WALL STREET JOURNAL
The Troubles Beneath the Surface of California's Comeback
There's a budget surplus, but also homelessness, lousy schools, expensive
housing and even typhus. Though the state is home to 12% of the U.S.
population, nearly half of the nation's "unsheltered" homeless now live in
California. Last year the number of homeless rose 16% in Los Angeles and 17%
in San Francisco. In Los Angeles the explosion of homelessness has given
rise to a host of related problems: public defecation, rodent infestations
and medieval diseases like typhus. Liberals blame a shortage of "affordable
housing," which notably is a function of local zoning and state
environmental policies that for decades have limited development. As usual,
the left believes the solution is more government spending.
A decade ago many conservatives watched with delight as deep-blue California
struggled beneath double-digit unemployment and gaping budget deficits. But
the schadenfreude faded as the Golden State's fiscal and economic picture
brightened-at least on paper. Unemployment has dipped to 4.2%, and the state
this year recorded a $21 billion surplus, due in part to a 2012 tax hike on
the wealthy. Gov. Gavin Newsom this week signed a $215 billion budget that
boosts spending on housing, schools and child care. It even includes a
sales-tax exemption for diapers.
So are we seeing the triumph of progressive policies in California? Have
high levels of taxation and government spending at long last bought
prosperity? Hardly. Californians are paying, one way or another, for their
state's liberal decadences.
Though the state is home to 12% of the U.S. population, nearly half of the
nation's "unsheltered" homeless now live in California. Last year the number
of homeless rose 16% in Los Angeles and 17% in San Francisco. In Los Angeles
the explosion of homelessness has given rise to a host of related problems:
public defecation, rodent infestations and medieval diseases like typhus.
Liberals blame a shortage of "affordable housing," which notably is a
function of local zoning and state environmental policies that for decades
have limited development. As usual, the left believes the solution is more
Voters in Los Angeles have voted to raise property and sales taxes and spend
the money on reducing homelessness, but they have continued to oppose
building new shelters. San Francisco Mayor London Breed last fall opposed a
ballot initiative to impose a gross-receipts tax on large businesses to curb
homelessness. The city was already spending more than $300 million on
homeless services, she said, and "before we double the tax bill overnight,
San Franciscans deserve accountability for the money they are already
paying." Sixty percent of voters supported the measure anyway.
Desperate to mitigate the scourge of vagrancy, Californians last fall
approved $6 billion in state bonds for housing. Democratic lawmakers in
Sacramento appropriated another $1 billion this year, but there's no
evidence more spending will produce better outcomes.
Many homeless are on the streets because they suffer from mental-health
problems. In 2004 California voters approved a 1% surtax on millionaires to
fund mental-health treatment. Yet in 2016 the state's Little Hoover
Commission, an independent government oversight agency, reported that
officials couldn't account for how the government spent the tax's $2 billion
icle_inline> in annual revenues.
In the past, some vagrants were incarcerated for drug offenses. But voters
effectively decriminalized possession of most illegal drugs by approving a
2014 initiative that was supposed to reduce prison spending. While the
state's incarcerated population has shrunk by about a quarter during the
past decade, prison spending doubled. California spends $81,000 annually to
keep an inmate locked up, according to the state's Legislative Analyst
Office-more than the cost of a year at Harvard.
Meantime, 1,000 inmates last year overdosed on drugs
facilities, sometimes with the knowledge of state workers. Since 2014 state
correctional-officer salaries have climbed 24% thanks to generous labor
contracts struck by former Gov. Jerry Brown. Mr. Newsom recently awarded the
prison guards another 3% raise, which the analyst's office said had "no
evident justification" based on hiring and retention needs.
Incarceration, like other social problems, is typically rooted in failing
schools. Only 31% of fourth-graders in California are proficient in math,
compared with 40% nationwide. Only 23% of Hispanic and 21% of low-income
California fourth-graders score proficient in reading, about half as many as
in Florida. California spends $3,600
pupil than Florida.
This year California will spend $102 billion on K-12 education, about 50%
more than before voters raised taxes on the rich in 2012. Test scores
haven't improved, and much of the money has gone toward pensions for retired
public employees. Democrats in the Legislature approved an additional $3
billion in this year's budget to reduce school district pension payments and
help insolvent districts like Sacramento and Los Angeles avert layoffs. At
the same time, they are applauding their prudence for paying down debt they
incurred a decade ago.
Speaking of bankruptcy, PG&E <https://quotes.wsj.com/PCG> Corp. , the
state's investor-owned utility, is seeking a government bailout after its
equipment caused more than a dozen wildfires and tens of billions of dollars
in damages. PG&E recently announced it has found hundreds of "immediate
safety risks" on its transmission towers and equipment. Californians pay
twice as much for electricity than do residents of Washington and Oregon. As
a regulated utility, PG&E is required to pay for system maintenance. But the
utility apparently shortchanged spending on safety for years so it could
spend more on green-energy mandates, with Sacramento's tacit approval.
Now bankrupt, PG&E wants to increase rates by $10 a month to pay for safety
improvements. Mr. Newsom last week also proposed allowing utilities to bill
customers to pay for future wildfire damages. Californians can expect to pay
again-and again, and again-for their state's bonfire of liberal vanities.
Ms. Finley is a member of the Journal editorial board.