Is there a Cal­i­for­nia tip­ping point?

Lodi News-Sentinel - - OPINION - CalMat­ter­sis a pub­lic in­ter­est jour­nal­ism ven­ture com­mit­ted to ex­plain­ing how Cal­i­for­nia s state Capi­tol works and why it mat­ters. For more sto­ries by Dan Wal­ters, go to cal­mat­ters.org/com­men­tary

two-hour drive to the south­east, Jim deMar­tini had al­ready reached his tip­ping point. A prom­i­nent farmer and Stanis­laus County su­per­vi­sor, deMar­tini an­nounced in July that he was not only giv­ing up his po­lit­i­cal po­si­tion, but had sold his 1,100 acres of farm­land and was mov­ing to Ne­vada. Not for busi­ness rea­sons. I’ve had it with Cal­i­for­nia, deMar­tini said. Circa ap­par­ently isn’t alone.

Joseph Vranich, who helps busi­nesses re­lo­cate, has pub­lished a re­port, en­ti­tled “Why Com­pa­nies Leave Cal­i­for­nia,” claim­ing that be­tween 2008 and 2016, at least 13,000 com­pa­nies moved out of state dur­ing that nine-year pe­riod. Vranich says high taxes and in­creas­ingly oner­ous reg­u­la­tory laws are the ma­jor rea­sons for busi­ness de­par­tures. DeMar­tini isn’t alone ei­ther. Cal­i­for­nia rou­tinely loses more peo­ple to other states than it gains, with

Texas the No. 1 desti­na­tion of ex-Cal­i­for­ni­ans.

There are nu­mer­ous anec­do­tal re­ports of wealthy peo­ple, such as deMar­tini, qui­etly opt­ingto re­lo­cate to no-or low-tax states such as Ne­vada and Texas as their tax bur­dens in­crease. The larger ques­tion is whether Cal­i­for­nia as a whole could reach a tip­ping point when high taxes, reg­u­la­tion, soar­ing hous­ing, util­ity and fuel costs, chok­ing traf­fic con­ges­tion, dis­easerid­den en­camp­ments of the home­less and other neg­a­tive fac­tors over­whelm the pos­i­tives of liv­ing and do­ing busi­ness here and the state be­gins to ex­pe­ri­ence eco­nomic and so­cial ero­sion.

We have seen tip­ping points in Cal­i­for­nia be­fore, both pos­i­tive and neg­a­tive. We saw the San Fran­cisco Bay Area ex­plode as a gen­er­a­tor of jobs and wealth when tech­ni­cal in­no­va­tion, ven­ture cap­i­tal and en­tre­pre­neur­ial spirit com­bined in just the right pro­por­tions. We saw Los An­ge­les County im­plode when the end of the Cold War rav­aged its aero­space in­dus­try and more than a mil­lion peo­ple fled the re­gion, leav­ing it with the worst poverty in a state with the na­tion s worst poverty.

What might be Cal­i­for­nia’s tip­ping point? Could it be one or more of the bills just passed in the Leg­is­la­ture? Could it be As­sem­bly Bill 5, which would, by cod­i­fy­ing a state Supreme Court de­ci­sion, force busi­nesses to place more work­ers on their pay­rolls, rather than treat them as con­trac­tors? Could it be As­sem­bly Bill 1482, which im­poses lim­its on rents in older apart­ment houses? Or could it be one of the mea­sures that vot­ers might face next year to raise prop­erty taxes on com­mer­cial real es­tate or boost in­come taxes on the high­est in­come Cal­i­for­ni­ans?

We may not be there yet, but logic — and his­tory — tell us that there is al­ways a tip­ping point. The de­cline and fall of the Ro­man Em­pire is one ob­vi­ous re­minder. More to the point, we should re­mem­ber that Detroit, the boom­ing Sil­i­con Val­ley of its time, ar­ro­gantly as­sumed that its pros­per­ity was im­preg­nable, and then stum­bled into a so­cioe­co­nomic abyss.

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