Calif. State Government Always Grows in Size and Intrusion

Ten years ago, California’s annual state budget was $90 billion. In only 10 years it has grown to $222.2 billion, with an expected shortfall of $54 billion. This projected tax receipts shortfall was before the COVID shutdown. The aftermath may double the estimated shortfall to $100 billion.

This $100 billion is an estimate that takes into consideration the losses based upon the prolonged economic downturn, the loss of $18 billion in the state college education system, losses of business taxation based on modified new social distancing reality, and of course new draconian measures forced on the public by state and local governments.

Ten years ago, the state’s occupant population was 37,253,956. Today it has grown to 39,937,489. In the last 10 years, the population has increased by 2,683,533. An interesting observation is how many taxpayers and productive producers have left the state, and continue to leave at an accelerating pace, and how many non-producers continue to arrive to scoop up all be of the most generous government handouts in the USA. Of course, government handouts are redistributions of tax dollars from the taxpayers and producer class.

California has 883,408 active full-time state, county, and local government employees. There are over 1,000,000 state, county, and local retired government employees. There are also 362,381 Federal employees including Dept. of Defense and annuitants located in California. 64,000

Californians work for the post office, which is a quasi-federal public agency. The above numbers are not all-inclusive but reflect at least 2,300,000 active full-time government workers and those retired, all of whom are getting paid a generous compensation package.

According to a study from the Hoover Institution, California Policy Center recently examined the public-sector and found that full-time government workers earn 200% or twice what private sector similar jobs earn. For example, the study states that a typical fireman makes at least $200,000 per year with overtime included. The impact of unionization manifests itself in high pay, benefits, and early retirement.

The top public employee earner is California is $3,341,707 for the head coach for the University of California at Los Angeles. A few top university professors are paid more than $2,000,000 annually. One can review all the multimillions of dollars salaries of public employees on https://publicpay.ca.gov/.

Bureaucratic government workers also receive 14 paid holidays, 12 personal days, 20 or more paid vacation days, and an early retirement pension plan where they can earn almost as much as their highest year of salary if they strategically plan. The unspoken reality is that the administrative state government is a monopoly that no one will openly object to because of the potential for reprisal attack consequences.

Elected officials who are not labor union members and work very hard to earn their temporary spot in government can find themselves being attacked by very powerful public employee labor unions who are willing to spend millions to destroy or recall them.

Even Franklin Delano Roosevelt, the 32nd president of the United States (1933-45), warned against allowing the public sector to gain collective bargaining rights. “All government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service.” It has its distinct and insurmountable limitations when applied to public personnel management.”

“The very nature and purposes of government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with government employee organizations.” “Government is the people.” “The employer is the whole people, who speak by means of laws enacted by their representatives in Congress. Accordingly, administrative officials and employees alike are governed and guided, and in many instances restricted, by laws which establish policies, procedures, or rules in personnel matters.”

“The pay is fixed by Congress and the workmen are represented by the members of Congress in the fixing of government pay.”

The first giant question is why the voters keep voting for bigger government, larger budgets, more onerous regulations, and of course higher taxes, all under some preconceived illusion of fairness. The official narrative, subscribed by the ones who benefit the most, is that collectivism and government over-site is a good thing.

The second giant question is why voters do not seem to care whether the productive folks are leaving, and those who are arriving rely on government support. These include the entitled classes, illegals, welfare recipients, and the homeless.

Companies in Silicon Valley, which include tech companies, billionaires and the “investor class,” pay over 40% of state taxes. These taxes include direct taxation and capital-gains taxes. The remaining taxes are paid by other productive individuals and companies. Future funds to support the California population will require massive cuts in government services, raising taxes, and borrowing that will be dumped on individuals in our future generations.

Government as an administrative class and power structure will resist reducing its size and power, as has always been the case, regardless of the structural damage they create to families and businesses.

What will happen if the California legislature passes so much onerous legislation it will make it impossible to run a profitable business or own real estate because of the draconian taxation, liability, and regulation? Creating tens of thousands of additional bureaucratic government employees to implement and monitor the new draconian rules will only exacerbate the problems, including limiting personal freedoms, extinguishing real property ownership rights, prohibit and limit operations of profitable businesses, modify and eliminate historical contract laws.

Of course, there is a plan to add additional employees of the administrative state to monitor our actions, with severe penalties and negative consequences that will accelerate the drive for productive people to leave, in order to take their profit-making businesses to more friendly business climate states. At the same time, the non-productive subsets of individuals will continue to arrive by the millions to get in on the free benefits.

Three million of California’s population are undocumented (illegal) immigrants, of which 65% of that figure are on public financial assistance. 34% of all California residents, or 13,600,000, including the undocumented of 1,020,000 are on welfare or public assistance. California also currently has 8,000,000, or approximately 20% of its population who are unemployed and who expect unemployment benefits.

Add 13,600,000 welfare recipients, plus 8,000,000 unemployed, plus 150,000 homeless equals a total of 21,750,000 who are not wage earners, not paying significant taxes, but expect financial, medical, and family support benefits. This is greater than 54% of the total state population. California has 12% of the US population but boasts 35% of all US welfare recipients.

California’s progressive government seems clueless about issues of fairness but is hellbent on growing government services, dependency, and personal intrusions of state occupants. Also, health, education, and legal costs associated with massive illegal immigration have squeezed the budget beyond repair.

One third of the budget goes to the Medicare and Medi-Cal programs, including births by undocumented immigrants. Zoning and building regulations discourage low-cost housing. But welfare benefits, non-enforcement of vagrancy and public health laws, and a fantastic climate will continue to draw the dependent class.

Most of the proposed active California legislation will result in substantial reductions of private property rights to be replaced by government control over housing, rights of lenders, and prohibit lenders ability to foreclose as a remedy to collect the debt. This will have a negative effect on investors decisions to purchase real property in the future.

Dan Harkey is a business and finance consultant. www.danharkey.com.