Posts Tagged ‘CalPERs’

Texas vs. California Update for October 19, 2016

Wednesday, October 19th, 2016

Time for another Texas vs. California update! Included here are several links from City Journal’s special “Texas Rising” issue.

  • Texas cities continue to kick ass economically:

    Texas’s spectacular growth is largely a story of its cities—especially of Austin, Dallas–Fort Worth, Houston, and San Antonio. These Big Four metropolitan areas, arranged in a layout known as the “Texas Triangle,” contain two-thirds of the state’s population and an even higher share of its jobs. Nationally, the four metros, which combined make up less than 6 percent of the American population, posted job growth equivalent to 30 percent of the United States’ total since the financial crash in 2007. Within Texas, they’ve accounted for almost 80 percent of the state’s population growth since 2000 and over 75 percent of its job growth. Meantime, a third of Texas counties, mostly rural, have actually been losing population.

    Texas is sometimes described as the new California, an apt parallel in terms of the states’ respective urban geographies. Neither state is dominated by a single large city; each has four urban areas of more than 1 million people, with two of these among the largest regions in the United States. In both states, these major regions are demographically and economically distinct.

    But unlike California, whose cities have refocused on elite priorities at the expense of middle-class occupations, Texas offers a complete spectrum of economic activities in its metros. Another key difference is that Texas cities have mostly embraced pro-development policies that have kept them affordable by allowing housing supply to expand with population, while California’s housing prices blasted into the stratosphere due to severe development restrictions. Texas cities also benefit from favorable state policies, such as the absence of a state income tax and a reasonable regulatory and litigation environment. These factors make Texas cities today what California’s used to be: places to go in search of the American dream.

  • More on how Texas cities are growing:

    Though some east/west coastal cities—notably, San Francisco—have enjoyed vigorous growth of late, none has been nearly as proficient in creating jobs in the new millennium as Texas’s four leading metros. Overall, Dallas–Fort Worth and Houston have emerged as the nation’s fastest-expanding big-city economies. Between 2000 and 2015, Dallas–Fort Worth boosted its net job numbers by 22.7 percent, and Houston expanded them by an even better 31.2 percent. Smaller Austin (38.2 percent job-base increase) and once-sleepy San Antonio (31.4 percent) have done just as well. New York, by way of comparison, increased its number of jobs in those years by just 10 percent, Los Angeles by 6.5 percent, and San Francisco by 5.2 percent, while Chicago actually lost net employment. And the Texas jobs are not just low-wage employment. Middle-class positions—those paying between 80 percent and 200 percent of the national median wage—have expanded 39 percent in Austin, 26 percent in Houston, and 21 percent in Dallas since 2001. These percentages far outpace the rate of middle-class job creation in San Francisco (6 percent), New York and Los Angeles (little progress), and Chicago (down 3 percent) over the same period.


    Among 52 American metropolitan areas with more than 1 million residents, San Antonio had the largest gain in its share of middle- and upper-income households—that is, the percentage of households in the lower-income category in the city actually dropped—from 2000 to 2014. Houston ranked sixth, Austin 13th, and Dallas–Fort Worth 25th in the Pew survey.


    In 2015, unemployment among Texas’s Hispanic population reached just 4.9 percent, the lowest for Latinos in the country—California’s rate tops 7 percent—and below the national average of 5.3 percent.

    Texas Latinos show an entrepreneurial streak. In a recent survey of the 150 best cities for Latino business owners, Texas accounted for 17 of the top 50 locations; Boston, New York, L.A., and San Francisco were all in the bottom third of the ranking. In a census measurement, San Antonio and Houston boasted far larger shares of Latino-owned firms than did heavily Hispanic L.A.

    In Texas, Hispanics are becoming homeowners, a traditional means of entering the middle class. In New York, barely a quarter of Latino households own their own homes, while in Los Angeles, 38 percent do. In Houston, by contrast, 52 percent of Hispanic households own homes, and in San Antonio, it’s 57 percent—matching the Latino homeownership rate for Texas as a whole. That’s well above the 46 percent national rate for Hispanics—and above the rate for all California households. (The same encouraging pattern exists for Texas’s African-Americans.)

    California and Texas, the nation’s most populous states, are often compared. Both have large Latino populations, for instance, but make no mistake: Texas’s, especially in large urban areas, is doing much better, and not just economically. Texas public schools could certainly be improved, but according to the 2015 National Assessment of Educational Progress—a high-quality assessment—Texas fourth- and eighth-graders scored equal to or better than California kids, including Hispanics, in math and reading. In Texas, the educational gap between Hispanics and white non-Hispanics was equal to or lower than it was in California in all cases.

    Though California, with 12 percent of the American population, has more than 35 percent of the nation’s Temporary Assistance for Needy Families welfare caseload—with Latinos constituting nearly half the adult rolls in the state—Texas, with under 9 percent of the country’s population, has less than 1 percent of the national welfare caseload. Further, according to the 2014 American Community Survey, Texas Hispanics had a significantly lower rate of out-of-wedlock births and a higher marriage rate than California Hispanics.

    In California, Latino politics increasingly revolves around ethnic identity and lobbying for government subsidies and benefits. In Texas, the goal is upward mobility through work. “There is more of an accommodationist spirit here,” says Rodrigo Saenz, an expert on Latino demographics and politics at the University of Texas at San Antonio, where the student body is 50 percent Hispanic. It’s obvious which model best encourages economic opportunity.

  • Chuck DeVore explains how SB1234, a bill that establishes the California Secure Choice Retirement Savings Trust, a state-run retirement fund for 7.5 million Californians, is actually a mechanism for forcing taxpayers to bail out public pensions:

    Per section 100004 (c) of the new law: Moneys in the program fund may be invested or reinvested by the treasurer or may be invested in whole or in part under contract with the Board of Administration of the Public Employees’ Retirement System or private money managers, or both, as determined by the board. What is the California Public Employees’ Retirement System or CalPERS for short? It’s America’s largest public pension fund with some 1.8 million current and retired government employees.

    But, as with many public retirement systems around the nation, CalPERS is grossly underfunded. Including the California teacher retirement system and smaller local government systems, the unfunded liability for future retirement payouts is about $991 billion, according to the Stanford Institute for Economic Policy Research’s Pension Tracker run by Joe Nation, Ph.D., a former Democratic member of the California State Assembly.

    Since cash is amazingly fungible in government hands, dragooning some 7.5 million Californians into a retirement system that supports 1.8 million state government workers by levying what amounts to a 3 percent payroll tax is going to go a long way towards ensuring CalPERS’ short-term solvency while, perhaps more importantly, building public support for bailing out CalPERS’ looming trillion-dollar shortfall.

    7.5 million Californians will be made to care about CalPERS fiscal health.

    (Hat tip: Pension Tsunami.)

  • California wants to offer ObamaCare to illegal aliens. (Hat tip: Director Blue.)
  • Governor Bush’s education reforms were a lot more successful than President Bush’s. “Educational outcomes overall have continued to improve in Texas.” A long article that points out the need for more reform.
  • Meanwhile, California’s teacher’s unions are trying to destroy charter schools.
  • “The Redding Police Department’s net personnel costs in fiscal 2007-08 were $21 million for 173 employees; in fiscal 2015-16 the costs were $22 million for 131 total employees. In fiscal 2015-16, the Redding Police Department is paying $47,500 per employee more than in fiscal 2007-08. The increase is to pay its unfunded pension liability.” (Hat tip: Pension Tsunami.)
  • San Jose voters to vote on compromise pension reform that rolls back real pension reform passed four years ago. (Hat tip: Pension Tsunami.)
  • “Former [Orange County] Public Works administrator and convicted felon Carlos Bustamante, who served jail time this year for his sex crimes against county workers, lost a chunk of his pension benefits Monday after he was stripped of credit for the years he worked while committing the crimes.” But he’ll still get a pension. Also: “The board’s decision also means Bustamante is owed the nearly $56,000 he paid into the system during the 2 1/2 years he was committing crimes – meaning he’ll be refunded nearly $32,000 but will collect lower pension payments moving forward.” (Hat tip: Pension Tsunami.)
  • Los Angeles is suffering from a housing shortage. So naturally there’s a ballot initiative to make housing construction more expensive through requiring union kickbacks.
  • Here’s a long piece in City Journal by’s Jon Cassidy. It’s a very balanced assessment of both the strengths and weaknesses of Texas’ governmental structure.

    The good news is that the benefits of the Texas model, overseen by its part-time legislature, are impossible to ignore. From 2000 to 2014, Texas created some 2.5 million nonfarm jobs, more than a quarter of the U.S. total for the period. In 2015, amid free-falling oil prices, Texas still managed to finish third among states in job growth, thanks to booming health care, education, professional services, manufacturing, hospitality, warehousing, and light industrial sectors. Construction is doing well, too. Wondrously cheap housing and pro-growth land-use policies draw people and business to the state. None of this diversification was centrally planned. It’s the product of an economy that’s wide open to foreign trade and immigration. Immigration has boosted native Texans’ income by an aggregate $3.4 billion to $6.6 billion a year. Income inequality is up, too—but that’s just another way of saying that high-paying jobs are growing fastest.

    To a large degree, the Texas model has worked because the Austin governing establishment is penned in, limited in the damage that it can inflict by a state constitution that not only keeps lawmakers from enacting new laws for one out of every two years but also severely restricts taxation and imposes budget caps. Texas has no state income tax, and instituting one would require voter approval. The legislature makes do with a sales tax, a handful of excise taxes, and an onerous gross-receipts tax that penalizes high-volume businesses. The Texas state government simply never has the money for bold new expansions of government. So it stays small, just as the original Texans wanted it. It’s not perfect and never will be, but the state is flourishing.

    (Hat tip: Pension Tsunami.)

  • Texas state government has done a good job controlling debt. Local governments? Not so much. (Hat tip: Pension Tsunami.)
  • Police are under fire in Sacramento and Los Angeles.
  • The high speed rail project is uniting Californians! In opposition to it:

    The rest of the story is the astonishingly widespread political opposition to the train by California voters these days, even though 53 percent of them approved the idea when it was on the state ballot in the November 2008 election. The opposition spans ideological left and right and demographic rich, poor, and middle-class: from wealthy Silicon Valley technocrats horrified that the ultra-fast rail lines, with overpasses only every 10 miles or so, would wreck their leafy, bicycle-friendly upscale-suburban neighborhoods, to Latino-majority working-class towns in Southern California’s San Fernando Valley that would be split in half by the train corridors, to equestrians in the San Gabriel Mountain foothills who would see their horse trails destroyed and environmentalists concerned about wetlands destruction in Northern California and threats to wildlife and endangered plant species in Southern California’s Angeles National Forest, through which several of the proposed train routes would plow.

  • Hat tip for the above to Amy Alkon, who also notes:

    The analyzed per mile rate would make a one-way SF to LA ticket cost about $190.5 Therefore, if the CHSRA’s assumed private operator must charge enough to break even, four tickets for a LA/SF round trip would cost at least $1,520. Conclusions: California’s 2009 median household income was $42,548.6. For a middle class household to ride the train LA-SF once would cost them about 4% of their annual pre-tax income.

  • San Francisco to city of Brisbane: “Build housing in your city so San Franciscans can enjoy it…or else!”
  • CalPERS tries to stick 700 person town of Loyalton with a $1.6 million bill as punishment for dropping out of the system…for four retirees. (Hat tip: Pension Tsunami.)
  • The Bay Area Air Quality Management District needs more money so employees can enjoy more expensive junkets to New Orleans.
  • Want to sell signed books in California? A newly passed law requires you to issue a certificate of authenticity for any item over $5, including your name and address, even if it came from the publisher pre-signed. No COA? “You can be liable for TEN TIMES damages, plus attorneys fees. Call it a cool half mill, because you didn’t know you were supposed to issue a COA.” Word is they’re planning to change this idiocy, but that doesn’t excuse passing it in the first place.
  • Another California idiot law: A man can’t display historical Civil War paintings at the state fair because they have confederate flags in them. More here.
  • Did California just legalize child prostitution? Snopes says no, but I’ve seen California impose more tendentious readings on other laws. (Hat tip: Director Blue.)
  • “Jerry Brown Just Signed a Tough-on-Rape Bill That’s So Bad, Even Feminists Hate It.” (Hat tip: Instapundit.)
  • Voters in Apple Valley, California push for initiative to force voter approval on debt spending. Naturally the City Council puts their own initiative on the ballot to continue “eminent domain acquisition efforts unencumbered by another election.” Plus they illegally spent taxpayer money advertising in favor of their own initiative. (Hat tip: Pension Tsunami.)
  • Harrison County in east Texas has been enjoying industrial gains.
  • Dallas has become a big hub for philanthropy. (Hat tip: Pension Tsunami.)
  • California passes a hide an actor’s age upon request law. I sincerely doubt this will pass constitutional muster on first amendment and equal protection clause grounds. Plus, IMDB’s servers are in Washington state…
  • Verengo Inc, the largest installer of residential solar systems in southern California, filed for Chapter 11 bankruptcy protection on Friday as it seeks to sell itself after defaulting on a bank loan.”
  • “The San Diego-based Garden Fresh Restaurant Corp., which owns the Souplantation chain, has filed for chapter 11 bankruptcy protection…Court papers show that Garden Fresh pins its troubles on declining sales, higher minimum wages, and higher employee benefit costs.”
  • DentalOne is relocating its headquarters from Ohio to Plano.
  • Texas vs. California Update for August 10, 2016

    Wednesday, August 10th, 2016

    Time for another Texas vs. California roundup:

  • How California screwed itself:

    Then-Gov. Gray Davis and the Legislature had quietly, virtually without notice, decreed a massive, retroactive increase in state employee pension benefits, which was quickly emulated by hundreds of local governments.

    At the time, CalPERS was ringing up big earnings from the 1990s’ bullish stock market — so big that it had reduced contributions from member governments to near zero. Public employee unions hankered for a share of the bounty and pressed for a benefit increase.

    The CalPERS board, dominated by public employees and union-friendly politicians, sponsored the increase, Senate Bill 400, with assurances that it would cost taxpayers nothing. A state Senate analysis of the bill said CalPERS “believes they will be able to mitigate this cost increase through continued excess returns of the CalPERS trust.”

    Years later, it emerged that the assurances reflected the most optimistic of several scenarios developed by the CalPERS staff. More pessimistic scenarios were kept secret — but they were the ones that came true. By the time Seeling delivered his dark appraisal in 2009, the state was being hammered by an ultra-severe recession, and the CalPERS trust fund was losing what turned out to be nearly $100 billion in value.

    Seven years later, CalPERS and other pension funds still haven’t fully recovered, and they’re sharply raising mandatory “contributions” from state and local governments to cover the gaps left by meager investment earnings.

    (Hat tip: Pension Tsunami.)

  • California is deluding itself if it thinks it’s “turned to corner” and is on the path for sustainable growth:

    Between 2000 and 2015, Austin has increased its jobs by 50 percent, while Raleigh, Houston, San Antonio, Dallas, Nashville, Orlando, Charlotte, Phoenix and Salt Lake City – all in lower-tax, regulation-light states – have seen job growth of 24 percent or above. In contrast, since 2000, Los Angeles and San Francisco expanded jobs by barely 10 percent. San Jose, the home of Silicon Valley, has seen only a 6 percent expansion over that period.

    Obviously this runs counter to the notion of California being business friendly, since the ratio of jobs to workers is lower here than in Texas and the rest of the United States, and sometimes a lot lower.


    Gov. Brown has achieved bragging rights by suggestions of a vaunted return to fiscal health. True, California’s short-term budgetary issues have been somewhat relieved, largely due to soaring capital gains from the tech and high-end real estate booms. But the state inevitably will face a soaring deficit as those booms slow down. Brown is already forecasting budget deficits as high as $4 billion by the time he leaves office in 2019. As a recent Mercatus Center study notes, California is among the states most deeply dependent on debt.

    The state’s current budget surplus is entirely due to a temporary tax and booming asset markets. The top 1 percent of earners generates almost half of California’s income tax revenue, and accounts for 41 percent of the state’s general fund budget. These affluent people have incomes that are much more closely correlated to asset prices than economic activity, and asset prices are more volatile than economic activity generally. Brown’s own Department of Finance predicts that a recession of “average magnitude” would cut revenue by $55 billion.

    More critically, the state continues to increase spending, particularly on pensions. Outlays have grown dramatically since the 2011-2012 fiscal year, averaging 7.8 percent growth per year through FY 2015-2016. Seeing the writing on the wall, the state’s labor leaders now want to extend the “temporary” income tax, imposed in 2012, until 2030. This might not do much to spark growth, particularly in a weaker economy.

    During this recovery, California has made minimal effort to eliminate the state’s budget fragility. To use a recently popular term, this is gross negligence. It is, thus, no surprise that credit ratings agency Moody’s Investors Service ranked California second from the bottom in being able to withstand the next recession. Someday the bills will come due.

  • More on California’s business climate vs. Texas:

    Note that across the entire decade the unemployment rate in California was consistently greater than that in the United States, averaging 1.5 percentage points greater overall and maxing out at 2.9 percentage points in January and February of 2011. Except for the first six months of 2006, the same story holds true for California and Texas, although the differences here are more pronounced: an average of 2.5 percentage points greater and a maximum difference of 4.2 percentage points at various points in 2009 and 2010. Also note how long double-digit unemployment persisted in California (43 months) during this decade compared to the United States (1 month) and Texas (0 months).

    Also: “Texas outperformed California in 9 of the 10 years. And Texas had a CAGR of 3.1 percent, meaning its economy grew at more than twice the pace of California’s each year.” (Hat tip: Pension Tsunami.)

  • Texas’ economic, labor Market, and fiscal situation. “The Texas model leads comparable states and U.S> averages in most measures.”
  • “CalPERS has not met its expected 7.5% rate of return for the last 20 years.” (Hat tip: Ace of Spades HQ.)
  • Things in Texas are very different than they were in the 1980s:

    This is what Krugman and others really get wrong about the Texas miracle.

    The state had its last major recession from 1986 to 1987, after oil prices collapsed and the real estate and financial sectors crashed. Back then, the mining sector, dominated by oil and gas activity, was directly related to about 21 percent of the real private economy and roughly 5 percent of the labor force. Today, mining is 15 percent of the real private economy and less than half of the labor force share. As a result, the combination of more economic diversification and pro-growth policies has produced a much more resilient economy. Texas in 2016 looks a lot different than Texas in 1987.

  • “A major impediment to economic growth and a factor chasing people and businesses away from California is the state’s high tax rates and poorly structured tax code. California levies the highest top marginal income tax rate in the nation at 13.3% and has the country’s 6th highest overall tax burden. Such a hostile tax climate has consequences. During the last decade, from 2000 to 2010, California had a net outmigration of over 1.2 million residents move to other states. Those former Californians took over $29 billion in income with them.”

    Residents of San Diego, Newport Beach, Los Angeles, San Francisco, and many other cities and towns across California enjoy beautiful scenery and enviably pleasant weather year round; while folks in Dallas, San Antonio, Austin, and Houston ride out their hot and humid summers by staying indoors as much as possible. Yet Texas has been the number one recipient of California refugees. While the physical climates found in states that are the top recipients of California refugees don’t hold a candle to the Golden State’s, the business tax climates are far more hospitable.

    California imposes the nation’s highest income tax, while Texas is one of nine states with no income tax. While Texas has the 10th best business tax climate in the nation, according to the non-partisan Tax Foundation, California has the country’s third worst. During the last decade, over 225,000 people moved from California to Texas, bringing over $4.4 billion in income with them to the Lone Star State. After Texas, Nevada is the number two recipient of ex-Californians. Like Texas, Nevada can’t compete with California’s natural beauty and climate, but the Silver State makes up for it by having no state income tax and the nation’s 5th best business tax climate.

    (Hat tip: Pension Tsunami.)

  • The deregulated energy market is still working to lower costs for Texans.
  • California’s Democrat-dominated local governments are riddled with nepotism in their hiring practices. In San Diego, “Investigators uncovered an employee vetting process they allege was ‘abused’ — so that in a third of the cases reviewed, ‘friends and family members’ of city staff were hired ‘to the detriment of public job applicants.’” (Hat tip: Pension Tsunami.)
  • Liberal complains about how San Francisco’s progressive policies killed affordable housing. “Instead of forming a pro-growth coalition with business and labor, most of the San Francisco Left made an enduring alliance with home-owning NIMBYs. It became one of the peculiar features of San Francisco that exclusionary housing politics got labeled “progressive.” Do note this piece is from a year ago. (Hat tip: Instapundit.)
  • Speaking of San Francisco, three of the city’s supervisors have decided that he would like to take the goose that laid the golden egg (i.e., the city’s high tech employers), smother it with locally source rosemary, thyme and organic butter, and broil it at 450° in the form of a payroll tax for those companies that earn $1 million or more in gross receipts.
  • “In 2014 there were 142,417 housing starts in the city of Tokyo (population 13.3m, no empty land), more than the 83,657 housing permits issued in the state of California (population 38.7m).” (Hat tip: Instapundit.)
  • “California To Proclaim August “Muslim Appreciation And Awareness Month.” So when do we get Christian Appreciation Month?
  • “Relocation of Highway 99 in Fresno, a key part of the bullet train project, is over budget, behind schedule and will cost millions of dollars more to complete.” (Hat tip: Cal Watchdog.)
  • DAE Systems is relocating its headquarters to Catawba County and intends to create 46 new jobs and invest $6.8 million during the next three years, Gov. Pat McCrory’s office announced Monday. The California-based company, which is moving to Claremont, will receive a grant of up to $110,000 from the One North Carolina Fund that is dependent on the company meeting job-creation goals.”
  • Nothing says “adult oversight” quite like playing strip poker with teenage camp counselors. Take a bow, Stockton Mayor Anthony Silva! (Hat tip: Dwight, who also notes that Silva is a member of the criminal-ridden “Mayors Against illegal Guns.”)
  • Noted for the record: Mayor Silva comes up twice at the very top of Stockton real estate developer Dan Cort’s Facebook page. (Previously.)
  • Texas vs. California Update for July 25, 2016

    Monday, July 25th, 2016

    Enjoy another Texas vs. California roundup:

  • June marked the 114th month that Texas was at or below the national unemployment average. Texas also created 246,600 jobs in the service sector.
  • Once again Texas ranks as the best state for business, and California ranks worst. (Hat tip: Fox and Hounds via Pension Tsunami.)
  • Elites watch while California crumbles:

    The basket of California state taxes — sales, income, and gasoline — rates among the highest in the U.S. Yet California roads and K-12 education rank near the bottom.

    California depends on a tiny elite class for about half of its income-tax revenue. Yet many of these wealthy taxpayers are fleeing the 40-million-person state, angry over paying 12 percent of their income for lousy public services.

    Excessive state regulations and expanding government, massive illegal immigration from impoverished nations, and the rise of unimaginable wealth in the tech industry and coastal retirement communities created two antithetical Californias.

    One is an elite, out-of-touch caste along the fashionable Pacific Ocean corridor that runs the state and has the money to escape the real-life consequences of its own unworkable agendas.

    The other is a huge underclass in central, rural, and foothill California that cannot flee to the coast and suffers the bulk of the fallout from Byzantine state regulations, poor schools, and the failure to assimilate recent immigrants from some of the poorest areas in the world.

    The result is Connecticut and Alabama combined in one state. A house in Menlo Park may sell for more than $1,000 a square foot. In Madera, three hours away, the cost is about one-tenth of that.

  • CalPERS suffers $30.8 billion annual loss. “CalPERS has notoriously minimized the annual pension contribution for its 3,007 government entities by fantasizing that its superior investments expertise will allow its investments to compound every year without loss for the next three decades at an annual rate of 7.5 percent.” (Hat tip: Pension Tsunami.)
  • CalSTRS isn’t doing much better: “The California State Teachers’ Retirement System [earned] 1.4% for the fiscal year ended June 30.” (Hat tip: Instapundit.)
  • Record tax revenues, yet somehow California is still broke:

    California taxpayers are getting taken to the cleaners, but most of them are completely in the dark about how and why.

    I will pose a quick question: Does it seem strange that California has recorded record revenue increases, yet we also see a record number of tax increases and bond issuances on the ballot?

    In other words, the state’s tax system is collecting massive amounts of revenues, record amounts, yet politicians are still asking for a record number of new tax increases. For taxpayer advocates, it just doesn’t seem fair and seems very strange at first glance as to how this can even occur.

    The truth of the matter is that California’s system of public finance is a complete train wreck and is set up such that no amount of tax revenues collected will ever be enough to satisfy “spending needs.” The so-called baseline expenditure increases are on autopilot and deficit projections are generated despite record revenue increases, a trend projected in the Governor’s May Revise.

    (Hat tip: Pension Tsunami.)

  • “As we roll toward the November ballot, I’m reminded of H.L. Mencken’s quip that “Democracy is the theory that the common people know what they want, and deserve to get it good and hard.” We always get it “good and hard” in California given the ever-expanding one-party rule. The worse it gets, the more voters from the GOP high-tail it to Nevada and Texas — and the worse it gets as political competition evaporates. It’s the political equivalent of a death spiral.” (Hat tip: Pension Tsunami.)
  • Lots of tax hikes are on the California ballot this November, for a variety of different ostensible reasons, but actually for a single reason: Pensions. (Hat tip: Pension Tsunami.)
  • Beaumont, California: “Seven former officials were arrested and charged with stealing nearly $43 million during the city’s development boom. Now, residents are learning that the town’s problems go much deeper than the criminal case.” (Hat tip: Gregory Benford’s Facebook page.)
  • “California’s high-speed rail project increasingly looks like an expensive social science experiment to test just how long interest groups can keep money flowing to a doomed endeavor before elected officials finally decide to cancel it.” $68 billion and rising. (Hat tip: Ace of Spades HQ.)
  • Teachers union writes a $10-million check for income tax ballot measure.”
  • “Oakland police officer Malcolm Miller more than quadrupled his $107,627 salary to $489,662 with overtime, benefits and other specialty pays last year — making him Oakland’s highest paid employee for the third year in a row.” (Hat tip: Pension Tsunami.)
  • “C.C. Myers Inc., one of California’s highest-profile freeway builders, has filed for bankruptcy.”
  • Also filing for bankruptcy: California-based developer Criswell-Radovan, which owns the Tahoe Cal Neva casino Frank Sinatra used to own.
  • One tiny bit of dubious good news for the Bankruptcy Court for the Central District of California: Now they’re only the second in bankruptcy filings in the nation at 45,000, having been overtaken by the Bankruptcy Court for the Northern District of Illinois at 47,535 filings.
  • Nissan and Toyota battle over Texas. “Both automakers are zeroing in on Texas as a key growth opportunity.”
  • California’s Democratic State Controller Betty Yee fined $2,082 for violations during her 2014 campaign.
  • Rent a security robot for $7 an hour. How many human security guards will be left at California’s $15 an hour?
  • Old and Busted: Participation trophies. The New Hotness: California’s Democratic officials giving awards to their own family members.
  • “Judge throws out ex-L.A. County Sheriff Lee Baca’s plea deal, saying six months in prison not enough.” (Hat tip: Dwight.)
  • Texas vs. California Update for June 2, 2016

    Thursday, June 2nd, 2016

    Time for another Texas vs. California update:

  • Once again, Texas is ranked as the best state for business by CEO Magazine, while California is ranked the worst. (Hat tip: Rider Rants via Pension Tsunami.)
  • This OC Register piece offers an good restatement of the general problem:

    California has earned quite a reputation for being openly hostile to business, as confirmed by numerous studies and surveys. Its plethora of taxes and regulations are driving away legions of entrepreneurs and workers, but they are doing wonders for one segment of the economy: the moving industry. It is almost as though that industry is secretly lobbying the state Legislature for its anti-business policies.

    Joe Vranich, as president of Spectrum Location Solutions, an Irvine business relocation consulting firm, knows all about what drives businesses’ decisions to give up and leave for greener pastures. According to his research, in just the past seven years, approximately 9,000 businesses have decided to leave California or expand their operations out of state. Companies leaving California typically save between 20 percent and 35 percent of operating costs, he concluded.

    Texas has been the biggest beneficiary of California’s business exodus.


    California’s litigious climate has become a common complaint of business owners. No wonder the American Tort Reform Foundation once again named California the No. 1 “Judicial Hellhole” in the nation last year, based on the state’s excessive laws and regulations and a flood of disability access, asbestos and food advertising and labeling lawsuits, frequently more opportunistic attempts at extortion than legitimate attempts to seek justice for victims who have been truly harmed.

    California has proven to be a particularly harsh climate for manufacturing businesses. “Even if California were to eliminate the state income taxes tomorrow, that still would not be enough,” CellPoint Corp. CEO Ehsan Gharatappeh told the Dallas Business Journal of the Costa Mesa company’s move to Forth Worth.

    General Magnaplate Corp., which has made reinforced parts for the aerospace, transportation, medical, oil and other industries for 36 years, decided to shut down its California facility in Ventura altogether. “This is a very sad day for our employees and for my family, who have a long history of job creation in this area, but the simple fact is that the state of California does not provide a business-friendly environment,” CEO Candida Aversenti said in a press release. “Increases in workers’ compensation costs and government regulations, combined with predatory citizens groups and law firms that make their living entirely by preying on small businesses, have left us with no other choice but to shut down our California facility. This is in stark contrast to our New Jersey and Texas facilities, which are flourishing in small business-friendly environments created by the respective local governments and environmental agencies.”

  • Tech layoffs double in the Bay area:

    Yahoo’s 279 workers let go this year contributed to the 3,135 tech jobs lost in the four-county region of Santa Clara, San Mateo, Alameda and San Francisco counties from January through April, as did the 50 workers axed at Toshiba America in Livermore and the 71 at Autodesk in San Francisco. In the first four months of last year, just 1,515 Bay Area tech workers were laid off, according to mandatory filings under California’s WARN Act. For that period in 2014, the region’s tech layoffs numbered 1,330.

  • How did the California city of Irwindale rack up the largest per household market pension debt in the state, at $134,907 per household?
  • Low and negative interest rates means that CalPERS must make risky investments to even come close to hitting their yield targets:

    The nation’s largest public pension fund, the California Public Employees’ Retirement System, has one-fifth of its assets in bonds and is down 1.3% since July 1, according to public documents. The system, known by its abbreviation Calpers, also has 53.1% of its assets in stocks, 9% in real estate and 9.4% in private equity. In 2015, Calpers posted a return of 2.4%, below its target rate of 7.5%.

    Nor is CalSTARS doing much better:

    The nation’s second-largest public pension plan, the California State Teachers’ Retirement System, has shifted a significant amount of money away from some stocks and bonds to protect against a downturn. It moved assets into U.S. Treasurys and so-called liquid-alternative funds, which mimic hedge-fund strategies. Calstrs, as the pension is called, reported gains of 1.5% during a choppy 2015, with returns on its fixed-income investments up just 0.6%.

    (Note: WSJ link, so you may need to do the Google thing.)

  • News: Former CalPERS chief executive Fred Buenrostro convicted of bribery. California: Buenrostro will continue to receive his CalPERS pension while in prison. (Hat tip: Pension Tsunami.)
  • Overview of the Texas budget.
  • UnitedHealth exits California’s Obamacare exchanges.
  • Despite that, California wants to offer ObamaCare subsidies to illegal aliens.
  • California also wants to spend more money to send illegal aliens to college.
  • And those illegal aliens with California driver’s licenses still aren’t purchasing liability insurance.
  • Hate California traffic? Tough:

    The newest outrage comes from the Governor’s Office of Planning and Research in the form of a proposed “road diet.” This would essentially halt attempts to expand or improve our roads, even when improvements have been approved by voters. This strategy can only make life worse for most Californians, since nearly 85 percent of us use a car to get to work. This in a state that already has among the worst-maintained roads in the country, with two-thirds of them in poor or mediocre condition.


    In essence, the notion animating the “road diet” is to make congestion so terrible that people will be forced out of their cars and onto transit. It’s not planning for how to make the ways people live today more sustainable. It has, in fact, more in common with Soviet-style social engineering, which was based similarly on a particular notion of “science” and progressive values.

    (Hat tip: Instapundit.)

  • Toyota’s Plano headquarters takes shape.
  • The UAW is making a big push to unionize Tesla’s Fremont plant.
  • Speaking of Tesla, they’re approaching the grand opening of their giant battery factory…in Nevada.
  • McDonald’s CEO says a $15 minimum wage will make his restaurants shift to using robots. But what would McDonald’s know about minimum wage workers?
  • In the same vein, it’s no wonder that Whole Foods opened it’s first semi-automated Whole Foods 365 store in Los Angeles. “Promoted as a ‘chain for millennials,’ the new ‘365’ stores use about one-third less square footage than the company’s traditional 41,000-square-foot Whole Foods stores, but they also slash almost two-thirds of workers with robots and computerized kiosks.” (Hat tip: Director Blue.)
  • Schedule for California high speed rail boondoggle pushed back four more years. Latest obstacle: wealthy equestrians. “Hey, this study says horses won’t mind a super-fast, super loud train zipping along right next to them.” “You mean the study from the institute that two bullet train authority members sit on? Get stuffed!”
  • “The State Assembly Subcommittee on Education voted Tuesday to delay funding to the UC system because of concerns with the UC Retirement Plan, proposed by UC President Janet Napolitano in March, which would cause the university to incur significant costs. The delay was announced after an actuarial report was released earlier that day by Pension Trustees Advisors, or PTA, which showed that the retirement plan would cost the university $500 million in savings, or $34 million a year, over the next 15 years.” (Hat tip: Pension Tsunami.)
  • Maywood, California (which had previously outsourced services to the corrupt city of Bell) is on the brink of bankruptcy. (Hat tip: Dwight.)
  • “Two L.A. sheriff’s deputies convicted of beating mentally ill inmate.”
  • San Francisco liberals versus the city’s police union
  • “Another aviation company has decided to move its corporate headquarters to Fort Worth to take advantage of the Lone Star state’s business friendly environment and the city’s longtime history in the aerospace industry. The move is historic for Burbank, California-based C&S Propeller — an FAA and EASA certified repair station for propeller and airplane maintenance — which has been in California for nearly five decades.”
  • This one’s a wash: XCOR lays off employees in both California and Texas.
  • Texas vs. California Update for April 18, 2016

    Monday, April 18th, 2016

    Time for another Texas vs. California roundup, with the top news being California’s hastening their economic demise with a suicidal minimum wage hike:

  • Jerry Brown admits the minimum wage hike doesn’t make economic sense, then signs it anyway. (Hat tip: Ed Driscoll at Instapundit.)
  • Who is really behind the minimum wage hike? The SEIU:

    California’s drive to hike the minimum wage has little to do with average workers and everything to do with the Golden State’s all-powerful government employee unions.

    Nationally, the Service Employees International Union (SEIU) is known for representing lower skilled workers. But, of the SEIU’s 2.1 million dues-paying members, half work for the government. In California, that translates to clout with much of the $50 million SEIU spent in the U.S. on political activities and lobbying spent in California. In fact, out of the 12 “yes” votes for the minimum wage bill in the Assembly Committee on Appropriations on March 30, the SEIU had contributed almost $100,000 out of the three-quarters of a million contributed by public employee unions—yielding a far higher return on investment than anything Wall Street could produce.

    Unions represent about 59 percent of all government workers in California. Many union contracts are tied to the minimum wage — boost the minimum wage and government union workers reap a huge windfall, courtesy of the overworked California taxpayer.

  • “The impacts of the increase in minimum wage on workers at the very bottom of the pay scales might be just the tip of the iceberg in terms of the ramifications of the minimum wage increase.” (Hat tip: Pension Tsunami.)
  • Indeed, that hike will push government employee wages up all up the ladder.
  • “California minimum wage hike hits L.A. apparel industry: ‘The exodus has begun.'” (Hat tip: Director Blue.)
  • “Texas’ job creation has helped keep the unemployment rate low at 4.3 percent, which has now been at or below the U.S. average rate for a remarkable 111 straight months.”
  • “Number of Californians Moving to Texas Hits Highest Level in Nearly a Decade”:

    “California’s taxes and regulations are crushing businesses, and there are more opportunities in Texas for people to start new companies, get good jobs, and create better lives for their families,” said Nathan Nascimento, the director of state initiatives at Freedom Partners. “When tax and regulatory climates are bad, people will move to better economic environments—this phenomenon isn’t a mystery, it’s how marketplaces work. Not only should other state governments take note of this, but so should the federal government.”

    According to Tom Gray of the Manhattan Institute, people may be leaving California for the employment opportunities, tax breaks, or less crowded living arrangements that other states offer.

    “States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average,” Gray wrote. “Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs.”

    “Most of the destination states favored by Californians have lower taxes,” Gray wrote. “States that have gained the most at California’s expense are rated as having better business climates. The data suggest that may cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.”

    (Hat tip: Pension Tsunami.)

  • More on the same theme. (Hat tip: Pension Tsunami.)
  • It’s not just pensions: “The state paid $458 million in 2001 (0.6 percent of the general fund) for state worker retiree health care and is expected to pay $2 billion (1.7 percent of the general fund) next fiscal year — up 80 percent in just the last decade.” (Hat tip: Pension Tsunami.)
  • Texas border control succeeds where the Obama Administration fails. (Hat tip: Ace of Spades HQ.)
  • California and New York still lead Texas in billionaires. But for how long?
  • “The housing bubble may have collapsed, but the public-employee pension fund managers are still with us. If anything they’re bigger than ever, still insatiably seeking high returns just over the horizon line of another economic bubble.” (Hat tip: Pension Tsunami.)
  • How to fix San Francisco’s dysfunctional housing market. “Failed public policy and political leadership has resulted in a massive imbalance between how much the city’s population has grown this century versus how much housing has been built. The last thirteen years worth of new housing units built is approximately equal to the population growth of the last two years.” Also: “The city is forcing people out. Only the rich can live here because of the policies created by so-called progressives and so-called housing advocates.” (Hat tip: Ed Driscoll at Instapundit.)
  • UC Berkley to cut 500 jobs over two years.
  • What does BART do faced with a $400 million projected deficit over the next decade? Dig deeper. (Hat tip: Pension Tsunami.)
  • Stanton, California, is the latest California municipality facing bankruptcy. “One of the main reasons the city can’t pay its bills without the sales tax is that it gives outlandish salaries and benefits to its government workers.” (Hat tip: Pension Tsunami.)
  • Yesterday was Tax Freedom Day in Texas.
  • Politically correct investing has already cost CalPERS $3 billion. (Hat tip: Pension Tsunami.)
  • “A federal jury on Wednesday convicted former Los Angeles County Undersheriff Paul Tanaka of deliberately impeding an FBI investigation, capping a jail abuse and obstruction scandal that reached to the top echelons of the Sheriff’s Department.” (Hat tip: Dwight.)
  • Top California Democratic assemblyman Roger Hernandez accused of domestic violence.
  • Calls for UC Davis Chancellor Linda P.B. Katehi to resign, she of the supergenius “pay $175,000 to scrub the Internet of negative postings about the pepper-spraying of students in 2011” plan.
  • California beachwear retailer Pacific Sunwear files for Chapter 11 bankruptcy.
  • California retailer Sport Chalet is also shutting down.
  • 75% of current Toyota employees are willing to move to Texas to work at Toyota’s new U.S. headquarters.
  • California isn’t the only place delusional politicians are pushing a “railroad to nowhere.” The Lone Star Rail District wants to keep getting and spending money despite the fact that Union Pacific said they couldn’t use their freight lines for a commuter train between Austin and San Antonio. The tiny little problem being that the Union Pacific line was the only one under consideration…
  • Texas vs. California Update for March 31, 2016

    Thursday, March 31st, 2016

    Lots of Texas vs. California linky goodness, much of it via Jack Dean at Pension Tsunami, who’s been emailing me links of significant interest.

  • Texas continues to grow:

    As last week’s US Census Bureau population estimates indicated, the story of population growth between 2014 and 2015 was largely about Texas, as it has been for the decade starting 2010 (See: “Texas Keeps Getting Bigger” The New Metropolitan Area Estimates). The same is largely true with respect to population trends in the nation’s largest counties, with The Lone Star state dominating both in the population growth and domestic migration among 135 counties with more than 500,000 population.


    Houston, which is the fastest growing major metropolitan area (over 1 million population) in the nation includes the two fastest growing large counties. Fort Bend County added 4.29 percent to its population between 2014 and 2015 and now has 716,000 residents. Montgomery County grew 3.57 percent to 538,000. In addition to these two suburban Houston counties, Harris County, the core County ranked 16th in growth, adding 2.03 percent to its population and exceeding 4.5 million population.

    Dallas-Fort Worth, the second fastest-growing major metropolitan area has two counties among the top 20. The third fastest-growing county is Denton (located north of Dallas-Fort Worth International Airport), which added 3.42 percent to its population over the past year and now has 781,000 residents. Collin County, to the north of Dallas County, grew 3.17 percent and now stands at 914,000 residents. Its current growth rate would put Collin County over 1 million population by the 2020 census.

    Travis County, with its county seat of Austin, grew 2.22 percent to 1,177,000 and ranked 12th. Bexar County, centered on San Antonio grew 2.01 percent and ranks 17th.

    Overall, Texas had four of the five fastest growing large counties, and seven of the top twenty. California had none. (Hat tip: Pension Tsunami.)

  • The Austin metropolitan area passes 2 million people.
  • The California Policy Center has a devestating roundup of what’s wrong with California’s economy. To wit:
    • “A now has by far the nation’s highest state income tax rate. We are 34% higher than 2nd place Oregon, and a heck of a lot higher than all the rest”

    • “CA has the highest state sales tax rate in the nation. 7.5% (does not include local sales taxes).”
    • “California in 2015 ranked 14th highest in per capita property taxes (including commercial) – the only major tax where we are not in the worst ten states. But the 2014 average CA single-family residence (SFR) property tax is the 8th highest state in the nation. Indeed, the median CA homeowner property tax bill is 93% higher than the average for the other 49 states.”
    • “California has a nasty anti-small business $800 minimum corporate income tax, even if no profit is earned, and even for many nonprofits. Next highest state is Rhode Island at $500 (only for “C” corporations). 3rd is Delaware at $175. Most states are at zero.”
    • “California’s 2015 ‘business tax climate’ ranks 3rd worst in the nation – behind New York and anchor-clanker New Jersey. In addition, CA has a lock on the worst rank in the Small Business Tax Index – a whopping 8.3% worse than 2nd worst state.”
    • “The American Tort Reform Foundation in 2015 again ranks CA the ‘worst state judicial hellhole’ in U.S. – the most anti-business.”
    • “CA public school teachers the 3rd highest paid in the nation. CA students rank 48th in math achievement, 49th in reading.”
    • “California’s real poverty rate (the new census bureau standard adjusted for COL) is easily the worst in the nation at 23.4%. We are 57.3% higher than the average for the other 49 states.”
    • “Of 100 U.S. real estate markets, in 2013 CA contained by far the least affordable middle class housing market (San Francisco). PLUS the 2nd, 3rd, 5th, 6th and 7th.”

    It’s like a whole bunch of Texas vs. California roundup statistics all in one big green ball of fail. Read the whole thing. (Hat tip: Pension Tsunami.)

  • “California’s 50% [minimum wage] increase would eliminate nearly 700,000 jobs—which means higher unemployment for the poor and least skilled in particular.”
  • Why did Carl’s Jr. flee California? Taxes, regulations and lawsuits.

    CKE Restaurants CEO Andy Puzder told the Wall Street Journal in 2013, “California is not interested in having businesses grow.”

    The article points out that many factors, including local building regulations, make one community less desirable than another for businesses.

    For example, it takes 60 days in Texas, 63 in Shanghai, and 125 in Novosibirsk, Russia for one of CKE’s restaurants to get a building permit after signing a lease. But in Los Angeles, Ca. it takes a whopping 285 days.

    Puzder added, “I can open up a restaurant faster on Karl Marx Prospect in Siberia than on Carl Karcher Boulevard in California.” The street in California is ironically named for the restaurant chain’s founder.

    California’s labor regulations may also play a role in a company’s desire to seek alternative locations. In that same interview with WSJ, Puzder said his company had spent $20 million in the state over the past eight years on damages and attorney fees related to class-action lawsuits.

    (Hat tip: Pension Tsunami.)

  • Justice Scalia’s death dooms the Friedrichs vs. California Teacher’s Association lawsuit.
  • “If a Stanford Institute for Economic Policy Research’s estimate is accurate, public pension debt in California is even worse than feared. Preliminary calculations from a forthcoming SIEPR study peg the unfunded retirement tab for state and local government employees at more than $1.2 trillion.” (Hat tip: Pension Tsunami.)
  • Texas unemployment rates drops to 4.4%.
  • San Bernardino’s bondholders get screwed so the bankrupt city can continue sending money to CalPERS. (Hat tip: Pension Tsunami.)
  • California’s colleges are so money-hungry they’re screwing in-state students out of admissions so they can charge more to out-of-state applicants, including those who wouldn’t normally be able to get in. Sort of like the UT admissions scandal, but less politically connected and more widespread and money-grubbing… (Hat tip: Instapundit.)
  • But there’s one type of student California admissions isn’t keeping out: antisemites. (Hat tip: Director Blue.)
  • Even the supposed beneficiaries of California’s high speed rail fantasy have become disillusioned with it.
  • A hot relocation to Texas rumor just in: “Plano – new home of Toyota Motor’s North American headquarters – has been mentioned as a possible relocation site for a Wichita-based subsidiary of conglomerate Cargill.”
  • Texas vs. California Update for February 25, 2016

    Thursday, February 25th, 2016

    Been too long since I did a Texas vs. California roundup, so here it is:

  • Dark Age California:

    There are large areas of Central California that resemble life in rural Mexico. Within a radius of five miles I can go to stores and restaurants where English is rarely spoken and there is no racial or cultural diversity—a far cry from Jeb Bush’s notion of an “act of love” landscape.

    With unemployment at 10% or more in the interior of the state, with the public schools near the bottom in the nation, and with generous entitlements, it is no accident that one in six in the nation who receive public assistance now live in California, where about a fifth of the population lives below the poverty line.

    One in four Californians also were not born in the United States; more than one in four who enter the hospital for any cause are found upon admittance to suffer from Type II diabetes. The unspoken responsibility of California state government is to bring state-sponsored parity to new arrivals from Oaxaca, and to do so in ideological fashion that ensures open borders and more government. It is the work of a sort of secular church, and questioning its premises is career-ending blasphemy.

  • “California has come a long way to dig itself out of budget deficits, but the state remains on shaky ground due to nearly $400 billion in unfunded liabilities and debt from public pensions, retiree health care and bonds.” More: “It’s California’s debt and liabilities that are concerning financial analysts, particularly the state’s rapidly growing unfunded retiree health care costs, which grew more than 80 percent over the past decade. California has promised $74 billion more in health and dental benefits to current and retired state workers than the state has put aside.” (Hat tip: CalWatchdog.)
  • And new accounting rules make those unfunded liabilities harder to ignore.
  • The problem might not be quite as bad as it is did not CalPERS and CalSTARS insist on politically correct investments. (Hat tip: Pension Tsunami.)
  • San Francisco political officials indicted:

    A retired city employee and a former city commissioner who are at the center of bribery allegations involving Mayor Ed Lee were charged with multiple felonies including bribery and money laundering, San Francisco District Attorney George Gascon announced at a news conference Friday afternoon.

    Also charged Friday was political consultant and former San Francisco Unified School District Board of Education President Keith Jackson, who pleaded guilty last year to racketeering charges.

    The district attorney’s office charged recently retired Human Rights Commission employee Zula Jones, ex-HRC commissioner Nazly Mohajer and former political consultant Keith Jackson.

    Remember that Zula Jones and Nazly Mohajer were fingered by Leeland Yee’s attorneys as being the go-betweens for bribing Lee. This brings up the question (yet again): Why hasn’t Lee himself been indicted?

  • And speaking of California government officials being indicted: “Retired Los Angeles County Sheriff Lee Baca pleaded guilty Wednesday to lying to federal investigators, a stunning reversal for the longtime law enforcement leader who for years insisted he played no role in the misconduct that tarnished his agency.” (Hat tip: Dwight.)
  • Jerry Brown vetoes kangaroo court minimums for college sexual assault cases.
  • “Brown pushed for the giant pension fund CalPERS to lower its assumed investment return from 7.5% to 6.5%. Given that the world is headed towards deflation and that CalPERS earned only 2.4% for the fiscal year ended June 30, 2015, Brown’s request seemed entirely reasonable. Instead, the board approved a staff proposal to move to the 6.5% target over 10 years.” (Hat tip: Pension Tsunami.)
  • CalPERS board President Rob Feckner, serving his twelfth term, casts deciding vote against proposal for term limits for board members. “Feckner was president of the California School Employees Association for four years and executive vice president of the California Labor Federation for five. Such a conflict of interest wouldn’t be tolerated with the president of other boards of directors. But with CalPERS, it’s par for the course.” (Hat tip: Pension Tsunami.)
  • San Diego voters: We want pension reform! Union-stacked Public Employment Relations Board (PERB): Get stuffed, peasants! Result: Lawsuit. (Hat tip: Pension Tsunami.)
  • The middle class is fleeing California. “In 2006, 38 percent of middle-class households in California used more than 30 percent of their income to cover rent. Today, that figure is over 53 percent.”
  • California tech industries continue their exodus to Texas:

    The tech industry in the Bay Area has become a victim of its own success – and state policies. Like many other California businesses, tech firms are relocating or expanding operations in others states – particularly Texas – at an alarming rate.

    Some companies spend significant amounts of time and money finding and training the right workers, only to see them poached by a flashy startup within a number of months. The need for a more stable workforce was one of the main reasons cloud-computing company LiveOps Cloud moved from Silicon Valley to a suburb of Austin, Texas, CEO Vasili Triant told the San Francisco Chronicle.

    Other reasons to move or expand out-of-state are government-created: high taxes, burdensome regulations, unaffordable housing due to excessive development fees and restrictive land-use policies. California’s highly-educated workforce is not so unique anymore, and its quality of life has been tarnished by regulatory and affordability issues. Texas, by contrast, has no personal income tax and no corporate income tax (though it does have a less-onerous gross margins tax), and is universally hailed for having one of the friendliest business climates in the nation.

    Google, Facebook, Apple, Dropbox, Oracle and nearly two dozen other Bay Area tech companies have all built or expanded facilities in Texas just since 2014, the Chronicle reported. There have been more than 1,500 publicly reported California “disinvestment events” across all industries over the past seven years, according to a November report from Spectrum Location Solutions, an Irvine-based business relocation consulting firm, although it estimated the actual tally at as high as 9,000. A California business “can save 20 percent to 32 percent of labor costs by relocating a facility out of state,” Spectrum president Joe Vranich told us last year.

  • More on the theme:

    Between 1997 and 2000, during the peak of the dot-com boom, the Bay Area was a net importer of Texans: About 1,500 more households moved into the region from Texas than vice versa, bringing an additional $191 million (2015 dollars) in taxable income into the region, according to IRS data, which tracks the movement of taxpaying residents.

    The trend changed in the early 2000s, and Texas has been a net importer of Bay Area households ever since. Between 2009 and 2012, as the recession was winding down and the second tech boom was revving up, the region lost about 1,430 households to Texas, and nearly $390 million in taxable income.


    I had a guy working for me (in the Bay Area) making $200,000 a year, struggling to pay his bills,” company CEO Triant said. “In lots of places in the country you’re living high on the hog on $200,000. … As far as work life balance and employee morale, we have absolutely seen a remarkable increase since moving here; it’s night and day.”

    The firm still keeps a small Bay Area office, and Triant speaks fondly of his hometown of San Diego and California in general.

    But when it comes to building a company and running a business, he has found a new home in Texas. “I want my employees to be able to have a good quality of life, live in a city with low crime rates, good schools,” he said. “And that’s what we’re doing here.”

  • “It’s no coincidence that Texas and Florida have thrived while New York and California have not. High levels of taxes, spending, and regulations make it more difficult for entrepreneurs to be successful. When entrepreneurs cannot expand their businesses and hire new workers, everyone is hurt, not just the rich.”
  • In the course of verifying a Rep. Joe Straus campaign ad, Polifact confirms that Texas has grown twice as fast as the rest of the country.
  • The University of California, Berkeley, is running a $150 million deficit this year. (Hat tip: Pension Tsunami.)
  • UC Academic Senate rejects task force’s proposed retirement benefits plan that, keeping with Jerry Brown’s modest pension reforms, would pay them a measly $117,020 pension benefit. (Hat tip: Pension Tsunami.)
  • “What’s more important: High-speed rail or water? Proponents of a proposed ballot measure would force voters to choose just that. The measure would redirect $8 billion in unsold high-speed rail bonds and $2.7 billion from the 2014 water bond to fund new water storage projects.”
  • Speaking of water restrictions, looks like Californians will get to enjoy them for another year.
  • Sure, Covered California (California’s ObamaCare) may be incompetent. But it’s also corrupt. The state auditor “criticized the exchange for not sufficiently justifying its decision to award a number of large contracts without subjecting the contractors to competitive bidding.”
  • California is releasing many felons as part of a “mass forgiveness” program. Including a murderer who tied up a husband and wife and beat them to death with a pipe.
  • California adds Aloe Vera to list of cancer-causing substances. “The problem is that the 800+ chemicals listed in Proposition 65 are not devised to protect consumers, but rather serve as a cash cow for private trial lawyers to sue small business and reap the hefty settlement payout. Since 1986, nearly 20,000 lawsuits have been filed, adding up to over half a billion dollars in settlement payments by business owners.” (Hat tip: Ed Driscoll at Instapundit.)
  • San Francisco’s planning process is designed for gridlock.
  • Bankrupt San Bernardino has reached a settlement with its firefighters union.
  • Heh. “The movement to emblazon state legislators with the logos of their donors has collected tens of thousands of signatures for its would-be ballot initiative.The measure, formally called the ‘Name All Sponsors California Accountability Reform (or NASCAR. Get it?) Initiative,’ would require all state legislators to wear the emblems or names of their 10 top donors every time they attend an official function.” The ballot initiative has already collected 40,000 signatures…
  • Huge soda pop collection is coming to the Dr Pepper museum in Waco.
  • Texas vs. California Update for January 19, 2016

    Tuesday, January 19th, 2016

    Been a while since I did a Texas vs. California update, due to Reasons, so here’s one:

  • Texas ranks as the third freest state in the union, behind New Hampshire and South Dakota. California ranks second to last, just ahead of Massachusetts.
  • Texas added 16,300 Jobs in November.
  • How’s this for heavy-handed symbolism? California’s legislature plans to close one of its doors to the public, but continue to allow access to lobbyists. Because you’ve always got to see your real boss when he comes around…
  • California’s unfunded liabilities for CalPERS and CalSTARS spiked by $24 billion is fiscal 2014/2015. (Hat tip: Pension Tsunami.)
  • The much ballyhooed pension reform plan won’t make it on the ballot this year. Supporters are now aiming for 2018. Who knows how broke California will be by then… (Hat tip: Pension Tsunami.)
  • That’s probably because the game is rigged against pension reform. (Hat tip: Pension Tsunami.)
  • Jerry Brown unveils a budget in California. The budget increases are relatively modest, by California standards, but $2 billion into the rainy day fund isn’t even remotely going to cover California’s huge unfunded pension gap, and most of the structural bloat in the budget remains.
  • More on the same theme:

    While all the numbers are constantly in flux, in 2014-15, the California Public Employees’ Retirement System saw its status fall from 76.3 percent funded to 73.3 percent, likely due to the fact that investment returns fell far below expectations. The long-neglected California State Teachers’ Retirement System, as of June 30, 2014, was 69 percent funded. Combined, the systems report unfunded pension promises of more than $160 billion.

    The current budget shows steep and consistent increases in state funding to the two systems. Whereas CalPERS is set to receive $4.3 billion in state contributions in the 2015-16 fiscal year, which ends June 30, it could receive $4.8 billion the following year. CalSTRS is to receive $1.9 billion this year and about $2.47 billion next year.

    In comparison, CalPERS and CalSTRS received $3.1 billion and $1.26 billion, respectively, in 2011-2012.

    While it is perfectly reasonable for costs to rise over time, the rate that costs have risen for the two giant pension funds is mainly a consequence of California trying to play catch-up for years of inadequate forecasting and planning, aggravated by investment losses. But because the pension systems are run for public employees – CalPERS’ board is full of former public employee union leaders – the necessary changes and adjustments have been made far too late to avoid calamity.

    (Hat tip: Pension Tsunami.)

  • On the actual mechanics of pension reform, and the impossibility implementing them at the state level in California. (Hat tip: Pension Tsunami.)
  • Part 2, examining the possibility of reform at the local level. (Ditto.)
  • “California government, however, serves one purpose. It always reminds America what not to do.” Also:

    California has given us three new truths about government.

    One, the higher that taxes rise, the worse state services become.

    Two, the worse a natural disaster hits, the more the state contributes to its havoc.

    And three, the more existential the problem, the more the state ignores it.

    California somehow has managed to have the fourth-highest gas taxes in the nation, yet its roads are rated 44th among the 50 states. Nearly 70 percent of California roads are considered to be in poor or mediocre condition by the state senate. In response, the state legislature naturally wants to raise gas taxes, with one proposal calling for an increase of 12 cents per gallon, which would give California the highest gas taxes in the nation.

  • Federal judge rejects San Bernardino’s bankruptcy proposal, saying it doesn’t contain enough information.
  • Sacramento continues to ignore the needs of rural residents. (Hat tip: Ed Driscoll at Instapundit.)
  • Half of California’s driver’s licenses are issued to illegal aliens.
  • After years at the top of the relocation list, Texas was only the 9th biggest relocation destination in 2015.
  • On the other hand, Texas was still the top destination according to Allied Van Lines.
  • But businesses continue to flee California:

    In California, costs to run a business are higher than in other states and nations largely due to the states tax and regulatory policies and the business climate shows little chance of improving. It is understandable that from 2008 through 2015, at least 1,687 California disinvestment events occurred, a count that reflects only those that became public knowledge. Experts in site selection generally agree that at least five events fail to become public knowledge for every one that does. Thus it is reasonable to conclude that a minimum of 10,000 California disinvestment events have occurred during that period….For about 40 years California has been viewed as a state in which it is difficult to do business. Gov. Jerry Brown’s Administration’s less than candid approach regarding the business climate has misled the Legislature, the news media and the public about the flight of capital, facilities and jobs to other states and nations.

    The study also shows that Texas had the most new facilities opening up in the nation in 2014, with 689. California, despite being the most populous state, tied for 12th with 170.

  • 85% of Marin County’s special district workers collected over $100,000.” Bonus: Their pensions are underfunded too. (Hat tip: Pension Tsunami.)
  • Troubled California Wine Retailer Files for Bankruptcy. Premier Cru owes customers almost $70 million for wines it never delivered.”
  • This county-by-county breakdown of recession recovery is full of (very slow loading) data, and I haven’t come close to digesting it yet.
  • Texas vs. California Update for December 7, 2015

    Monday, December 7th, 2015

    Finally, some news from California that doesn’t involve radical islamic jihadis killing innocent people…

  • California lost 9,000 business HQs and expansions, mostly to Texas, 7-year study says. “It’s typical for companies leaving California to experience operating cost savings of 20 up to 35 percent.” (Hat tip: Pension Tsunami.)
  • Remember those “temporary taxes” that made California’s state income taxes the highest in the country? Well, to the all-devouring maw of a broke welfare state, no tax is temporary.
  • Los Angeles County: center of American poverty:

    The Census Bureau’s 2012 decision to begin releasing an alternative measure of poverty that included cost of living has appeared to have far-reaching effects in California as politicians, community leaders and residents react to the new measure’s depiction of the Golden State as the most impoverished place in America.

    The fact that about 23 percent of state residents are barely getting by has helped fuel the push for a much higher minimum wage and prompted renewed interest in affordable housing programs. It’s also put the focus on regional economic disparities, especially the fact that Silicon Valley and San Francisco are the primary engine of state prosperity.

    While the tech boom and the vast increase in housing prices it has triggered in the Bay Area are national news, prompting think pieces and thoughtful analyses, the poverty picture in the state’s largest population center isn’t covered nearly as fully. Although the fact is plain in Census Bureau data, it’s not commonly understood that Los Angeles County is the capital of U.S. poverty. A 2013 study by the Public Policy Institute of California and the Stanford Center on Poverty and Inequality based on 2011 data found 27 percent of the county’s 10 million residents were impoverished, the highest figure in the state and the highest of any large metro area in the U.S.

  • Why California’s cities are in trouble: “The problems here, as the bankruptcies of San Bernardino and other cities have shown, are mismanagement and high costs incurred as a result of the state’s public-employee unions.” (Hat tip: Pension Tsunami.)
  • How CalPERS created a ticking time bomb. (Hat tip: Pension Tsunami.)
  • CalPERS also paid $3.4 billion in private equity firm fees since 1990, despite returns that were not that great. (Hat tip: Pension Tsunami.)
  • And CalPERS also has a huge problem with self-dealing and conflicts of interest. (Hat tip: Pension Tsunami.)
  • Texas’ largest employer is Wal-Mart. California’s largest employer is the University of California system.
  • But I doubt Wal-Mart has 35,065 employees who make more than $100,000 a year…
  • What good is California’s open meetings law if officials still feel free to ignore it? “Six decades after Brown Act passage, elected leaders still hold illegal meetings.” (Note: The Brown Act is named after Assemblyman Ralph M. Brown, D-Modesto, not either Jerry Brown.) (Hat tip: Pension Tsunami.)
  • Though Texas is doing much better at fiscal restraint than California, TPPF notes that Texas’ could still use additional spending restraint:

    “Though Texas legislators did an excellent job by holding the total budget below population growth plus inflation during the last session, the state’s weak spending limit remains a primary cause of excessive budget growth during the last decade,” said Heflin. “Legislators can strengthen the limit by capping the total budget, basing the growth on the lowest of three metrics, and requiring a supermajority vote to exceed it. These reforms would have helped keep more money in Texans pockets where it belongs.”

  • All segments of Texas housing market show strong gains in 2015.”
  • Mojave solar project operator files for bankruptcy.
  • “Fresh off of a major expansion, iconic San Francisco craft brewery Magnolia Brewing Co. filed voluntarily for Chapter 11 bankruptcy.” So a brewery that opened in 1997 is “iconic”?
  • “Fuhu Holdings Inc, a maker of kid-friendly computer tablets, has filed for Chapter 11 bankruptcy protection, according to a court filing on Monday.” Eh, included for completeness. That sounds like a bad business model for a startup no matter what state it was in…
  • Fresno Democratic assemblyman resigns to make more money in the private sector. Evidently a year to wait until his term expires was just too long to avoid climbing aboard the revolving door gravy train…
  • Texas vs. California Update for November 2, 2014

    Monday, November 2nd, 2015

    California continues to suffer from drought while central Texas just suffered through torrential rains. Time for another Texas vs. California update:

  • Texas Adds 26,600 Jobs in September.
  • Texas and Florida rank at the top of education index for biggest states, while California ranks last.
  • The University of Texas is ranked the number one public university in America.
  • Meanwhile, at the University of California system: “The number of those making at least $500,000 annually grew by 14 percent in the last year, to 445, and the system’s administrative ranks have swelled by 60 percent over the last decade – far outpacing tenure-track faculty.” (Hat tip: Pension Tsunami.)
  • Another example of California’s perpetual trial lawyer enrichment act: “cumulative trauma” awards for employees after termination, even if they’ve never reported symptoms before. Shouldn’t every former member of the Raiders, Chargers and 49ers file a lawsuit?
  • Why CalPERS contributions are soaring. (Hat tip: Pension Tsunami.)
  • So now the California high speed rail boondoggle is going to cost $68 billion and require 36 miles of tunnels, including some dug right through an active tectonic fault. That’s ten times the length of tunnel Boston needed to dig for the Big Dig. And the cost is equivalent to the Gross Domestic Product of Sri Lanka. For a train line. It would probably be cheaper to buy cab rides for everyone traveling between Los Angeles and San Francisco, but that wouldn’t provide enough opportunities for graft…
  • “The parent company of the Orange County Register and Riverside Press-Enterprise filed for federal bankruptcy protection.”
  • Also filing for bankruptcy, yet another West coast grocery chain, Fresh & Easy.
  • Another bankruptcy filing: Fresno’s One Club Casino. California casinos are different from Nevada casinos, and I believe One Club is what is called a “card room”. Still, when you can’t make a profit off gambling…
  • California plastics company opens plant in Pflugerville. “Medway, founded in 1974, will also relocate its research and development laboratory to the new Pflugerville facility. Though Medway Plastics will continue operations in California, the company may consider relocating its headquarters to Pflugerville within the next five to eight years, the company said.”
  • Plans continue apace to build a Texas Gold Depository.
  • California Ballot initiatives weaponize emotion to centralize power.