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California's Problems Emblematic of Nation's


Here in flyover country, there is a temptation to a certain schadenfreude about the problems besetting the state of California. Years of hearing about sunshine, scenery, science, beaches, mountains, movie stars and cheap education at terrific public universities can't help but inspire a little envy. It's about time California had some problems, too.

Of course, California always had more than its share of kooks and crazies, to say nothing of earthquakes, wildfires, mudslides, smog, vast slums, horrible traffic and mile after unrelieved mile of cheap tract housing selling for several multiples of what it would cost in the Midwest.

But California always seemed to have it made, and with pretty good government, too. Republican governors like Earl Warren, Ronald Reagan and Pete Wilson and Democrats like Pat Brown and his son, Jerry Brown, always were able to get together with legislative leaders like Jesse Unruh and Willie Brown to get things done.

In this they were helped by the fact that California was always growing. Even Mr. Reagan, remembered now as the patron saint of conservatism, in 1967 proposed and signed what was at the time the biggest tax increase in any state's history. Fueled by economic growth, the state's budget grew by 122 percent during his eight years in office.

The population soared. Social programs expanded. Salaries and benefits exploded. It was the land of plenty: "I like to think how nice it's gonna be, maybe, in California," says Ma in Steinbeck's "The Grapes of Wrath." "Never cold. An' fruit ever' place, an' people just bein' in the nicest places, little white houses in among the orange trees."

By 2007, when Arnold Schwarzenegger was sworn in for the second time as governor (where else but California could that happen?), he could boast that California was a "nation-state" with "the ideas of Athens and the power of Sparta" and the "sixth-largest economy in the world."

In fact, by 2007 California's economy had slipped a couple of notches, making it the eighth largest in the world. The state had begun not just bumping up against the limits of growth, but crashing into them full bore. Not even an action hero like Mr. Schwarzenegger could stop it.

At the end of July, after wrangling with the legislature for months, the governor signed and vetoed his way through a package of legislation to close a $24 billion gap in this year's $85 billion general fund budget. The cuts promise significant pain for many of the state's most vulnerable citizens. Thousands more state employees will be laid off; most of those remaining will take unpaid furloughs. Parks will be closed. Child welfare programs will lose $80 million. AIDS prevention programs will lose $52 million.

For all of that, serious fiscal problems remain. The state's bond rating has been lowered to BBB, two notches above junk status. In January, Mr. Schwarzenegger had said the state faced a $41 billion deficit. The budget closes about $24 billion of that, but more fixes must come late this year or in early 2010.

California's unemployment rate is now 11.6 percent. Some 900,000 Californians have lost their jobs since the recession began in December 2007.

Now, as some economists are saying the recession has ended — the GDP is expected to grow in the third quarter by 2.1 percent — Californians are wondering when things will get back to normal.

They won't, not anytime soon, and not by the standards Californians have come to expect. Its citizens and businesses are retrenching, paying down debt, reorganizing and lowering expectations. Whatever normal turns out to be, it will look very different.

And on the assumption that trends that start in California eventually make their way eastward, what happens there will be a cautionary tale for the rest of us.

California has a systemic problem that makes budgeting there particularly difficult: the ease with which citizens can put direct initiative propositions on the ballot. In 1978, the state passed Proposition 13, requiring a two-thirds majority in the legislature to pass a tax increase. Not to be outdone, California teachers helped pass Proposition 98 in 1988, mandating that 40 percent of general fund revenue be spent on education.

Both measures hamstring the legislative process. The problems could be finessed as long as the state economy was booming. In 1990, California passed a term limits law, which eventually led to the removal of experienced legislative deal-makers. In their place came hyper-partisan hardliners, elected in gerrymandered districts by single-issue constituent groups spending millions of dollars on their campaigns.

Slick operators moved easily through the seams, capturing state regulators and convincing the state to deregulate the price of energy in 1996. Prices were kept artificially low and then skyrocketed while companies like Enron made huge profits, leading to the state's energy crisis in 2000-2001.

Even then, the state's economic growth covered up a lot of problems. But when times got hard, legislators still weren't inclined to give any ground. Even if they were of a mind to compromise, they had to please their constituents to keep their jobs. The times called for statesmanship, and California got partisanship.

If California is to recover in an era of lower expectations and slow growth, that will have to change. And if that were to happen, it would be the most welcome trend ever to start in California.

As the nation emerges from recession, it confronts a very strange landscape — more people with more needs, higher energy costs, fewer jobs and lower prospects of getting one, stagnant wages, long-postponed problems with greenhouse gases and health care, more need than ever for excellent education and less chance of affording one.

Credit is hard to come by for businesses large and small, and very difficult for many Americans. This may or not be a good thing — our prosperity in the 1990s and early 2000s was driven by cheap credit — but downsizing expectations is difficult for both buyers and sellers. A 2.1 percent growth in GDP won't put food on too many tables, much less hang a plasma TV on many walls.

Solving these problems will require statesmanship, not partisanship. Speaking to The Washington Post, Dan Schnur, director of the Jesse M. Unruh Institute of Politics at the University of Southern California, said the rest of the country can learn a valuable lesson from California's inability to deal with its problems.

"This is where a culture of hyper-polarization eventually leads," he said. "Two armed camps, separated by an almost insurmountable gulf, a recipe of gerrymandering, ideologically tailored media and increasingly influential interest groups on both sides leads you to a point where if every single elected representative faithfully represents the views of his or her constituents, there will never be agreement on anything, ever."




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