Judging by 15 policy measures, all of which are influenced by the state legislature, ALEC analysts determined that California ranked 46th in terms of its economic outlook.

The 15 measures include: top marginal personal income tax rate (13.30 percent, ranks 50), top marginal corporate tax rate (8.84 percent, ranks 40), sales tax burden ($24.24 per $1,000 of personal income, ranks 30).

Other measures, which are considered negative by the report but others might argue are good things, are the state’s relatively high minimum wage of $10 per hour (the legislature just approved a gradual increase to $15 per hour) and California not being a right-to-work state.

“This is certainly some pretty troubling findings for most hard-working California taxpayers,” said Jonathan Williams, vice president for the Center for State Fiscal Reform at the American Legislative Exchange Council.

“We chose those 15 (measures) because they’re things that legislators control and are also things that we know, based on academic research, things that lead to greater amounts of economic growth if you get them right,” Williams continued.

It wasn’t all negative, though. The state ranked high — 6th overall — for having one of the lowest rates of public employees as part of the workforce (nearly 452 public employees per 10,000 of the population).

Since 2009, California’s economic outlook peaked at 38. In 2016, the state ranks 46th, down two spots from last year. The only states with lower rankings are: Connecticut, New Jersey, Vermont and New York. Utah has topped the list since 2009.

Economic Performance

While the report casts a grim projection, actual performance has been much higher. California ranks 31 in economic performance, which measures gross domestic product, absolute domestic migration and non-farm payroll employment.

Between 2004 and 2014, California has seen GDP rise 40.3 percent (cumulatively), ranking 22. GDP is the monetary value of all the finished goods and services produced in the state over a period of time.

Non-farm payroll employment has cumulatively grown 6.8 percent over the same 10-year period, ranking 19th.

Absolute domestic migration

Williams said economic performance had a high domestic migration rate not pulled it down. California has seen a cumulative loss of more than 1.2 million people between 2005 and 2014, ranking 49th. This measures excludes births, deaths and foreign immigration.

Texas has seen a cumulative gain of more than 1.3 million Americans over that time, while Florida has overall taken in around 835,000 new, American residents. They rank first and second, respectively.

“Americans continue to vote with their feet in favor of states with better economic opportunity,” Williams said. “It is clear California has been on the losing end of this competition for jobs and human capital.”

By John Seiler

Last year, the Obama-connected left-wing group Media Matters engaged in a vendetta against the American Legislative Exchange Council. ALEC is a venerable, old, bipartisan group that helps legislators craft bills. Media Matters was upset that ALEC had produced model legislation on voter IDs, something routine in any other democracy in the world, but which the Left feared would reduce the number of illegitimate votes for the president.

The vendetta sparked many former top corporate donors to flee ALEC, about which Media Matters gloated.

Now Media Matters itself is caught up in the Obamagate scandals engulfing the administration. Breitbart reports:

“The Department of Justice (DOJ) Inspector General published a new report Monday that confirms former U.S. Attorney for Arizona Dennis Burke leaked a document intended to smear Operation Fast and Furious scandal whistleblower John Dodson.

“The DOJ IG said it found ‘Burke’s conduct in disclosing the Dodson memorandum to be inappropriate for a Department employee and wholly unbefitting a U.S. Attorney’…..

“In addition to Burke’s involvement in leaking the document, emails the IG uncovered show senior officials at the Department of Justice discussed smearing Dodson.

“One of those was Tracy Schmaler, the Director of the Department’s Office of Public Affairs, who resigned her position at the DOJ after emails uncovered through a Freedom of Information Act (FOIA) request showed that she worked with leftwing advocacy group Media Matters for America to smear whistleblowers and members of Congress and the media who sought to investigate DOJ scandals under Attorney General Eric Holder.”

Ironically, Media Matters boss David Brock got into trouble two decades ago for his scandalous reports on the Clintons. He then ditched his conservative patrons for liberal ones and founded Media Matters.

The Nixonian stench spreading from the White House now has engulfed Media Matters.

Let’s hope journalists (real ones), federal investigators and congressional committees sweep fresh breezes through this whole scandal.

By Katy Grimes

SACRAMENTO — California’s economy isn’t dead — yet.

With a few smart, pro-growth policy changes, California could get back in the game and be the economic leader it once was, Jonathan Williams told me in a visit to our state capitol to analyze the Golden State. He is one of the authors of the 2012 report “Rich States, Poor States” published by the American Legislative Exchange Council. It compares the 50 states on 15 economic variables, such as tax rates and regulations.

But Williams warned that, if California’s leaders do not make some immediate, dramatic structural moves, the dismal economic forecast will overshadow the stunning weather forecast, and could eventually turn California into the least desirable state in the union.

The report’s co-authors are Stephen Moore of the Wall Street Journal and Arthur Laffer, who helped design Calfiornia’s Proposition 13 and Ronald Reagan’s tax cuts. Laffer also heads the new Laffer Center at the Pacific Research Institute, CalWatchdog.com’s parent think tank, and this year authored “Eureka! How to Fix California.”

“Be more like Texas and less like California”

“Texas versus California has become the most stark example,” Williams continued. “The left wing tries to impune Texas, but the job creation, low unemployment, income growth and GDP growth is undeniable.”

So what should California do?

If Brown merely adopted the tax reform policies of Kansas, California would see immediate improvement in the business sector, job growth and unemployment rate. Williams said that this year Kansas flattened its income tax, dropped three tax brackets to two, lowered the top income tax rate from 6.45 percent to 4.9 percent and eliminated the personal income tax for small business owners.

“This pro-growth policy would put California back in play and jump start the economy,” Williams said. “It would tell the entire country that the private sector still matters — that competition matters.” Unlike the federal government, he added, “You can’t print money, so the state must do pro-growth at some point.”

His words confirmed what Intel CEO Paul Otellini recently told the Wall Street Journal. The microchip giant hasn’t added a job in California more than 10 years and closed its last factory in the state around six years ago. “Oh God. I was born and raised here. I’m fifth or sixth generation. It’s one of the nicest pieces of real estate on the planet, and we’re so close to screwing it up, it’s pathetic,” Otellini said. “I’d like to be bullish, but I worry that we have to hit the abyss before we can fix things, and I worry that the abyss will be more like Greece.”

Good weather is not enough

“Over the last 20 years, 3.6 million more Americans have moved out of California than have moved in, and 130,000 more Americans have moved from Hawaii than to it,” “Rich States, Poor States” reported.

Yet every year California legislators brag openly about how the good weather trumps economic policy and low taxes.

“This is too stark to deny, particularly as it relates to regulatory policy in states,” Williams said. “And, we will never know how many people and businesses decided not to move to California.”

Beautiful weather may attract tourists, but if the economic policy isn’t sound, even the beautiful states can’t keep or attract residents. “California charges a premium for nice weather,” Williams said.

Residents of California’s coastal communities may turn their noses up at North and South Dakota, and mock anyone wanting to move there. But Williams said that, with the strong economic policies, the Dakotas have a 2.9 percent unemployment rate. This has led to a new house building market that can’t keep up with the rising demand. “Capital is blind to weather. The numbers don’t lie,” Williams added.

Alaska has one of the harshest climates in the entire Western Hemisphere, but it’s performing better economically than California.

The authors of “Rich States, Poor States” found that, over the last 10 years, more than 4.2 million people have moved out of the highest income tax states and states with the highest local tax burdens.

“A state may, if its citizens choose, serve as a laboratory; and try novel social and economic experiments without risk to the rest of the country,” said U.S. Supreme Court Justice Louis D. Brandeis.

California’s laboratory eventually will have to switch from experiments that fail to those known to succeed.

By John Seiler

Just ahead of its “fall” convention in beautiful downtown Burbank on Aug. 10-12, the CA GOP is in a tiff with the New York Times over the status of the party in the Pyrite State. I have little faith in anything the Times writes. But the author of the article, Adam Nagourney, actually is a decent reporter. He wrote:

“LOS ANGELES — This would seem a moment of great opportunity for California Republicans. The state has become a national symbol of fiscal turmoil and dysfunction, the Legislature is nearly as unpopular as Congress and Democrats control every branch of government.

“But instead, the state party — once a symbol of Republican hope and geographical reach and which gave the nation Ronald Reagan (and Richard M. Nixon) — is caught in a cycle of relentless decline, and appears in danger of shrinking to the rank of a minor party.”

That’s pretty accurate. But he also wrote:

“The slide began in 1994, when Republicans rallied around a voter initiative, Proposition 187, that would have made it illegal for the government to provide services for undocumented aliens. That campaign created a political rupture with Hispanics at the very moment when their numbers were exploding.”

That’s not accurate. In fact, Hispanics have voted 70 percent Democratic for decades. They did so before Prop. 187, and have done so since then. They do so in other states that never heard of 187. That’s just a fact of life that won’t change. Moreover, on the “social issues” — such as abortion and same-sex “marriage,” on which the GOP is more in tune with Hispanics — the party’s moderate bosses refuse to engage. So, the party is toast with salsa among Hispanics.

CA GOP Chairman Tom Del Beccaro responded to the Times article:

“The New York Times piece is grossly inaccurate. It reads like someone who wrote it by doing minimal surface research and calling the usual suspects/detractors. At the start of this year, we were told that Republicans would lose seats in the Congress, Senate and Assembly – that Armageddon was around the corner. However, independent analysts without an ax to grind now see the Republicans holding serve in Congress, possibly picking up seats in Congress and holding on to their Senate seats. This November, Prop. 32 could well pass bring reforms to our system including barring direct contributions from corporations and unions and paycheck protection. When that passes, California will have a more level playing field, Republicans will have a new day and be rather competitive statewide.”

Prop. 32, which I wrote about yesterday, is a good idea. But it probably won’t pass. The unions rigged the election by getting the Legislature to push the initiative from the June election to November, when more far-left Democrats will be voting. Even if it does pass, the CA GOP still won’t be helped much, if at all. Moderate Democrats would be helped most by being less in thrall to the powerful unions.

Bad candidates

Aside from demographics, the CA GOP’s real problem is that, at the federal and state levels, it has coughed up horrible candidates. Since 1988, the national party has won the presidential popular vote once, in 2004, when George W. Bush still could stoke fears just three years after 9/11. Bush became president in 2000, of course, because of the electoral college and that chad problem in Florida; but he still lost the popular vote.

Look at the party’s nominees. In 1992, George H.W. Bush lost because he broke his “Read my lips!!! No new taxes!!!” pledge of 1988. In Parade Magazine just this month, the old lying tax increaser still was defending his actions by attacking Grover Norquist, the one who holds mendacious pols to their word when they pledge not to increase taxes. Bush said:

“The rigidity of those pledges is something I don’t like. The circumstances change and you can’t be wedded to some formula by Grover Norquist. It’s—who the hell is Grover Norquist, anyway?”

Reagan showed Bush I how to win, but he never learned, any more than did the others I’ll bring up.

Dole and Bush II

In 1996, it was Bob “Tax Collector for the Welfare State” Dole, who in the U.S. Senate pushed through $900 billion in tax increases.

Then we got George W. Bush in 2000 and 2004, who has become such an embarrassment to the party that he’s ashamed to appear at their convention in Tampa next month. He also didn’t appear at the 2008 convention, although he did beam himself in with a telecast. Compare that to how Ronald Reagan was greeted at the 1988 and 1992 GOP conventions — as a conquering hero. Reagan didn’t appear at the 1996 and 2000 conventions only because he was suffering from alzheimer’s.

In 2008, the party nominated nutty Sen. John McCain, who panicked during the September financial crisis that year and suspended his campaign for a week.

Now it’s Mitt Romney, a liberal son of a liberal governor, by name George Romney of Michigan. According to the Intrade betting service, which has a high prediction record, just 40.4 percent of bets are on Romney to win. That’s despite an economy nosediving back into recession. The GOP sure can pick ’em.

Dismal California candidates

Then there are the California gubernatorial candidates. In 1990, Pete Wilson ran as a small-government candidate. But once in office, he raised taxes $7 billion in 1991 to deal with a budget shortfall. I’ve talked to staff members since then, and they say he regrets it.

In 1994, he won partly because of Prop. 187, which I discussed earlier. But another big factor was that his Democratic opponent, Kathleen Brown, instead of pouncing on the tax-increase mistake, called for even higher taxes. That also was the year of the Republican congressional victory nationwide and the revolt against Clinton’s tax increases. (Clinton learned his lesson, and promptly cut capital gains taxes, sparking the boom of the late 1990s and his own 1996 re-election.)

In 1998, the GOP nominated Dan Lungren, who ran one of the worst campaigns I’ve ever seen. He tried to campaign as a “law and order” candidate, not realizing that Gray Davis, when he had been the Democrats’ state honcho earlier in the decade, had lured the cop unions to the Democrats with pledges of pension spiking. Davis won easily, then spiked the cops’ pensions, a major factor in the state’s current fiscal demise.

In 1992, Bill Simon actually was a decent candidate for governor. But the Davis machine chewed him up. In 1993, of course, Davis was recalled.

In the replacement election, the CA GOP bigshots backed Arnold Schwarzenegger instead of then-state Sen. Tom McClintock, who was the real conservative deal. “Arnold can win,” Republicans told me. I responded, “But he sponsored a spending initiative last year. And even he quips that he sleeps with a Kennedy,” meaning his wife, Democratic liberal Maria Shriver-Kennedy. That was before we knew that he also was sleeping with the family maid.

McClintock

This was part of the state party bosses’ continued shunning of McClintock, now a congressman in Washington, D.C., over three decades. Had the party bigshots given him even nominal support in his campaigns for state controller and lieutenant governor — and had they supported him, not Arnold, in 2003 — he would have been elected governor in the 2002-03 period, have solved the state’s budget problem by bringing back the Gann Limit, and so have burnished the CA GOP’s bona fides. They didn’t.

Arnold was so-so for his first two years in office, seemingly improving the tarnished GOP “brand” in the state. Then he lost his 2005 reform plank and turned hard Left, especially with AB 32, the jobs-slaughtering Global Warming Solutions Act of 2006. Yet the CA GOP that year still backed him heartily.

He then increased taxes a record $13 billion in 2009. The economy tanked, with California unemployment three points higher than the national rate. He left office in complete disgrace, taking the GOP down with him.

In 2008, the CA GOP nominated ex-Ebay CEO Meg Whitman and her billions. She wasted $180 million of her fortune on a ridiculous campaign, losing big time to a reanimated septuagenarian, Jerry Brown. Whitman now heads Hewlett-Packard, where she has caved in to leftist pressure and ended funding to the great nonpartisan research group, the American Legislative Exchange Council.

After so many bad candidates have been put before the voters at the national and state levels the pas 30 years, the wonder is that the GOP has survived at all. The secret to its success is that the Democrats have been almost as bad, descending from a party of working-class types into a party dominated by government union hacks and lifestyle leftists.

Democrats and Republicans are like two drunks getting into a bar fight during an electricity blackout. They draw the rest of us into it, blindly cracking pool cues over our heads.

And there’s no exit.

By JOHN SEILER

California’s stagnating economy suffered more bad news by ranking 47th of the 50 states for economic outlook. The ranking comes from the new, fourth edition of “Rich States, Poor States: The ALEC-Laffer State Economic Competitiveness Index.” It combines 15 economic rankings, such as top marginal personal income tax rate and average workers’ compensation costs.

I received an advanced copy of the rankings, and will discuss them here. It will be released tomorrow, June 22, by the American Legislative Exchange Council, a nonpartisan group of state legislators. I’ll put up a link to it then. (Update: Here’s the link.)

In addition to ranking 47th in economic outlook, California ranked an almost-as-dismal 46th in economic performance for the previous decade, 2000-2009. It really was a “lost decade” for the state’s economy under the fumbling governorships of the recalled Gray Davis and his satyric replacement, Arnold Schwarzenegger.

The only states ranking worse on the economic outlook were New York, rock-bottom 50th, followed by Vermont and Maine. Along with California, all are high-tax, high-regulation, jobs-killing states. The three other states have bad weather.

The rankings put California’s income tax at fourth worst, assuming the top rate remains at 10.3 percent and Gov. Jerry Brown’s call for increasing that and other taxes are not heeded.

But California is rock-bottom worst in income tax progressivity. Our second highest rate, 9.3 percent, kicks in at around $50,000 of income, meaning the middle-class really gets gouged. It’s a high price to pay for the sunshine.

Hope for California

I asked if the state tax hikes are likely to go through. “I don’t think so,” the rankings’ co-author Arthur Laffer replied. “The Legislature didn’t put it on the ballot. And Jerry Brown just vetoed the unbalanced budget. There’s a lot of hope for the state.”

Laffer heads Laffer Associates in Tennessee, which he moved there a few years ago from San Diego to take advantage of the Volunteer State’s zero percent state income tax rate. Laffer helped craft President Reagan’s federal tax cuts in 1981 and 1986, which formed the foundation of 30 years of national economic growth.

And last week it was announced that Laffer would be working on the new California Recovery Project of the Pacific Research Institute, CalWatchDog.com’s parent think tank. Laffer already has produced an outline for a book he’s working on about how to get California’s economy moving again. The outline is a good overview of California’s political and economic past, and potential future recovery.

He also told me that he’s optimistic about Jerry Brown’s governorship, despite the governor’s plea for tax increases. “I’ve been associated with Jerry Brown for years.” He said that, during Brown’s first governorship in the 1970s and early 1980s, he worked with Brown to implement the Proposition 13 tax limitation, get voter approval for the Gann Limit on spending and repeal the state inheritance tax (the “death tax”).

Always enthusiastic, Laffer said, “If there’s one person who can transform California, it’s Jerry Brown. When he ran for president in 1992, he came out for a flat tax,” which was designed by Laffer. “It’s very exciting.”

The ongoing budget crisis, Laffer said, is essential to reach real reform. “You need sturm und drang to get revolutionary change,” he said. “California is a great place to live — except for the policies.”

Golden State Positives

On the positive side, the ALEC-Laffer rankings found some luster left on the Golden State. In addition to the great weather and the lack of a death tax, California ranks fourth best on tax limitations, thanks to Prop. 13 and other caps on taxing.

The state ranks seventh-best for public employees being 5 percent of the population. And…that’s about it on the positive side.

Other negatives include: 46th ranking for recently legislated tax changes (Schwarzenegger’s 2009 tax increases, which should expire on July 1), debt service as a share of tax revenue (at 8.5 percent, ranks 31st), 29th for sales tax burden and 46th for “tort litigation treatment and judicial impartiality” — even our courts are a mess.

Despite Prop. 13’s limits on property tax increases, which tax-increasers always are trying to repeal, California ranks only 31st on property tax burden. The problem there is that real estate here costs so much, even a low percentage tax brings in high revenues.

“Taxes matter a whole lot on economic growth,” co-author Jonathan Williams explained; he’s the director of ALEC’s Tax and Fiscal Policy Task Force. “The 2010 U.S. Census showed that people vote against income taxes and taxes on capital by leaving high-tax states.”

He pointed out how Texas and other low-tax states have benefited in the past decade by seeing an influx of businesses, jobs and workers. While high-tax states such as New York have seen an exodus.

California’s population grew the past decade — but, for the first time in its history, only at the national average. And its growth entirely was due to immigration from foreign countries.

The study concludes:

Over the past decade, the 10 biggest population gainers had an average state and local tax burden of $3,098. The average for the 10 states with the lowest population gain was $3,735—more than 20 percent greater. The average top personal income tax rate in the 10 fastest growing states was just more than 4 percent versus more than 7 percent in the 10 slowest growing states. Clearly, states with the steepest tax rates, poor labor policy, excessive levels of government spending and hiring, overregulation of business, and tort laws that encourage frivolous lawsuits end up chasing jobs, businesses, and families to other states. In contrast, low tax states were magnets for new residents.

In the years 2000-09, California also saw a net of 1.5 million residents leave the state for greener pastures in other states. Only New York saw more residents leave. These commonly were people with skills to earn middle-class incomes — and pay middle-class taxes.

Texas, Here They Come

During the economic recovery of the past two years, four out of 10 new jobs were created in just one state, Texas, co-author Stephen Moore pointed out; he’s a member of the Wall Street Journal editorial board. Yet Texas has just 8 percent of the U.S. population — and bad weather. So, it’s creating jobs at a rate five times the national average.

The major reasons, Moore explained, are that Texas has no state income tax and is a “right to work” state — meaning workers aren’t forced to join unions.

Pension Tsunami

The rankings also warned that, as bad as current state budget deficits are,

these budget gaps are overshadowed in size and scope by unfunded liabilities in state pension and health care systems for public employees, which are trillions of dollars in the red. These are unsustainable cost drivers that threaten the financial solvency of the states. Without fundamental pension reform, expect the news stories discussing the possibility of state bankruptcy to continue.

The ALEC survey cited three other studies on the scope of state pension liabilities. For California, a PEW Center for the States study found the liability at “only” $59 billion. But an American Enterprise Institute study calculated it to be $398 billion. And a Novy-Marx and Raugh study calculated it at $370 billion.

The latter two numbers are similar to the more than $500 billion found in a Stanford University study last year. The ALEC-Laffer survey concluded that the PEW numbers were underestimating the true magnitude of state pension liabilities, and that the higher numbers are more accurate.

However you look at it, California’s  unfunded pension liabilities are immense.

On a positive note, the ALEC-Laffer survey found that pension reform is advancing. In the lead is Utah, which also topped the survey as the state with the best economic outlook. It quoted state Senator Dan Liljenquist of Utah, an ALEC member, who testified before the U.S. Congress:

Utah closed its defined-benefit pension plans to new enrollees, creating a new retirement system for new employees hired after July 1, 2011. Under Utah’s new retirement system, public employees will receive a defined employer contribution towards retirement. New public employees will be able to choose between (1) a 401(k)style program, or (2) a hybrid pension program (where they may pool market risk with other employees). Regardless of the program employees choose, Utah will only contribute at a set amount towards retirement. Utah’s recent pension reforms will, over time, reduce and eliminate Utah’s pension related bankruptcy risk. This is a big win for Utah taxpayers.

Reforms Needed

Ultimately, California and other states will need to adopt Utah-style pension reforms to avoid pension payments gobbling up 100 percent of a state or local government’s budget.

The ALEC-Laffer rankings also serve as a blueprint for reforms in high-tax, high-regulations states such as California. The only way the state can back on track to economic growth is to reduce the immense burden government places on taxpayers.