May 24, 2024
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California needs reforms to create stable future


Now that California is back, maybe it’s time to think big.

That’s the theme of a talk that economist Chris Thornberg has been giving up and down the coast. The founding partner of Beacon Economics gave the latest version of his remarks at the Central Coast Economic Forecast in San Luis Obispo on Nov. 6.

Thornberg is best known for his expertise in housing markets — he made a prescient call that warned about out of control leverage in California’s housing markets well before the onset of The Great Recession.

He’s brash and, at times, a bit over the top but his thoughts about using the good times we’re experiencing to create a more sustainable California economy are beginning to hit home. His message:

• Build housing. Not just affordable housing, but housing that’s affordable for the middle class. Thornberg would reform CEQA and other rules that drive up the cost of building new housing in coastal markets and build homes for the next generation.

• Put infrastructure where people want to live. In response to a question from the Business Times about California’s bullet train, he said: “We already have one. It’s called Southwest Airlines.” What California needs is better connections between its coastal communities.

• Keep bending the cost curve on public pensions. Thornberg argues that generous public pensions have allowed civil servants to afford expensive homes on the coast, crowding out private sector employees.

• Level the Proposition 13 playing field. California’s landmark property tax reform is hobbling local communities and forcing California to draw more and more tax revenue from a few hundred wealthy families. That’s a prescription for instability in public finance, he warns.

The great advantage of Thornberg’s worldview is that he is likely right about the opportunity that lies ahead. Like Atlanta Fed President Dennis Lockhart, he’s part of the consensus that, absent unforeseen events, another recession is unlikely for two to three years and maybe longer.

That gives policy makers and legislators breathing room to realign the state’s budget, develop new priorities and reinvent California for a still-new century — one that provides a more stable platform for our innovation-led economy.

Challenging Obamacare

Thomas Aquinas College has won a Supreme Court hearing over the Obama administration’s treatment of nonprofits that object to Affordable Care Act rules for providing reproductive health coverage.

Santa Paula-based Thomas Aquinas joined Catholic and evangelical nonprofits that bristled at Obamacare’s rules for providing contraception and other services. The administration’s fix was to take the objecting organizations out of Obamacare and then provide coverage indirectly — something that the plaintiffs say interferes with legal protections for religious freedom.

In Little Sisters of the Poor v. Burwell, the major provisions of Obamacare are not challenged. But this trip to the Supreme Court for the Affordable Care Act will test how far government can go in imposing requirements for birth control and other coverage on nonprofits that find the rules objectionable.

Earlier, the high court ruled that contraception requirements for Obamacare violated the rights of Hobby Lobby, a for-profit company.