By Victor Davis Hanson
Thursday, February 28, 2019
Californians brag that their state is the world’s
fifth-largest economy. They talk as reverentially of Silicon Valley companies
Apple, Facebook, and Google as the ancient Greeks did of their Olympian gods.
Hollywood and universities such as Caltech, Stanford, and
Berkeley are cited as permanent proof of the intellectual, aesthetic, and
technological dominance of West Coast culture.
Californians also see their progressive, one-party state
as a neo-socialist model for a nation moving hard to the left.
But how long will they retain such confidence?
California’s 40 million residents depend on less than 1
percent of the state’s taxpayers to pay nearly half of the state income tax,
which for California’s highest tier of earners tops out at the nation’s highest
rate of 13.3 percent.
In other words, California cannot afford to lose even a
few thousand of its wealthiest individual taxpayers. But a new federal tax law
now caps deductions for state and local taxes at $10,000 — a radical change
that promises to cost many high-earning taxpayers tens of thousands of dollars.
If even a few thousand of the state’s 1 percent flee to
nearby no-tax states such as Nevada or Texas, California could face a
devastating shortfall in annual income.
During the 2011-16 California drought, politicians and
experts claimed that global warming had permanently altered the climate, and
that snow and rain would become increasingly rare in California. As a result,
long-planned low-elevation reservoirs, designed to store water during
exceptionally wet years, were considered all but useless and thus were never
built.
Then, in 2016 and 2017, California received record snow
and rainfall — and the windfall of millions of acre-feet of runoff was mostly
let out to sea. Nothing since has been learned.
California has again been experiencing rain and cold that
could approach seasonal records. The state has been soaked by some 18 trillion
gallons of rain in February alone. With still no effort to expand California’s
water storage capacity, millions of acre-feet of runoff are once again
cascading out to sea (and may be sorely missed next year).
The inability to build reservoirs is especially tragic
given that the state’s high-speed rail project has gobbled up more than $5
billion in funds without a single foot of track laid. The total cost soared
from an original $40 billion promise to a projected $77 billion. To his credit,
newly elected governor Gavin Newsom, fearing a budget catastrophe, canceled the
statewide project while allowing a few miles of the quarter-built Central
Valley “track to nowhere” to be finished.
For years, high-speed rail has drained the state budget
of transportation funds that might have easily updated nightmarish stretches of
the Central Valley’s Highway 99, or ensured that the nearby ossified Amtrak
line became a modern two-track line.
California politicians vie with each other to prove their
open-borders bona fides in an effort to appeal to the estimated 27 percent of
Californians who were not born in the United States.
But the health, educational, and legal costs associated
with massive illegal immigration are squeezing the budget. About a third of the
California budget goes to the state’s Medicare program, Medi-Cal. Half the
state’s births are funded by Medi-Cal, and in nearly a third of those
state-funded births, the mother is an undocumented immigrant.
California is facing a perfect storm of homelessness. Its
labyrinth of zoning and building regulations discourages low-cost housing. Its
generous welfare benefits, non-enforcement of vagrancy and public health laws,
and moderate climate draw in the homeless. Nearly one-third of the nation’s
welfare recipients live in the state, and nearly one in five live below the
poverty line.
The result is that tens of thousands of people live on
the streets and sidewalks of the state’s major cities, where primeval diseases
such as typhus have reappeared.
California’s progressive government seems clueless how to
deal with these issues, given that solutions such as low-cost housing and
strict enforcement of health codes are seen as either too expensive or
politically incorrect.
In sum, California has no margin for error.
Spiraling entitlements, unwieldy pension costs, money
wasted on high-speed rail, inadequate water storage and delivery, and lax
immigration policies were formerly tolerable only because about 150,000
Californians paid huge but federally deductible state income taxes.
No more. Californians may have once derided the state’s 1
percent as selfish rich people. Now, they are praying that these heavily
burdened taxpayers stay put and are willing to pay far more than what they had
paid before.
That is the only way California can continue to spend
money on projects that have not led to safe roads, plentiful water, good schools,
and safe streets.
A California reckoning is on the horizon, and it may not
be pretty.
