Editorial: Private sector, not train, likely to put state on track
Despite an improving economy, discontent is simmering across California this summer. What that will mean for the November elections, and particularly Gov. Jerry Brown’s ambitious plan to raise taxes to fund his controversial bullet train and restore some money to education is anybody’s guess.
First, the economy. California added more jobs than any other state last month, some 25,000 in all.
On a positive note, forecasters at the University of the Pacific think the state’s unemployment rate is on a steady slope downward. In two years the number could be below 8 percent, according to the university’s latest forecast. Tourism, technology and a welcome rebound in finance and professional services are leading the way toward higher employment.
Commercial construction is also bouncing back from a very deep bottom, and housing may be on a sustained rebound. Note that state and local government spending is no longer a big part of this equation — the private sector continues to expand despite Brown’s moves toward austerity and high-profile bankruptcies by municipalities.
And there are welcome signs that communities are starting to value their private-sector jobs and foster them. Discussions about economic development strategies in San Luis Obispo and Ventura Counties are part of that process — Simi Valley Mayor Bob Huber’s efforts to thoughtfully loosen restrictions on garage-based startups has gotten wide exposure.
Now for the discontent. First, Brown’s big bet on the so-called Facebook effect, a potential $3.5 billion windfall from its much ballyhooed IPO, is quickly going bust. Facebook will generate a bit of revenue for California, but it will be nothing like the forecast amount. Second, revelations of tens of millions of dollars hidden from budgeters in accounts — including an obscure state parks fund — call into question Brown’s ability to get a handle on the real problems. His tax initiative, known as Proposition 30, has a slight edge but is very vulnerable.
Behind the discontent is the persistent feeling that if California is able to grow jobs in the private sector at a steady pace, it may not need the debt-driven stimulus of as much as $100 billion in government dollars going toward the high-speed rail.
California’s economy is shifting gears into a faster growth phase. But state revenues are lagging, the Facebook effect appears illusory and Proposition 30 remains a big question mark.