Next week, California will take the first step in choosing its next governor. Lots of fancy promises have been made – our next governor is going to expand all kinds of popular programs which will make California greener, better educated and more connected.
I’m not against any of those goals, laudable as they are. I don’t believe that any Californian opposes those aspirations. But I am concerned with what no candidate wants to discuss: how we’re going to pay for it. And I don’t just mean paying with General Fund revenue: I mean our businesses paying for it with increased regulation, our residents paying for it with higher housing costs and all of us paying indirectly through squeezed services when high-income residents leave the state as federal tax reform bites.
The only important question for California’s next governor should be what they will do to drive economic growth. Without continued economic growth, California’s next governor simply won’t be able to afford the programs that they, as candidates, have promised.
As the housing crisis continues to hit every family in California, people are leaving the state at an increasing rate. Domestic migration is accelerating, especially younger, working-age adults leaving California in search of a more affordable cost of living. It comes as no surprise that the Center for Economic Research and Forecasting at California Lutheran University projects that domestic migration will continue to accelerate.
The San Fernando Valley is traditionally a more affordable part of Los Angeles for the middle class to raise families. But CERF has also demonstrated that compared to the average income in the Valley, housing here is now even less affordable than in other parts of Los Angeles and California. The crisis is hitting Valley families the hardest, and it’s hurting us all.
We can’t take California’s continued economic strength for granted. While California’s GDP growth has consistently remained above the national level for the last few years, that trend looks to be slowing. CERF has also projected that by early 2019, this difference in GDP growth, the “growth premium,” could be eliminated.
No one fully understands what drives our economy: economics is a mysterious dark art that I will leave to others. But in the San Fernando Valley, I know that conditions created by our elected leaders have created a more difficult environment for business. California businesses are taxed at some of the highest rates and face the most stringent regulatory framework. I’ve personally spoken to many business leaders who finally face yet one more regulation, fee or tax that makes them reconsider growing their business in California.
We all know some companies have made the decision to get out of Dodge. JetSuite is moving to Dallas; Carl’s Jr., to Nashville. Jacobs Engineering, Nestle, OPI – more of California’s recent casualties. Each of those businesses represents jobs that are lost, and San Fernando Valley families that are suffering because it simply didn’t make sense for that business to stay in our state.
So when you mark your ballot on June 5 for governor, consider who will support economic growth in California. Because without supporting businesses that grow our economy, providing jobs and growing our tax base, every other promise they make is just words.
Stuart Waldman is president of the Valley Industry and Commerce Association (VICA), a business advocacy organization based in Van Nuys that represents employers in the San Fernando Valley at the local, state and federal levels of government.