Debunking the myths behind the recall
by Bill Magavern, Senior Legislative Representative, Sierra Club California
Recall proponents have loudly proclaimed that California’s economy is moribund
and businesses are fleeing the state to escape excessive taxation and regulation,
including environmental regulation. But when one considers the actual facts, a
much different picture emerges.
Is our economy worse than those of other states? “California has tracked the
national economy over the last several years,” says UC Berkeley professor John
Ellwood. In terms of attracting jobs, California has “done a little bit better
than the rest of the country,” notes Kenneth Rosen, from the Haas School of Business
at UC Berkeley. Total civilian employment in our state actually hit an all-time
high in August, something that you won’t hear from Arnold Schwarzenegger, Tom
McCliantock and other recall advocates.
All states are suffering from the Bush recession, and the facts show California
right in line with the national average. According to the Wall Street Journal,
California’s 2.5% economic growth in the 12 months ending in June exactly matches
the figure for the whole U.S. California did slightly better than average in percentage
of jobs lost and budget deficit as a percentage of gross domestic product, and
slightly worse in unemployment rate and growth in personal income.
California does have a fiscal crisis. The gap between revenues and spending
leaves a structural deficit of $9-15 billion. In the past, such gaps have been
bridged through a combination of increased revenues and spending cuts, and Governor
Davis proposed such a mix this year. Presently, though, the requirement for a
2/3 majority in both houses of the Legislature to pass either an annual budget
or a tax increase has allowed a minority of lawmakers who categorically oppose
all revenue increases to block such a balanced approach. The Budget Accountability
Act, which will be on the ballot in March, would make the fiscal process more
democratic, opening the door to a balanced approach.
Are Californians overtaxed?
No one likes to pay taxes, but experts say that our state and local tax burden
is 14th in the nation calculated as a percentage of income, and sixth-highest
when calculated on a per capita basis. Interestingly, “the bottom 80% of California
households by income (those earning $80,000 or less) have a combined state and
local tax burden that is below the national average for their income group,” says
Prof. Ellwood. In other words, our progressive tax structure compared to other
states puts more of the burden on the wealthiest fifth of Californians— those
who have received the lion’s share of the tax cuts enacted by the Bush Administration.
Do environmental regulations cause businesses to flee California? On the contrary,
California is still considered an attractive place to live and work, in part because
of the beautiful coast and mountains that we seek to safeguard. Furthermore, Americans
are more and more aware of the importance of clean air and water. What business
executives would want to move to a region where their children would be likelier
to contract asthma? What tourists would want to vacation at a beach so polluted
that they might get sick from swimming in the water?
Vote against the costly recall.