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California taking a hit but not going down for the count

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POSTED November 28, 2009 2:07 a.m.
The Big One is about to hit.

Sometime in the next six to 10 months a violent shaking is going to roll through California toppling preconceived notions of what government should do and can do. The state has dealt with massive deficits before but not one like the sequel in the 2010-11 fiscal year that will make the pain created by the current budget seem like happy days.

The projected $21 billion budget deficit coupled with cuts already made means one thing and one thing only – a large number of state workers are going to be losing their jobs. It is the only solution left unless legislators really want to go into the 2010 elections by decimating the ranks of classroom teachers or forcing major public safety cutbacks in cities and counties by swiping even more local revenue.

So does that mean the final days are coming for the California dream?

As Mark Twain might say, stories of California’s demise are greatly exaggerated

California – despite the foreclosure mess and the strain it has placed on the economy – still would rank eighth in economic strength if it was ranked as a nation. Our “gross national product” as a state is $1.8 trillion. Compare that to Brazil at $1.6 trillion or Russia also at $1.6 trillion. Mighty China – at $4.3 billion – is only 2.5 times larger in terms of a GNP than California.

It is a myth that businesses are fleeing California in droves. Over half of venture capital in this country was invested in California in 2008 with a whopping 43 percent of the national tab being dumped into start ups in the San Francisco Bay Area.

It is true that with 12 percent unemployment there are those who are loading up the truck and moving from Beverly Hills.

Yes, even with the foreclosure mess bringing housing prices down they are still not in the same territory as the middle of Iowa but then again who cares? Price is a function of desirability as much as how expensive it is to live somewhere.

There are 38 million residents in this state. There is a reason they haven’t all become New Yorkers, Texans, and Coloradans.

All of those are nice places but they don’t hold a candle to California in terms of attitude, weather, physical characteristics, potential, or being on the cutting edge in terms of everything from demographics to the economy. Yes, the economy. While the Midwest members of Congress conspired to bottle up greenhouse gas legislation, California has forged ahead. It is where innovations are taking place on most things to do with the environment. Toss in biogenetics and much maligned California is leading the charge into the new economic wave that will drive the world much like Silicon Valley did.

We have the Sierra, Mt. Whitney, Death Valley, two active volcanoes, Big Sur, the San Francisco Bay, sandy beaches, rugged and primitive coastlines, Lake Tahoe, and the Central Valley – the most bountiful agricultural producing region on the planet.

California is also a state of mind. We’re laid back and aggressive at the same time.

But what about the mess the state government is in? Doesn’t that take the edge off of everything? Not really. There are more than a few analysts that have come to the conclusion California’s government can get out of this mess by rewriting tax codes to abandon its dependence on bust and boom cycles and shift to more even taxation strategies.

California, in case you haven’t noticed, is also cutting edge when it comes to dysfunctional government. There are a number of other states lining up now behind California in the race to implode.

There is only one way that California can pull out of the financial mess the state is in and that involves bold moves.

State government will have to be redefined.

Why? Well unlike any other state we really are heading for the Big One in terms of a financial earthquake that will collapse government as we know it today for the simple reason politicians in California have had their hands tied by the voters and can’t simply tax their way out of overspending.

And as much as that restless energy that California can do things better helped create one of the world’s true cosmopolitan cities out of the rubble of the 1906 San Francisco earthquake, so can the new California that is on the horizon.

California has been guided by unbridled optimism since that day on Jan. 24, 1848 when a glittering speck in the American River defined how the world views the state we call home.
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