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Joe Guzzardi: California still has obstacles to overcome

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Posted: Saturday, December 14, 2013 12:00 am

In August, Rolling Stone magazine wrote a flattering article about Gov. Jerry Brown which said that the 75-year-old once and current governor has brought California back from the brink of double-digit unemployment and multibillion-dollar deficits that threatened to force the state into bankruptcy.

The story, titled “Jerry Brown’s Tough Love California Miracle,” was effusive in its praise of Brown and called him “America’s shrewdest elder statesman.” Brown got high grades on how he handled raising taxes, cutting the budget and allocating education funds.

Brown attributes his success to his singular focus on California. During his first tour of duty as governor 38 years ago, Brown kept one eye on Washington, D.C. He made three bids for the Democratic presidential nomination and one for the Senate, all unsuccessful.

Without question, today’s California is healthier than the one I moved away from in 2008. Back then, California’s outlook was bleak: foreclosures, high unemployment and, because of the global recession, sharp declines in tourism. The UCLA Anderson Forecast, the university’s business school’s quarterly review of the state economy, concluded, “There are no bright spots on the horizon.”

If anything, the UCLA prediction may have been understated. During fiscal year 2009-10, the deficit hit a staggering $60 billion. The state controller, John Chiang, sent IOUs instead of cash to some creditors.

Today, that’s all ancient history. But any comprehensive analysis of the Golden State has to include both Californias: the areas that are thriving — like Silicon Valley, Hollywood and Napa Valley — and those that are struggling, like San Joaquin Valley.

California’s unemployment rate is 8.7 percent, significantly higher than the national 7 percent rate and way higher than Florida’s 6.7, or Texas’ 6.2.

For the regular 9-to-5 crowd, Brown’s revived California still isn’t the haven Rolling Stone made it out to be.

Californians pay among the country’s highest retail gas prices. Statewide per gallon price is $3.58, more than 31 cents above the national average. Electricity costs are equally steep.

California is poised to spend $3.1 billion more on K-12 schools to shore up students’ chronic under-achievement, as if throwing money at a problem ever solved anything.

Although California is thought by many to be relatively high income, according to the Census Bureau, 72 percent of households make less than $100,000. The median income is $58,000.

Nevertheless, California expects to end its fiscal year with a $2.4 billion surplus.

But not everyone thinks that California’s problems are in the rear view mirror.

In 2011, former Federal Reserve Bank Chairman Paul Volcker and former New York Lt. Gov. Richard Ravitch created the State Budget Crisis Task Force to study the long term viability of six states, including California. The report concluded that California and its localities will face major ongoing challenges because of an aging population, rising health care costs, unfunded promises and an increasingly volatile revenue and sales tax base.

That may partially explain why, during the last 20 years, 3.4 million middleand upper-middle-class families have fled to states with lower taxes.

California has come a long way since 2008, and Brown deserves much of the credit. But the state, like many others, still has serious issues to overcome before it can be declared out of the woods.

Joe Guzzardi moved from Lodi to Pittsburgh in 2008. He worked for the Lodi Unified School District for more than 20 years. Contact him at guzzjoe@yahoo.com.

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