Lots of news on the Texas vs. California front. An audit turns up $31 billion in California budget mistakes, Democrats hike the minimum wage there, Jerry Brown tries to do something about the growing CalSTARS pension deficit, and people and businesses continue to depart the “Golden State” for Texas…
The California Bureau of State Audits set off a scandal on June 1st by disclosing that the State Controller’s Office made accounting misstatements amounting to $31.65 billion. The timing of the announcement may be devastating to the Democrats who expected to use their super-majority to pass billions of dollars in increased spending, but may now find the net effects of the accounting restatements are a $7 billion General Fund deficit.
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As the former Treasurer of Orange County, California it is my preliminary judgment that under state law the negative $7.847 billion impact from overstating general fund assets and revenues and overstating deferred tax revenues may create an “on-budget” deficit to the state’s $96.3 billion “General Fund Budget.”
Union-dominated states are sinking further into economic stagnation as Democratic politicians increasingly dominate the local political climate. In 2012, California Democrats won a supermajority in both houses of the legislature and proceeded to accelerate a tax and spending spree that has been ongoing for two decades. For example, California now has the nation’s top state income-tax rate, at 13.3 percent.
Those kind of policies have consequences. The Manhattan Institute released a report in 2012 that found that since 1990, California had lost nearly 3.4 million residents to other states with lower tax rates.
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The U.S. is swiftly becoming a tale of two nations. States that are following the Reagan model of low taxes and incentives are booming while states that are opting for the Obama model of wealth redistribution and European welfare-state economics are stagnating.
As a growing number of Americans choose to call Texas home, it is critical that policymakers not lose sight of the reasons why: low taxes, limited government, and personal responsibility. Liberty is popular. That’s a message that needs reinforcement, particularly at the local level where some of the macro level trends involving taxes, spending, and debt are moving in the wrong direction. We can keep Texas and our cities beacons of prosperity and flourishing — but to do that, we must understand the principles that got us here, and defend them in policy and the public square.
