A Tale of Two Capital Cities

By Bob Sanchez, JMI Policy Director
Posted August 23, 2012
The capital cities of Florida and California have a few things in common besides being a seat of state government. Both are college towns, and both are the temporary home of governors – Florida’s Rick Scott and California’s Jerry Brown – who are, shall we say, admirably lean but “follicle-ly challenged.” Indeed, side-by-side mug shots displaying their bald pates might lead the unwary to imagine that the two leaders are actually twins who were separated at birth.

In political philosophy, however, the two governors and the two state governments could hardly be more different. Brown, who was dubbed “Governor Moonbeam” during his long-ago first stint (1975-83) as the Golden State’s governor, is currently asking voters in November to approve a tax hike that’s projected to wring another $9 billion or so from Californians’ pockets. The plan, put forward to cope with a $16 billion budget deficit, would raise the state sales tax to 7.5 percent and increase the state’s personal income tax rates for “the rich,” who are defined as those with taxable incomes above $250,000.

Yet that $16 billion budget deficit isn’t even the worst of California’s money troubles. The state’s major pension plans — one for teachers and one other state workers – are among the nation’s largest and are also in terrible shape, with billions in unfunded liabilities.

Meanwhile, three California cities have declared bankruptcy – victims of their own unsustainable pension promises – and several other California cities are reportedly on the brink of insolvency.

Then, as if to make matters worse, Governor Brown recently signed legislation committing California to build a “high-speed” rail system that won’t actually run at high speed and won’t reach the state’s major metro areas until 2032, if ever. It’s currently projected to cost nearly $70 billion but is almost certain to cost a lot more.

In Florida, meanwhile, three consecutive governors during this time span – Jeb Bush, Charlie Crist, and now Rick Scott – regardless of their other foibles, commendably insisted that the state live within its means. A decline in state revenue was not perceived as an excuse to seek a major tax hike. In fact, the state managed to grant several tax decreases during this period, phasing out an intangibles tax that had been a disincentive for investors, and reducing several taxes that penalized business success.

The irony is that spendthrift California, despite having some of the nation’s highest taxes, has had to make far more severe budget cuts than Florida, despite the recession’s impact on Florida. California has closed dozens of its state parks, shortened the K-12 school year, dramatically slashed funding for its colleges and universities, and released thousands of felons from its costly prison system, where the powerful correctional officers union created inordinately high costs.

For a revealing snapshot of two states heading in different directions, check out a side-by-side comparison based on U.S. Census data analyzed by researcher Keith Leslie, a Florida State University student participating this fall in JMI’s prestigious internship program. His findings confirm that California, like the federal government in Washington, doesn’t have a revenue problem; it has a spending problem. Consider:

According to the Census Bureau, in the decade from 2001 to 2011, the number of full-time equivalent state employees in California increased by 9.3 percent – about the same as the state’s population increase — but the total payroll rose by a whopping 42.4 percent.

In that same time span, the number of full-time-equivalent state employees in Florida decreased by 1.7 percent as technological advances allowed a smaller workforce to be more productive. Because of inflation, the total state payroll increased by 22.5 percent – slightly more than half of California’s payroll increase. Nearly three-fourths of Florida’s payroll increase was attributable to the rapid growth in higher education, which experienced large increases in enrollment.

Maybe Sacramento is a victim of his fabled history. When gold was discovered near there in 1849, thousands of aspiring miners showed up to stake their claims, panning for gold in the region’s streams. The tradition continues. The difference is that nowadays, California’s politicians pan for gold in the taxpayers’ pockets.

In Tallahassee, local boosters are forever lamenting that it’s not yet as large as booming capital cities such as Austin, Raleigh, Columbus, or Nashville. If Florida’s capital city is looking for a role model, however, the state’s taxpayers ought to pray that it doesn’t choose to emulate Sacramento. Evidently, in addition to occasional flecks of gold, there is something else Northern California’s water that causes an incurable addiction to spending other people’s money.

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Responses to “A Tale of Two Capital Cities”:

  1. Nicola says:

    Thank you for the sensible critique. Me & my neighbor were just preparing to do a little research about this. We got a grab a book from our local library but I think I learned more from this post.

 
 

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