California's Plan? Take the Easy Way Out

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Illinois, New Jersey, and New York appear to be frontrunners in the stakes to become America's next "California." Just not in a good way.

California's addiction to gluttonous spending, the legislature's repeated returns to the taxpayer trough for additional revenue, and a decade of nonexistent fiscal leadership by both parties have come to a head, leaving a once-thriving state on the edge of financial ruin.

This should not be happening in a state that has an abundance of natural resources, a well-educated population and a beautiful landscape.

Despite those advantages, the Golden State is suffering from the fifth-highest unemployment rate in the country (11.5 percent) and a budget shortfall of $26.3 billion. Many of its most-productive citizens have left for lower-tax neighbor states such as Arizona, Nevada, and Texas.

For years California has been recklessly ratcheting up spending while hiking taxes on everyone from smokers to cable TV subscribers to the "rich," playing one group of taxpayers against another in a perpetual attempt to raise more taxes.

Now, just a few months after increasing taxes by $13 billion, the state is already considering more tax hikes.

Meanwhile, an additional 200,000 jobs are expected to be lost by the end of the year on top of the 800,000 already lost during the current recession. The state's irresponsible fiscal policies have hindered economic growth and driven productive citizens away.

California is a vivid example of why taxpayers must be concerned about all tax hikes and all government spending, regardless of who is initially stuck footing the bill. Nearly every state is dealing with some degree of fiscal strain due to the recession.

Legislatures are being handed a ripe opportunity to offer substantive government and spending reforms instead of ending up like California. As Rahm Emanuel put it earlier this year, "You never want a serious crisis to go to waste."

Unfortunately, far too many states, especially Illinois, New Jersey and New York, for years have been following California's playbook by taking the politically "easy" road of choosing to increase taxes, one small group of taxpayers at a time.

Instead of irresponsibly spending heaps of money on a seemingly endless list of inefficient government programs and subsidies as California has done, states should work to slow the breakneck pace at which spending has grown over the past decade and rein in government growth. Legislatures can start by eliminating wasteful "economic development" subsidies, privatizing non-core functions of government, reforming the tax code and overhauling the government workforce.

Those states that ignore California's cautionary tale and continue recklessly taxing more and spending more will suffer a longer recession and larger budget deficits.

In order to avoid that fate, states need to seize the opportunity this downturn presents and implement real spending reforms that will put their economies and taxpayers in a superior fiscal position.

California's loss will be their gain.


John Nothdurft is a budget and tax legislative specialist for the Heartland Institute. Reply to [email protected]

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