil rebounded."

United States Energy Information Administration (EIA), April 2001:

"The United States had 21.8 billion barrels of proved oil reserves as of January 1, 2001. These reserves are concentrated overwhelmingly (over 80%) in four states -- Texas (25% including the state's reserves in the Gulf of Mexico), Alaska (24%), California (21%), and Louisiana (14% including the state's reserves in the Gulf of Mexico)."

My comment: If California didn't spend so much time attacking its oil and electricity industries, while creating a mass hysteria to produce expensive alternative energy, living standards would be higher. The San Francisco Bay area is a very expensive place to live and work. Moreover, although there's massive income redistribution in California, the gap between rich and poor is huge (in part, because the poor has no incentive for a steady job, spend their welfare checks quickly, and then panhandle the rest of the month).

At 12/02/2009 9:50 PM, Blogger KO said...

Anonymous said...
... When you see California budget numbers per person, that is the state budget excluding local budgets. Apples to apples comparisons are difficult because California has had to assume local expenditures because of prop 13.

That second post I made DOES include local. And as you can see, California got WORSE by comparison when local is included. The part that was cut off of the url was /state_spend_gdp_population.

Although searching for "per capita" on that website brings it up.

Repealing prop 13 would force some older folks out of the state and increase revenues. But we all know the politicians would just increase spending by more than that amount.

At 12/02/2009 10:37 PM, Blogger PeakTrader said...

However, the chart suggests the homebuilding boom, that ended in 2006, concealed the fundamental weakness of the California economy.

At 12/02/2009 11:07 PM, Anonymous Richard Rider said...

Often you hear folks such as "Anonymous" rail about how Prop 13 gutted state and local government revenues. You see examples of some folks having low property taxes. But you never see them present the trend in property tax REVENUES since Prop 13 passed.

With good reason. Facts destroy their assertion.

When it comes to gathering sufficient property taxes, Prop 13 is no problem at all -- except for profligate spenders.

Look at the history of my San Diego County -- a history which pretty much reflects the history of property taxes in the urban/suburban counties that hold over 90% of California's population.

According to the SD County Tax Assessor, in 1977 -- the year BEFORE Prop 13 took effect -- our countywide property tax revenue was about $639 million. For this past 30 June concluding 2008-2009 fiscal year, our county assessor is projecting revenues of $4.656 BILLION. For every property tax dollar collected in 1977, the county today collects $7.29.

During that time frame, our county population has grown about 83%, and inflation has gone up about 260%. Hence property tax revenues today are substantially higher than the bloated PRE-Prop 13 year, even after adjusting for inflation and population growth.

At 12/02/2009 11:09 PM, Anonymous Richard Rider said...

One other point concerning Prop 13.

It turns out that, under Prop 13, property tax revenue is FAR more stable than our other forms of tax revenue. Income tax revenue is plunging, and sales tax revenue is dropping.

But property tax revenue seldom goes down AT ALL. Since Prop 13, San Diego County property tax revenue has ALWAYS gone up – every year.

Even this year. The SD County Assessor reports that total property tax revenue for this fiscal year ending June 30, 2009 is UP 0.9%. If you look at just the pure real estate property tax revenue (ignoring the “supplemental property tax” revenue which is not subject to Prop 13 limitations), real estate property tax revenue this year is up 4.1%. Not one person in a thousand knows this – the press has not (yet) covered this amazing fact.

Revenue is up because the structure or Prop 13 has the little-known added benefit of smoothing out real estate property tax revenue from year to year. Most properties this year (generally those purchased prior to 2003) had their property tax go up 2%. Add to that the resales, property improvements and new structures (which establish new tax assessment levels), and the revenue grew in spite of the downturn.

Next year, in this real estate collapse, a mild drop in the order of 2%-4% in total property tax revenue is projected by our county assessor. Given our dramatic economic decline, this is an incredibly small drop, coming in the fourth year of a real estate meltdown.

Consider what happens without Prop 13 protection: In the real estate boom years from 1998 through 2005, property taxes would have SOARED. (Even WITH the Prop 13 limitations, county property tax revenue collection during this period STILL rose 111%.) But then in the last three years, dropping property values would have caused a dramatic plummet in property tax revenues – revenues that government would be hooked on – just like we see now with our volatile income tax revenues.

At 12/03/2009 1:08 AM, Anonymous Anonymous said...

CA Treasurer Bill Lockyer (D) spells it out for Democrats in legislature.

At 12/03/2009 6:22 AM, Blogger juandos said...

"I completely disagree. The only reason Texas is in decent shape is because oil rebounded...

Hmmm, ever heard of Elk Hills and Kern county mach999?

California is taxing themselves into oblivion...

A simple comparison courtesy of the Tax Foundation shows that:



Joel Kotkin at New Geography wrote: It took some amazing incompetence to toss this best-endowed of places down into the dustbin of history...

At 12/03/2009 7:03 AM, Blogger brodero said...

The Hispanics voting bloc is just starting to emerge in Texas. It will not reach fruition until the 2016 presidential election. The Texas Republican Party has six years to answer this political force. Although Hispanics have a strong conservative thread their
economic interests are different especially with regard to the Texas Republican Party.

At 12/03/2009 10:07 AM, Anonymous Anonymous said...

Sorry, but I lived in Texas for 4 years (Dallas/Irving) and have been in California now for 9, and there's no way you could make me move back! 95 degrees for 6 months straight is not a comfortable living. You can't leave your house, office, mall, movie theatre..... nothing to do unless you're fond of the sauna. My salary then was 25% of my california income too. Houses are cheap but so are wages.

At 12/03/2009 10:55 AM, Blogger W.E. Heasley said...

Trade California and Michigan for New Zealand and a future draft pick?

At 12/03/2009 4:45 PM, Blogger PeakTrader said...

How about Obama vs. U.S. history?:

A 'Lost Decade' For U.S. Growth?
Ibd December 1, 2009

"From 2009 through 2012, we will add as much to the nation's debts as we did in the first 234 years of America's existence.

As a recent report from the nonpartisan Tax Foundation notes, just to close this year's expected deficit would require a tripling of tax rates for all taxpayers.

That's right: triple. Today, joint filers face tax rates that range from 10% to 35% of their income. To eliminate the deficit, the tax rates would have to soar to a range of 27.2% to 95.2%.

Some -- like economist Paul Krugman -- say the answer is still more stimulus spending, which would revive the economy, boost government revenues and thereby shrink the deficits. But this has been tried -- and it failed spectacularly.

At 12/04/2009 3:38 AM, Blogger PeakTrader said...

How to create a 2.5% real contraction in GDP in 2009:

Spend $787 billion on a stimulus bill that's too slow, $410 billion for an omnibus bill (or pork bill), cash-for-clunkers (destroying assets), cap and trade (raising energy costs), CAFE standards (raising costs), attempting to spend $1 trillion reforming health care (some believe the real cost is over $3 trillion), and basically throw money around at every problem, including low income children, education, wars, etc.

The best outcome will likely be a slow growth recovery, after a deep recession, while taxes eventually rise (regardless of household debt) to maintain the higher level of government spending.

At 12/04/2009 7:55 AM, Blogger juandos said...

Don Suber is reporting Obamanomics: $1 trillion in lost wages...

'The “progressive” Center for Economic and Policy Research issued a study that showed Americans will lose $1 trillion in wages through 2012.

Of course the press release said: “African Americans and Latinos will be especially hard hit, with the recession causing them wage losses of $142 billion and $138 billion, respectively.”

At 11/06/2010 1:50 PM, Blogger Carolyn said...

Benny Man may be right when he says that "Californian Hispanics, Asians and whites blend seamlessly and easily with another, in business and social circles." -- IF he is referring to people in the solid middle class to the upper classes.

There are far more ethnic divisions in lower socioeconomic areas of California. We've had some terrible experiences with hostility stirred up by "La Raza" types (some Berkeley-educated) in our rural area.

And doesn't Benny Man remember the Rodney King riots, where Korean business owners and white passers-by were targeted for arson, looting and violence? He thinks there is no tension in the poor areas of Los Angeles County where Hispanics are taking political control away from blacks? Why didn't Benny Man mention blacks in his picture of racial harmony?

I used to live in a low-income area of Orange County, where Hispanic immigrants were moving in fast. We got along fine, but it wasn't because certain politicians didn't try to create ethnic divisions. During this election cycle, Loretta Sanchez said on Spanish-language television, "The Vietnamese and the Republicans are, with an intensity, (trying) to take this seat — this seat (from which) we have done so much for our community — to take this seat and give it to this Van Tran, who is very anti-immigrant and very anti-Hispanic."

Does this sound like a "seamless blend" of ethnicities to you? Maybe Benny Mann needs to get out of his own insular business and social circles more before castigating the author for deficient knowledge about California.


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