Is state economy beyond point of no return?

Jan. 5, 2013

By Chris Reed

In September 2008, in his last major speech to the California Legislature, soon-to-be congressman Tom McClintock said the state government had turned the corner, and not in a good way.

“I believe we have now also passed the point where conventional budget reductions can restore our state’s finances. I believe we have now reached the terminal stage of a bureaucratic state where our bureaucracies have become so large and so tangled that they can no longer perform basic functions.”

Has the state’s economy also reached the “terminal stage” because of excessive taxes and regulations? Writing at NewGeography.com, Robert J. Cristiano, a California businessman and academic who has moved to Texas for tax reasons, believes that it has:

“The number 1 topic of conversation amongst the despised 1% in California today is when you are leaving California or whether you can leave. Property owners who cannot move their apartment building or office complexes can move their homes and change their residency. On a flight from Austin, Texas to Orange County last week, I sat next to the owner of a substantial manufacturing business whose plant is in the inland southern California community of Ontario. He lives in Austin, flies in on Monday and home on Thursday. He spends less than 180 days a year in California. His savings in state income taxes more than pays for his airfare, hotel and rental car expenses. His home and gas and energy all cost less in Texas. More significantly, he will not expand his plant in California and intends to move his plant and people to Texas over the next five years. …

“So many of the 1% are quietly leaving. The exodus has already begun. Spectrum Location Solutions reported that 254 companies left California in 2011. Despite claims of an upturn, a press release by the State Controller’s office last week revealed tax revenues from both personal income taxes and corporate taxes fell during the month of this November. Revenue from personal income dropped 19 percent below projections while corporate tax revenue was down a whopping 213.4 percent. Such declines will continue unabated for years to come as the California brain drain proceeds.

“When a government becomes a one-party state, nothing can stop the utopians and zealots of either party. In California, there’s no brake on progressives imposing its vision of Blue Utopia on its people. California may have clean water, clean air and green energy but at the expense of its people, prosperity and fiscal health.”

Read Cristiano’s entire lament about what California has become here.