Fears that California governor Jerry Brown and the new Democratic supermajority will go on a spending and tax-raising spree may be overblown. Brown has called for “prudence” in tax policy, and state leaders have deflected renewed pressure from public unions to reverse spending cuts. There’s still plenty to worry about, however, as The Economist reports:
Prop 30, or something like it, may have been necessary to stanch California’s budgetary bleeding. But it leaves the state with the highest top income- and sales-tax rates in the country. Most of its revenues will come from high earners, which will do little to ease California’s business-unfriendly reputation. . . .
Borrowing costs are high, and the credit rating dreadful. An over-reliance on income- and capital-gains taxes on the wealthy makes revenues highly volatile: when the Dow sinks, so do revenues.
Despite Democrats’ apparent omnipotence, there may be some opportunity for the long-sidelined (and scarce) Republicans in the state government to help address some of these problems:
Some items on Mr Brown’s to-do list, including pension reform and a softening of environmental rules, will alienate some of his party allies. Republicans could stem their slide into oblivion by working with the governor on such issues. Whether they choose to is another question; as the party has shrunk it has hardened, and after its latest reversals it may turn out to have calcified.
Whether or not they take this opportunity may help answer a big question with important ramifications for America’s future: Can the GOP become relevant again in California, with smart ideas, outreach to minorities, appeals to strivers and entrepreneurs, and policy ideas that make sense in the post-apocalyptic landscape of a deep blue dystopia?
If not, will smart Democrats craft an alternative to the “death by public union” liberalism that is strangling what ought to be America’s most dynamic state?
Only time will tell, but the recent signs from California have not been promising.