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California’s Legislative Blitzkrieg

from the magazine

California’s Legislative Blitzkrieg

The state’s lawmakers are destroying jobs and stunting economic growth. Spring 2011
Economy, finance, and budgets
Politics and law
California

In California, deficits of various kinds have become a way of life. On top of an annual budget shortfall of more than $26 billion and unfunded pension liabilities that surpass $500 billion, the Golden State is seeing massive shortfalls in everything from domestic migration (a net loss to other states of nearly 1.4 million people from 2000 to 2008, the worst performance in the nation) to private-sector jobs (a net loss of more than 1 million in the two-year period following the September 2008 financial crisis). But one area of the economy continues to generate a surplus of sorts: state government. By the time the California State Legislature’s filing deadline arrived on February 18, Sacramento’s 120 legislators had introduced more than 2,300 bills for consideration in 2011. And 750 new laws from last year’s session have already gone into effect since January.

Unlike most state legislatures, California’s meets full-time. Lawmakers earn an annual salary of over $95,000—still the highest in the nation, though reduced from $116,000 during a wave of public discontent in 2009. With no need for extra income from other employment, state legislators lack meaningful incentives to discharge government duties in a timely fashion or to limit proposed legislation to essentials. That may be part of the reason that California hasn’t balanced its budget on time in 22 of the last 30 years.

Compare California with Texas—where the citizen legislature meets only once every two years and where just seven new laws have gone into effect so far in 2011—and the consequences become clear. As the Texas Public Policy Foundation reported in October, “Texas created 129,000 new jobs in the last year—over one-half of all the new jobs in the U.S. In contrast, California lost 112,000 jobs during the same period.” While the states’ divergent job trends doubtless have multiple causes, their radically different approaches to legislation have surely played a part.

Apologists argue that as the nation’s most populous state and its largest economy, California requires a heightened level of government oversight—a claim that loses validity when one considers that Texas is second in both categories. And the laws being churned out in Sacramento represent gratuitous interventionism just as often as they address pressing matters of public policy. Proposed bills in the recent session included a tax on sugary beverages, a prohibition on smoking in tobacco shops, the outlawing of caffeinated alcoholic beverages, and a program to prevent the bullying of transgendered students at California universities.

This flurry of activity is no aberration. Proposals in past years have included the banning of trans fats (passed); a prohibition on Mylar balloons (passed the state senate but failed in the assembly); a bill to move California to a single-payer health-care system (passed the senate but did not receive a vote in the assembly); and a statewide ratification of the Kyoto Protocol’s greenhouse-gas limitations, which has been estimated to cost the state’s small businesses alone over $182 billion a year and to destroy 1.1 million jobs over time (passed). Legislative priorities in California run to extremes: it’s either nanny-state marginalia or liberal moon shots.

All this legislation has done little to right California’s course. The state continues to hemorrhage money, jobs, people, and firms. Calling California “the Venezuela of North America,” the magazine CEO, in a survey of more than 650 corporate heads, rated it the worst state in the nation to do business in. The U.S. Chamber of Commerce has designated the state’s hyper-litigious legal environment one of the nation’s five worst. And on nearly every key measure of public policy—from health-care quality and rates of taxation to public education and criminal recidivism—California ranks among the worst of the 50 states, eroding its image as a national pacesetter.

If it hopes to pull itself out of this morass, California will have to address the crippling role played by its hyperactive legislature. The state needs widespread, radical reform—but if Sacramento’s recent past is any indication, there are more than 2,300 reasons why that won’t happen this year.

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