The California Mordida

By Victor Davis Hanson

Thursday, March 07, 2013

 

California now works on the principle of the mordida, or “bite.” Its government assumes that it can take something extra from residents for the privilege of living in their special state.

 

Governor Jerry Brown made that assumption explicit in his latest back-and-forth with Texas governor Rick Perry, who keeps luring Californians to lower-tax, higher-employment Texas. Recently, Brown said of Texas, “Who would want to spend summers there in 110-degree heat inside some kind of fossil-fuel air conditioner?”

 

Translated, Brown’s retort meant that despite California’s sluggish economy, high taxes, and poor services, it’s still worth staying there to enjoy its beautiful climate — especially along the 1,000-mile-long coast, where most of the state’s elites live comfortably without the need for high-priced air conditioning.

 

In November, California approved a measure to raise its sales tax and its income-tax rates on the wealthy. According to the California Taxpayers Association, the state now has the highest sales tax and the highest top income-tax rate in the nation. The state also just upped its gasoline taxes by nearly 10 percent to make them the costliest in the United States — about 70 cents a gallon in combined federal, state, and local taxes. The state already has among the most expensive refinery regulations in America. That means California pump prices, at well over $4 per gallon, are second only to Hawaii’s.

 

Yet, unlike Hawaii, California has wells that still produce more than 500,000 barrels of crude oil each day — behind only Texas and Alaska. Its newly discovered Monterey Shale Formation may hold some 30 billion barrels of oil and gas. Perhaps no state has so much recoverable petroleum and yet such high fuel taxes and pump prices.

 

California’s record taxes are not reflections of the costs incurred ensuring superior public education. In fact, its public schools, in some surveys of national performance tests in math and English, rank near the nation’s very bottom.

 

Nor do record gas taxes equate to wonderful freeways. The federal government concluded that only half of California’s roads rate as acceptable. Private rankings put California’s roads near dead last.

 

The problem is that California has exorbitant built-in costs unlike those of any other state and, in politically correct fashion, usually tries to keep mum about them. As the home to about a quarter of the nation’s illegal immigrants, most from poorer areas of Latin America, California has public schools that enroll millions whose first language is not English. Someday, the infusion of young, motivated new Californians may prove a fiscal plus, but for the foreseeable future, illegal immigration translates into years of soaring health-care, housing, transportation, education, and law-enforcement costs — and billions of much-needed dollars lost from the state economy each year in remittances to Latin America.

 

California public unions are among the highest-paid in the nation. While Brown may have balanced next year’s budget through higher taxes, he cannot do much about the more than $300 billion in unfunded pension-fund liabilities and the municipal bonds that were incurred to help the state and its localities afford their public workforces.

 

Elite environmentalists — who feel that to extend the conditions of their own affluent coastal enclaves to millions of others would tax the ecosystem — have blocked new housing developments, cut off irrigation water to farmland, and opposed new energy production.

 

Yet if California has self-induced crises, it also has great natural and cultural advantages. Aside from the best climate in North America, it has the richest farming area in the nation, along with huge natural endowments of gas, oil, minerals, and timber. Universities such as Stanford, Caltech, and UC Berkeley continually rate among the best in the world. And for decades, Silicon Valley, Napa Valley, and Hollywood have earned hundreds of billions of dollars in the global marketplace.

 

In short, California is a wonderful place to live for Bay Area, 30-something Google executives; young, rich Stanford students; and Malibu celebrities — or recently arrived indigents fleeing the abject misery of Latin America and needing generous public help. But it is not such an accommodating landscape if you are in the shrinking middle class and seeking a good-paying job in energy, construction, or manufacturing; a safe daily commute on good roads; reasonable taxes; an affordable house; or a good public school.

 

The governor and the legislature believe that higher taxes, higher prices, and more regulations are worth the pleasures of California’s weather, natural beauty, and chic culture. Who would leave all that for low-tax but scorching Texas or Nevada?

 

They may be right. I am still here, writing this column in 70-degree March weather, gazing out at the snow-capped Sierra Nevadas, amid blooming almond orchards on the small farm of my ancestors — while computing my soaring taxes and picking up the daily litter tossed by the roadside, after another near-death experience on an archaic California freeway.