Jerry Brown Leads a Turnaround
California Comeback
By Lou Cannon - June 25, 2013, Real Clear Politics
The Golden State has long been dismissed as a paradise lost.
The end of the Cold War and subsequent implosion of the military-fueled aerospace industry in the 1990s sent California on a downward spiral. The state struggled through three economic downturns in two decades, each time emerging with weaker infrastructure and higher debt. A dysfunctional state government in Sacramento ignored structural fiscal issues, relying on gimmicks to pass budgets that were balanced in name only. Bond markets and rating agencies were not fooled, dropping California’s credit rating to the second lowest of the 50 states.
The bottom truly dropped out during the Great Recession when California suffered record unemployment and a housing bust. Median family income declined 11 percent between 2006 and 2010. Prisons became so crowded that the federal judiciary intervened, ordering the release of thousands of inmates. Schools also suffered from overcrowding and teacher layoffs. California’s vaunted higher education system raised tuitions and turned away students.
As the once-bright California Dream faded, politicians became late-night television jokes. Gov. Gray Davis was recalled in 2003 just 10 months into his second term. His celebrity successor, Arnold Schwarzenegger, failed to deliver on his lofty promises of fiscal reform. Frustrated voters turned in 2010 to an unlikely retread, Jerry Brown, derided as “Governor Moonbeam” when he was a young and often unfocused two-term governor in the 1970s and early 1980s.
But lo and behold, Brown has led a remarkable comeback, both for himself and his state. After inheriting a deficit of $27 billion on a general fund of about $90 billion, Brown has turned California around, aided by a rebound in the construction industry and the housing market on which it depends. Early this month he signed a budget that has a surplus of $1.2 billion by Brown’s conservative estimate. The independent Legislative Analyst’s Office, which usually finds gubernatorial estimates too rosy, says the actual surplus will be more than $4 billion.
Brown has good reason to low-ball the surplus. Democrats won a super-majority in both chambers of the Legislature last year and are itching to spend money. Brown calls Sacramento “a big spending machine” and observes that California revenues are always volatile because they are heavily dependent on the state income tax. Brown put a hefty chunk of the surplus into a rainy-day fund to offset any future deficits. He has vowed to keep the budget balanced, a promise he has the power to keep because California governors have line-item veto authority and Brown is far more popular than the Legislature.
(More here.)
By Lou Cannon - June 25, 2013, Real Clear Politics
The Golden State has long been dismissed as a paradise lost.
The end of the Cold War and subsequent implosion of the military-fueled aerospace industry in the 1990s sent California on a downward spiral. The state struggled through three economic downturns in two decades, each time emerging with weaker infrastructure and higher debt. A dysfunctional state government in Sacramento ignored structural fiscal issues, relying on gimmicks to pass budgets that were balanced in name only. Bond markets and rating agencies were not fooled, dropping California’s credit rating to the second lowest of the 50 states.
The bottom truly dropped out during the Great Recession when California suffered record unemployment and a housing bust. Median family income declined 11 percent between 2006 and 2010. Prisons became so crowded that the federal judiciary intervened, ordering the release of thousands of inmates. Schools also suffered from overcrowding and teacher layoffs. California’s vaunted higher education system raised tuitions and turned away students.
As the once-bright California Dream faded, politicians became late-night television jokes. Gov. Gray Davis was recalled in 2003 just 10 months into his second term. His celebrity successor, Arnold Schwarzenegger, failed to deliver on his lofty promises of fiscal reform. Frustrated voters turned in 2010 to an unlikely retread, Jerry Brown, derided as “Governor Moonbeam” when he was a young and often unfocused two-term governor in the 1970s and early 1980s.
But lo and behold, Brown has led a remarkable comeback, both for himself and his state. After inheriting a deficit of $27 billion on a general fund of about $90 billion, Brown has turned California around, aided by a rebound in the construction industry and the housing market on which it depends. Early this month he signed a budget that has a surplus of $1.2 billion by Brown’s conservative estimate. The independent Legislative Analyst’s Office, which usually finds gubernatorial estimates too rosy, says the actual surplus will be more than $4 billion.
Brown has good reason to low-ball the surplus. Democrats won a super-majority in both chambers of the Legislature last year and are itching to spend money. Brown calls Sacramento “a big spending machine” and observes that California revenues are always volatile because they are heavily dependent on the state income tax. Brown put a hefty chunk of the surplus into a rainy-day fund to offset any future deficits. He has vowed to keep the budget balanced, a promise he has the power to keep because California governors have line-item veto authority and Brown is far more popular than the Legislature.
(More here.)
Powered by Blogger
0 Comments:
Post a Comment
<< Home