Former California legislator contrasts strengths of Texas economy with weaknesses of Californias.
By Chuck DeVore
Texas Insider Report: AUSTIN Texas For six years ending in 2010 I represented almost 500000 people in Californias legislature. I was Vice Chairman of the Assembly Committee on Revenue & Taxation and served on the Budget Committee.
I moved to Texas late last year joining the 2 million Californians who have packed up for greener pastures in the past 10 years.
I was even a lieutenant colonel in the states National Guard. Before serving in Sacramento I worked as an executive in Californias aerospace industry.
One in five Americans calls California or Texas home. The two most populous states have a lot in common: a long coast a sunny climate a diverse population plenty of oil in the ground and Mexico to the south.
Where they diverge is in their governance.
In his State-of-the-State address this January California governor Jerry Brown said
Contrary to those declinists who sing of Texas and bemoan our woes California is still the land of dreams. . . . Its the place where Apple . . . and countless other creative companies all began.
Fast forward to March: Apple announced it was building a $304 million campus in Austin with plans to hire 3600 people to staff it more than doubling its Texas workforce.
California may be dreaming but Texas is working.
Californias elected officials are particularly adept at dreaming up ways to spend other peoples money. While the state struggles with interminable deficits caused by years of reckless spending the argument in Sacramento isnt over how to reduce government; rather its over how much to raise taxes and on whom.
Governor Brown is pushing for a tax increase of $6.9 billion per year to appear on this Novembers ballot. Californias powerful government-employee unions and Molly Munger a
wealthy civil-rights attorney (wealthy by dint of being the daughter of Warren Buffetts business partner) are offering two competing tax-hike plans. The silver lining may be that having three tax hikes on the ballot will turn voters off all of them.
Meanwhile lawmakers in Texas are grappling with a fiscal question of an entirely different sort: whether or not to spend some of the $6 billion set aside in the states rainy-day fund.
Californias government-employee unions routinely spend tens of millions of dollars at election time to maintain their hold on power. In Texas the government unions are weak and dont have collective bargaining leaving trial attorneys as the main source of funding for Lone Star Democrats.
Californias habit of raising taxes to fund a burgeoning regulatory state isnt without impact on its economy. Californians fork over about 10.6 percent of their income to state and local governments above the U.S. average of 9.8 percent. Texans pay 7.9 percent. This affects the bottom line of both consumers and businesses.
With that money Californians pay for more government. The number of non-education bureaucrats in California is close to the national average at 252 per 10000 people. Texas gets by with a bureaucracy 22 percent smaller: 196 per 10000.
Of course having more government employees means making more government rules. According to a 2009 study commissioned by the California legislature state regulations cost almost $500 billion per year or five times the states general-fund budget. These regulations ding the average small business for some $134122 a year in compliance and opportunity costs.
While California has more bureaucrats Texas has 17 percent more teachers with 295 education employees per 10000 people compared to Californias 252.
The two states educational outcomes reflect this disparity. If we compare national test scores in math science and reading for the fourth and eighth grades among four basic ethnic and
racial categories - all students whites Hispanics and African-Americans - Texas beats California in every category and by a substantial margin.
In fact Texas schools perform consistently above the national average across categories of age race and subject matter while California schools perform well below the national average.
Apologists for the Golden State frequently point to Texass flourishing oil and gas industry as the reason for its success. Texas does lead the nation in proven oil reserves but California ranks third.
The real difference isnt in geology but in public policy: Californians have decided to make it difficult to extract the oil under their feet.
Further contrary to popular opinion Californias refineries routinely produce a greater value of product than do refineries in Texas mainly because the special gasoline blends that California requires are more costly.
Another advantage that Texas enjoys over California is in its civil-justice system. In 2002 the U.S. Chamber of Commerce ranked Texass legal system 46th in the nation just behind Californias which was 45th. Texas went to work improving its lawsuit environment enacting major medical-malpractice reforms in 2003. Texass ranking consequently jumped ten places in eight years while Californias dropped to 46th. In the last legislative session Texas lawmakers passed a landmark loser-pays provision which promises to further curtail frivolous lawsuits.
While California seeks more ways to tax success it excels at subsidizing poverty. The percentage of households receiving public assistance in California was 3.7 percent in 2009 double Texass rate of 1.8 percent. Almost one-third of all Americans on welfare reside in California.
With this in mind it makes perfect sense that only 18 percent of the Democrats who control both houses of Californias full-time legislature worked in business or medicine before being elected. The remainder drew paychecks from government worked as community organizers or were attorneys.
In Texas with its part-time legislature 75 percent of the Republicans who control both houses earn a living in business farming or medicine with 19 percent being attorneys in
private practice. Texas Democrats are more than twice as likely as their California counterparts to claim private-sector experience outside the field of law.
That Texass legislature is run by makers and Californias by takers is glaringly obvious from the two states respective balance sheets.
Chuck DeVore served in the California State Assembly from 2004 to 2010. He is currently a visiting senior fellow in fiscal policy at the Texas Public Policy Foundation.
