But there are a few problems with this narrative in the Golden State. For starters, the high cost of housing is at least as responsible as stagnant wages for California having the nation’s highest poverty rate. The federal minimum wage could double from the present $7.25, and poverty would still be sky-high here so long as mediocre one-bedroom apartments rent for $1,200 a month or more in urban areas.

What would bring down the cost of housing? Adding more housing stock by limiting regulations blocking new construction and incentivizing developers to build mixes of middle-income and lower-income housing.

Will CA Dems ever do that? Of course not. Growth is evil, yunno. Even if opposing it hurts poor people. Gaia must be honored.

The best way to create middle-class jobs

But where the Democrats’ posturing on income inequality is most unhelpful is with public education. If we wanted to create middle-class opportunities galore for kids in poor communities, we would mandate that they take computer science in high school. I wrote about this angle in March:

Even if minimum-wage hikes don’t kill jobs, the idea that this policy is a promising solution to income inequality makes little sense. In the big picture, what we need are many more people with in-demand job skills that lead to middle-income careers. And what we badly need from our elected leaders is an acknowledgment that California’s approach isn’t working in creating these job skills.

Income inequality isn’t just growing in the U.S. It’s growing in all advanced nations as technological advances wipe out middle-class jobs by the millions. It’s growing everywhere as the job marketplace increasingly values — and strongly rewards — a narrower range of skills than it did previously.

The best way to minimize the disruption this inexorable change creates is by maximizing the number of people with job skills not diminished by “creative destruction.” For starters, we need a focus on computer science and technological expertise in middle school and high school — not curriculums based on the educational values of the 1950s. We also need to make it much easier for displaced workers of any age to go back to the classroom to get practical job training.

Pursuing this ambitious agenda would be far more daunting than raising the minimum wage. But it has promise to significantly reduce income inequality — not nibble at the margins.

Will Biden make this point? Or just posture with Occupy-style rhetoric about the 1 percent?

You know the answer. President Obama may have a good record of calling for incompetent teachers to get the boot, but he has had little to say about the urgent need to revamp high-school graduation requirements for the 21st century.

Why? It’s tough not to think that it’s because it would cost 10 percent or more of high-school teachers their jobs. Never forget that the main opposition in New York state in the late 1990s to ending or scaling back failed bilingual education policies came from teacher union leaders who were upset it would mean pink slips for many “Spanish immersion” teachers.

Get ready for traffic hell, Los Angeles

Meanwhile, Angelenos once again will face a traffic nightmare today because of Biden’s visit and the Obama administration’s latest Socal money-grubbing. Joe Mathews had an enjoyably tart take on this last week:

Bad news: President Obama is coming to California again.

Mr. President, I realize such a statement may seem jarring. After all, our state voted for you twice. When you were first running for president, Maria Shriver said, “If Barack Obama were a state, he’d be California.” But these days, I bet I could rally a majority of Californians behind a proposition asking that you never visit again. And I wouldn’t even have to talk about your record-low job approval ratings among Californians.

No, our fundamental problem with you is more personal than political. You, sir, have developed a reputation as a very poor houseguest.

You often show up with little warning about your itinerary or schedule. (Your excuse? That the Secret Service can’t disclose your movements for security reasons.) Your massive security cordon routinely causes hours-long traffic jams in a state that already has too many of them. I was once two hours late picking up a child from day care because you just had to stop for takeout in Los Angeles during the evening rush hour.

Mathews makes this case that this might be more palatable if the president actually seemed familiar with and eager to address California issues. But Obama doesn’t and isn’t.

Your trips here have come to feel like those political fundraising emails that keep arriving this time of year. You’re spamming us, Mr. President. If you can’t do better by California on these trips, then maybe you should stop visiting.

This isn’t the first time Joe Mathews has griped about such inconveniences. Here he also takes a shot at George Clooney. Now he’s really getting too big for his britches.

Gonzalez wrote about his findings in the Dallas Morning News earlier this month. He makes specific points about the cultural differences between Hispanics in the two mega-states that don’t get nearly enough attention. Here’s part of his essay:

Hispanics enjoy much better statistics across the board in the Lone Star State than in the Golden one.

The relative advantage that Hispanic Texans have in key cultural indicators is strongly related to the state’s dynamic economic growth and small government. But because Texas’ smaller government has allowed civil society to grow organically, there is a strong cultural background that must be considered.

In fact, when factoring in both economic and cultural factors, one can say that California and Texas stand for two completely different faces of the Hispanic experience in America or, more to the point, the Mexican-American experience. The question is whether the two states will continue to lead two different Mexican-American subcultures in the future, or whether one approach will come to be the dominant one nationwide. …

In 2013, Texas’ Hispanic population boasted an unemployment rate of 6.9 percent. That was more than 2 percentage points lower than the national Hispanic average (9.1 percent). More important, it was better than the overall national average of 7.4 percent and only six-tenths of a percent higher than Texas’ overall rate (6.3 percent).

Meanwhile, California’s Hispanics lagged across the aboard. Their unemployment rate of 10.2 percent underperformed all the national averages and was 1.3 percentage points higher than California’s overall unemployment rate of 8.9 percent.

One thing that may account for the lower Hispanic unemployment in Texas is that Hispanics in the Lone Star State are much more entrepreneurial than those in the Golden State. Texas’ rate of Hispanic-owned businesses as a percentage of the Hispanic population is 57 percent, whereas California’s is 45 percent.

Social stats somewhat better to much better in Texas

More from Gonzalez:

Texas’ Hispanics also score favorably on matters to do with the family. This is important, as two-parent households have proved to be the best anti-poverty program ever invented, and illegitimacy stands upstream from many social problems.

And in this key cultural indicator, Texas’ Hispanics also outperform California’s. According to the Census Bureau, the former are less likely to have had a child out of wedlock than the latter, 39.8 percent to 42.6 percent.

The following stats, again from the Census Bureau, are also noteworthy. Hispanics in Texas are 10 percent more likely to be married than those in California (47 percent to 43 percent), and close to 20 percent less likely never to have been married (36.9 percent to 43.5 percent), one-third more likely to have served in the military (4.1 percent to 2.8 percent), and one-third as likely to have received Supplemental Security Income public assistance (2.4 percent to 6.2 percent). …

In terms of religiosity, the General Social Survey does not break down information at the state level but shows that Hispanics in Texas are far more likely to attend church services regularly. One is tempted to assume that California Hispanics are less religious than the national average for Hispanics.

This raises lots of interesting questions, none readily answered.

Are Texas Hispanics more religious and more entrepreneurial because they live in a state that’s far more socially and politically conservative?

Conversely, are California Latinos less religious and more likely to rely on the government because they live in a state that’s extremely secular and in a state where the high cost of housing puts families whose income would be lower-middle-class in most states squarely in poverty?

I’d like to see more analysis of these questions. But whatever the answer is, that’s not the key takeaway from Gonzalez’s research. The headline is that it’s not just student test scores in which Latinos in Texas do better than Latinos in California. It is on many metrics of basic achievement and success — at least if you’re among those who think dependency on government is a bad thing.

Texas suburb is more like Irvine than any other city in CA

Gonzalez’s work helps with key context for the California vs. Texas debate. Another piece that does so is Joe Mathews’ exceptional column from this spring about the Texas suburb that might as well be a clone of Irvine. It breaks with what I see as a stale debate:

It’s insanely annoying how so many California defenders simply ignore basic facts like Texas is creating more middle-class jobs or that Texas’ Latino and black students do better than California’s in K-12 test scores such as the NAEP.

But it’s also pretty telling that so many Californians who tout Texas don’t acknowledge that for lots and lots of people, California’s lifestyle is so vastly more appealing that they’d rather live in a condo here than a 2,800-foot ranch home there.

Read more about the picture painted by Joe’s column here.

Joe Mathews presents

Yes, California has an above-average unemployment rate and other economic problems, and many of our people and companies are relocating or expanding to states like Texas that offer cheaper living and generous economic incentives. But there’s another way to look at these departures of Californians and California companies: as a colonization of Texas and the rest of the country. 

This colonization is not a sign of decline but of our success. Texas and other states are trying to steal our culture, our companies, and our jobs because we have so many things worth stealing.

If that’s the case, then Michigan is an even bigger “success.” When I got out of the U.S. Army in Feb. 1982, I returned to my native Great Lakes State. Unemployment was a Great Depression-level 16 percent. People were streaming out for Texas or wherever, bringing with them our Michigan charm and tolerance for cold weather.

I drove my father’s car around the Detroit area for weeks looking for work. This was a place where, just nine years before, anyone with a heartbeat could get a great factory job paying the equivalent in 2014 dollars of $120,000 a year. Nothing.

Eventually I ended up back in journalism — but in Washington, D.C. Then I came to California in 1987 during the boom times under Republican President Reagan, who cut national taxes; and Republican Gov. George Deukmejian, who in 1987 actually refunded to taxpayers the tax money the state didn’t need.

By contrast, Michigan’s population actually declined in the last decade. Detroit just went bankrupt, and in 60 years has lost 2/3 of its 2 million population.

If that “success” pattern holds for California, its population will drop from 38 million today to 12.7 million in 2074. That will please anti-people environmentalists and the California Coastal Commission, as the state, as actually has happened to Detroit, returns to the wilderness.

It’s insanely annoying how so many California defenders simply ignore basic facts like Texas is creating more middle-class jobs or that Texas’ Latino and black students do better than California’s in K-12 test scores such as the NAEP.

But it’s also pretty telling that so many Californians who tout Texas don’t acknowledge that for lots and lots of people, California’s lifestyle is so vastly more appealing that they’d rather live in a condo here than a 2,800-foot ranch home there.

I’m in that camp. I reject the idea that Texas is some primitive backwater. But where I live in San Diego, the weather is going to be awesome 330 days a year, not 50 days a year. And if you’re a foodie, I know people tout Austin. It’s not Socal. The 20,000 square miles of California from San Bernardino to the coast to the Mexican border have a staggering variety of great ethnic food. The other I day I had sisig, a Filipino pork dish I didn’t know about until last year, and my life felt more complete. Move over, bacon.

A Texas city that seems modeled on … Irvine!

So any kind of CA vs. TX comparison that skips past the talking points is to be welcomed. Now Joe Mathews has just such a piece in which he writes about his road trip to Texas and how dazzled he was not by the state in general but by a suburb of Dallas that sounds like it was modeled on … Irvine!

Here’s Joe, relating his experience with the company-relocation recruiters of Frisco, Texas:

“What they talked about most was children — and their education.

“They told the story well. Frisco has one of the fastest growing school districts in the country, adding thousands of students every year. Today, nearly a third of residents are kids, and with good reason.

“Texas is full of giant high schools that produce huge football teams and bands. But Frisco, at considerable cost, has chosen to limit its high schools to no more than 2,100 students. The smaller school approach reflects a philosophy that every child in town should be ‘known by name and need.’ This strategy had worked. In a 2013 Dallas Morning News list of the best neighborhoods for public schools in the north Texas region, eight of the top 10 neighborhoods were in the Frisco school district.

“My recruiters emphasized the lengths to which Friscoans will go to support their schools. Voters just approved a $775 million school construction bond (a comparably sized bond in the Los Angeles Unified School District would be more than $20 billion). Despite public criticism of the bond as too big and risky, the measure passed with nearly 80 percent of the vote.

“… such family-centered investment didn’t stop with schools. Frisco has more than 40 park sites and is in the process of turning some of its most valuable land into a 380-acre centerpiece, Grand Park. There are all kinds of businesses and housing development — from gated communities to urban apartments. The town has so many athletics facilities for its people that I lost count.”

Actual reporting, not just blow-harding

Please read Joe’s entire piece here. It’s nice to see real reporting on the opinion pages.

Now maybe Dan Morain can fly to Germany and give a firsthand report on how a government’s overcommitment to green energy has gone haywire.

OK, OK — I won’t get my hopes up.

This state needs to raise tobacco taxes. For a state as properly focused on health as California, the fact that we have unusually low such taxes is downright weird. We should be well above the national average in our level of taxation.

According to the Tax Foundation, our state cig tax of 87 cents is 32nd highest among the states. The highest is New York State at $4.35. As you might expect, cig taxes generally are lower in the Southeast tobacco states, highest in the Puritanical states in the Northeast, such as New York, and their offshoots in in the West, such as Washington at $3.05.

Strangely, Washington just legalized marijuana. It reminds me of the hippies who used to introduce the movies shown evenings in the auditoriums at the University of Michigan when I matriculated there 40 years ago. They would smirk, “During the movie, no smoking” — pause — “cigarettes.” Then when the lights went down half the audience (although not yours truly) would light up joints.

No wonder America didn’t survive us Baby Boomers.

Tobacco vs. wacky tobacky

And here’s something interesting. In 1996 Proposition 215, which legalized medical marijuana, passed in hippy San Francisco with 78 percent of the vote, but lost in reactionary Sutter County, getting just 39 percent. Sutter is so uptight it even banned alcohol in the 1890s, way before national Prohibition in the 1920s.

Now look at Proposition 29, the cigarette tax increase on the June 2012 ballot that barely lost. SF: 74 percent yes; Sutter County: 35 percent yes. That’s just about the opposite of Prop. 215. So in Frisco, when you give up the coffin nails and get withdrawal shakes, you just start toking. Whereas in Sutter, you’re an Okie from Muskogee and “don’t smoke marijuana” but inhale tobacco like the Marlboro Man.

And here’s something interesting. Orange County generally is considered to be a reactionary place. Not surprisingly, just 42 percent favored the Prop. 29 cig tax increase, especially with the Orange County Register editorial page (on which I still freelance) coming out strong against it.

But you might not expect that O.C. also backed Prop. 215, with 52 percent voting yea. Some of that also must have come from the Register, where longtime senior editorial writer Alan Bock wrote many editorials backing 215, and wrote a book on the medical marijuana movement, “Waiting to Inhale” (a play on the 1995 movie, “Waiting to Exhale“; alas, Alan died in 2011; great guy).

So at least in this comparison, Orange County really does live up to its libertarian reputation, preferring to let people choose what poison they light up with, while SF comes off as a place of hippy hypocrites.

Black markets

Back to the tobacco tax…

What Mathews didn’t even hint at is that bans and high taxes ignite black markets. That obviously is the case with marijuana, where it remains illegal. But it’s also true with cigarettes. I did a lot of research on this in the mid-1990s when Canada boosted cigarette taxes. The evidence showed that a vast black market caught fire once a pack cost $7 Canadian.

Adjusting for inflation and currency exchanges, that would be about $9 in U.S. dollars today. Currently, a pack of cigs in California costs about $7 in grocery stores, including all taxes; a couple bucks less in tobacco stores. So if the current initiative proposal of boosting taxes $2 a pack is passed, a pack would cost $9 at grocery stores, right on the edge of what caused widespread bootlegging in the Great White North.

The Chronicle reported on Nov. 9:

According to a study released last month by an affiliate group of the California Chamber of Commerce, a $2 increase would double smuggling rates in the state to almost 40 percent of cigarettes consumed.

The group, California Foundation for Commerce and Education, estimated that the Bay Area alone would lose $4.7 million in local sales tax revenue and 2,900 retail jobs if cigarette smuggling increased.

Proponents of the tax dismiss the warnings as propaganda.

“These are the same lies as before that never came true,” said Mike Roth, a spokesman for the cigarette tax ballot proposal, which was submitted last month and is pending in the attorney general’s office. If approved, the measure would need 504,000 signatures to qualify for the 2014 ballot. Roth said the proposal would fund new cancer research and discourage current and future smokers from the habit.

Smuggling

Lies? I remember when the cig tax was increased a mere 25 cents back in 1988 with Proposition 99. A local liquor store here in Huntington Beach was knocked off the next day. The owner hired a firm to put iron bars on his front door, over the mere glass door that had been there before. I asked what happened. “They broke in through the door and stole all the cigarettes,” he said. I asked about the expensive liquor. “No, they left that. It’s too heavy. They just grabbed armfuls of cartons and took them.”

And here’s what’s going on in the New York anti-cigarette utopia. The New York Post reported:

The jailed head of a multi-million dollar cigarette smuggling ring and one of his top lieutenants plotted from behind bars at Rikers Island to kill witnesses they believed were cooperating with law enforcement officials, authorities said.

But when ringleader Basel Ramadan placed a phone call to hire a contract killer he was really talking to an undercover NYPD detective.

Attorney General Eric Schneiderman and Police Commissioner Ray Kelly announced the new indictment of Ramadan and Yousseff Odeh on Thursday.

They were among 16 Palestinian men charged in May with running a massive smuggling ring that flooded New York City and the Albany regions with millions of cartons of unstamped cigarettes. Officials said the ring had direct ties to Mideast terrorists and some of their profits may have been funneled to Hamas and Hezbollah.

According to state Sen. Tony Avella, D-Queens, “The fact that 60 percent of all cigarettes sold in New York were smuggled in from other states, that’s unbelievable. It’s incredible.”

If California’s smoke taxes go up $2 a pack, to $3.87, it’ll be happening here too. An whereas Big Apple contraband cigs come from Indian reservations and Virginia, California’s will come from Mexico. If the government can’t stop cocaine and people from slipping into California illegally, how will it stop packs of smokes?

The first has to do with its allegedly devastating effect on revenue.

It didn’t turn off spigot

There’s something about Proposition 13 that induces derangement among the political and media establishment in California. You can make an argument, as Joe Mathews has, that using direct democracy to shape key state policies is a formula for straitjacketed government. But then the argument should apply to lots and lots of props, not just 13, starting with 1988’s Proposition 98, which made permanent teachers unions’ dominance of state spending and budget decisions. Why should one result of direct democracy bear the blame for other exercises in direct democracy?

But to argue that capping one source of taxes has ruined the state, as the Peter Schrags and the George Skeltons of the world like to do, is bizarre. By any measure, tax revenue in California has gone up far faster than inflation plus population growth since Prop 13’s adoption in 1978. By any measure, California has among the nation’s highest sales, income and gasoline taxes and the highest corporate taxes in the West. Only in property taxes are we in the middle of the 50 states.

We have enough to live within our means. The only reason it sometimes seems like we do not is because of political decisions that place the interests of public employees ahead of the interests of the public, in pay, benefits, job protections and more.

This is pretty well understood among libertarians, conservatives and small-government advocates.

Not just about limiting taxes; it’s about protecting homeowners

But the second grounds for offering a vigorous defense of Prop 13 is often not appreciated enough by people across the California political spectrum — including its admirers. The measure was drafted and passed in a landslide for a very specific and powerful reason: to protect people from losing their homes or suffering financial disaster because of housing bubbles.

This is from a June 5, 1978, Newsweek story about the mood in California on the eve of Prop. 13’s adoption:

“Shaken homeowners and landlords wobbled out of the country assessor’s office in Los Angeles last week with rebellion in their eyes. In the suburb of Palos Verdes, Don Johnson, a certified public accountant who earns $25,000 a year, returned dumbstruck to his four-bedroom ranch home. When he and his wife, Ellen Ann, bought the home in 1959 — for $33,900 — their tax bill was $600 a year. But inflation ballooned the assessed value of the home, and by last year, the Johnsons’ taxes were $1,593. Last week, the tax man released the latest listings. Overnight the assessed value of the Johnson home has soared to $135,000 and the Johnsons’ taxes threatened to skyrocket to $4,139.

“At the assessor’s office in West Los Angeles, an ashen-faced husband emerged to give similar bad news to his wife, a woman in a matronly blue dress. ‘Sam, Sam, don’t tell me,’ she cried. ‘I’m going to have a heart attack right here.'”

Why can’t members of the political-media establishment (including occasional contrarians Joe Mathews and Dan Walters) grasp that we’d have seen a wave of such stories during the housing bubble from 1998 to 2006 without Proposition 13?

Home prices in some markets nearly tripled over that span.

Retirees, those living on fixed incomes and middle-class families with big mortgages would have been devastated  if their property taxes had nearly tripled. We’re talking about millions of people.

So while we are used to seeing Prop. 13 as an artifact from a distant era, we don’t realize it remains an enormous protection TODAY for current homeowners who can barely make ends meet and who would be ravaged by a huge tax hike.

This may not be central to the fight over whether businesses should be exempt from Prop 13’s caps on how fast property taxes can increase. But it should be central to the broad debate over whether Prop 13 is bad or good for California. During the latest housing bubble, as in all the housing bubbles that preceded it, Prop 13 did far more to protect regular Californians from financial disaster than any other single factor.

That should matter much more than it seems to.

By Chris Reed

When the press release came out Monday that the California High-Speed Rail Authority had recruited a top executive away from the California Public Employees’ Retirement System, a Tweet from former Los Angeles Times journo Joe Mathews asked me if my head had exploded. A Schwarzenegger administration official sent me an email titled “You Can’t Make This Stuff Up.” He wrote, “Of course the California High Speed Rail Authority would hire CalPERS’ CFO. Who better to cover up a nearly $100 billion budget hole?”

On Wednesday’s U-T San Diego editorial page, I weighed in on the topic.

“Here’s a quick quiz: What two state agencies have a long history of providing misleading and deceptive accounts of their tangled, troubled finances to the public and the Legislature? A history of depicting legitimate criticism as being ideologically driven and mendacious? A history of resisting reform and fighting to maintain a wrongheaded status quo? A history of refusing to acknowledge past fiascoes?

“If you said the California Public Employees’ Retirement System and the California High-Speed Rail Authority, pat yourself on the back. Given their poor records, if these agencies were looking for executive talent, one would assume they’d bring in an outsider with a strong history of oversight and independence – someone willing to stand up to the bureaucratic forces of inertia.

“But then that’s what the agencies would do if they were honest about their records. Instead, inexplicably, both the pension giant and bullet-train shepherd think they’re doing a great job. And so it was no surprise to learn this week that the rail authority has hired CALPERS’ acting chief financial officer, Russell Fong, as its CFO. How tidy.

“Expect the same management culture to continue at both agencies. Arrogance and denial: It’s the CalPERS/CHSRA way.”

We will see if anyone in the mainstream media picks up on the bullet train-CalPERS parallels. But I wouldn’t get my hopes up. To paraphrase H.L. Mencken, no one ever went broke underestimating the ability of the California media to miss the obvious.

By Chris Reed

Joe Mathews, one of the least ideological mainstream California political pundits, has weighed in on the analysis I did last week on the evidence that unions are trying to stifle direct democracy in California by monkey-wrenching petition drives, trying to invalidate successful anti-union ballot measures and urging union-allied lawmakers to interfere with the initiative-drafting process.

I think Joe is a bit naive, but I welcome him taking this issue seriously, unlike California’s myopic mainstream media. Here’s the link to his column.

I left a Facebook comment on his piece, but as of 11:30 p.m. Wednesday night, it wasn’t showing up, for whatever reason.

By Steven Greenhut

First Vallejo, then Stockton, then Mammoth Lakes and now San Bernardino. As Orange County Supervisor John Moorlach told Bloomberg News, the bankruptcy dominoes are starting to fall. One California city after another — following a decade-long spree of ramping up public-employee pay and pension benefits, as well as redevelopment debt — are becoming insolvent.

Not that the state’s legislators have anything constructive to offer. California’s Democratic leaders are not only unwilling to rein in the costs of benefits for their patrons, the public-sector unions, but they have been erecting roadblocks to those localities that want to fix the problem on their own. Yet all the political blockades in the world cannot fix the basic problem of insolvency.

Stockton negotiated the new process created by a state law requiring a 60-day period of negotiations before filing for Chapter 9 bankruptcy. That period is over and the city – a hard-pressed port on the edge of the California Delta – has become the largest city in the country to pursue municipal bankruptcy. The cause was a pension system eating up 30 percent of the budget, an absurdly generous retiree medical program that provided lifetime benefits after working for the city for a short period, and excess bond debt for pension obligations and redevelopment projects.

Soon after, Mammoth Lakes decided to pursue bankruptcy. That city’s problem came after it lost a judgment in a development case. Although not tied to public-employee compensation, the situation was caused by city officials who prefer to play developer than tend to the nuts-and-bolts of city government – a long-term problem in that eastern Sierra vacation town. In 1996, Mammoth Lakes lost a court case after it declared its downtown area blighted because of excess urbanization, in a ruling the judge said exemplified the misuse of redevelopment power.

The latest city to declare bankruptcy is San Bernardino, which has declared an emergency situation that will allow it to evade the negotiation period mandated by state law. The city simply doesn’t have the cash to keep operating. As Bloomberg reported, “San Bernardino and its agencies have more than $220 million of debt, including $48.6 million of taxable pension-obligation bonds, according to financial statements.” Pension-obligation bonds are used by cities to pay ongoing pension expenses, yet San Bernardino’s problems show that a city cannot borrow its way out of debt.

Other big cities, including Los Angeles, are talking more openly about the bankruptcy option. Not long ago critics who mentioned the B-word were considered Chicken Littles.

The latest talking point is that these cities couldn’t control what happened to them – that they were victims of the foreclosure crisis that rocked the inland areas where housing construction boomed during the housing bubble.

Foreclosures

The Riverside Press-Enterprise reported: “The city of San Bernardino’s financial woes are a directly correlation to a torrent of foreclosures in the Inland area of Southern California, the national foreclosure tracking firm RealtyTrac said Thursday. ‘Property taxes plunged in San Bernardino because of an avalanche of foreclosure activity during the recent housing bust,’ said RealtyTrac vice president Daren Blomquist.”

There’s no doubt San Bernardino and Stockton — Ground Zero for the housing crisis — suffered from the problem described above. But what did those cities do with the rapid increase in property tax revenues during the price run-up? We know – they squandered it on increased compensation for government employees, on redevelopment projects and other questionable spending deals. They squandered the money when it came flowing in, now depict themselves as victims of circumstance when the funds dried up.

The real culprit, as I argue here in City Journal, is foolish decision making. Stockton, for instance, refused to take advantage of an exemption in prevailing wage laws – something that could have saved it money but would have angered the powerful unions.

The housing bubble hit the hardest in cities inland from the growth-controlled major metropolitan areas. When the prices went up in Los Angeles and San Francisco, developers moved inland, where it was easier to get the permits necessary to respond to the demands of the marketplace.

Coastal cities

But even coastal cities are struggling. Los Angeles is not a victim of the foreclosure crisis. Pension costs in San Jose — where the housing market has rebounded thanks to a healthy tech-based economy — rose 350 percent in 10 years and now consume 20 percent of the general-fund budget. That city passed pension reform on the November ballot to stop the fiscal bleeding.

Here Joe Mathews debunks San Bernardino’s allegations that the state is to blame for its fiscal problems: “Local elected officials who complain about a lack of state money have things backwards. The state of California is relatively spare in its spending, compared to national averages. California’s local officials are, by contrast, big spenders, at or near the national lead in compensation for local workers, especially law enforcement.”

There’s no doubt the problem is fiscally profligate local governments, who busted the bank on public-safety pay and benefit packages and now are looking to cast blame anywhere they can.

Bankruptcy is not a great option but at least it gives cities a chance to get their house in order and start fresh. Unfortunately, Vallejo and Stockton refused to tackled existing pension debt in their bankruptcy plans. Orange County emerged from bankruptcy in the 1990s in better shape than ever, but as Chris Reed explained for CalWatchdog, subsequent boards of supervisors then began spending like crazy on public-sector compensation.

Bankruptcy cannot stop future officials from wasting the taxpayer dollar. But when there’s no money, there’s nothing left to do. In Scranton, Pa., a judge issued an injunction to stop the mayor’s plan to begin paying all city employees minimum wage. But there’s no money left to pay any more than that, he said. The city will gladly pay more as soon as it has the cash to pay it.

Only when the money runs out will cities find the necessary solutions. That’s perhaps the saddest commentary on the situation in California cities these days.