The State Legislature’s almost quarterly drafting of a new budget for California last month contrasts sharply with its February spending plan which resulted in a $12 billion tax increase, billions in cuts, and billions in borrowing. The latest budget, which is expected to get the state through perhaps as far as November of this year, includes no tax increases, deeper cuts in spending, and more borrowing. It doesn’t present a bright future for California. Of course, we all know that the problem lies in the fact that the declining tax revenues have not been keeping pace with the growth in state spending. Certainly, we all like many of the programs the state funds, and, as voters, we have added to the programs that require state spending even when the revenues aren’t readily available. Oftentimes, we have failed to read the fine print to fully understand what is in fact on the ballot and how it may differ from the promises we are fed on TV ads and direct mailers. While transportation, education, water and other basic services are ones which we all appreciate and benefit from, many other programs have been added that are more specialized and lack steady revenue streams to continue funding them. Some are programs the Legislature has added, while others are programs that voters added. Still others, such as improved health care in state prisons, have been mandated by federal courts. The point is not to single out any one in particular for mismanaging our state’s finances, as we share some of the blame in one form or another, whether we have served in the Legislature or voted to approve billions in new bonds and minimum spending thresholds. As Californians weather the “Great Recession,” there are many opportunities to generate new revenues for the state and improve on unemployment figures expected to reach 13 percent in L.A. County and 12 percent statewide without making more cuts or raising taxes. A decline Lawmakers can start with addressing California’s continued decline in its competitiveness with other states, particularly in the West. Taxes are considerably higher, and regulations more onerous, making it increasingly difficult for employers to create jobs that provide health benefits, pensions, and wages high enough to support a middle class family. Speaking of our middle class, or what is left of it, let’s prioritize keeping two industries that have been steadily moving jobs out of California in recent years, manufacturing and entertainment. When I was a kid, most of my neighbors’ parents worked in fields associated with two industries, aerospace and filmmaking. I didn’t know anyone who was in upper management, but I knew a lot of engineers who worked at Hughes Aircraft and TRW in the South Bay. The A-list talent in Hollywood sent their kids to private schools, and I hardly knew any of them, but I knew a lot of kids whose parents worked on the TV shows starring celebrities and earned enough to live comfortably. Today, those kids are grown up and have kids of their own. Many of them couldn’t afford to live in Los Angeles and have moved out of state; others work for companies that used to employ thousands of people here. Still others have become white-collar workers in real estate, banking and the law as well as government, which in many regions, is the largest employer. Local factories that used to produce cars and airplane parts handmade by union members have been replaced by retail outlets that pay their employees far less. Too many of our kids today can look forward to a future of selling jeans and video games for a living, although rarely do such jobs pay enough to support a family. How do we get old entertainment and manufacturing jobs back? Unfortunately, those jobs are probably lost forever and are now part of the economic strengths of other states that treat job creators as partners, rather than annoying neighbors. Nonetheless, there are ways to keep what is left of those jobs, and there are new technologies being developed locally at institutions such as CalTech, USC, and UCLA. Growing industries Therefore, policymakers should stop talking about it and start enacting new policies that grow new industries, such as bio-med and green tech. Mayors and state officials should be on the phone with CEOs of these companies and ask what California can do to attract them here. The answers will probably lie in some tax incentives and regulation waivers to improve productivity. Study after study demonstrates how other states outperform California in job growth and economic activity. How do they do it? Usually with lower taxes and fewer lawsuits against employers. Those that traditionally oppose tax incentives often do so out of fear that they result in lower tax revenues for their favorite state programs. What they don’t understand is that if employers are not currently in California, then we’re not losing any revenues through incentives instead we’re gaining new revenues from new employers who will move here if the business climate is improved. If done correctly, tax incentives will attract new employers who will generate new tax revenues for state and local governments. Enough rhetoric let’s see some action to get us out of this “Great Recession.” And the sooner the better. Brendan Huffman is the owner of Huffman Public Affairs, LLC in Studio City and specializes in strategic communications, public policy development, and issue advocacy.
