By Noel T. Braymer
This nation now is in a transition from a Democratic to a Republican Administration. Last time that happened was in late 2000. In the first decade of the 21st century California soon found itself on the ropes. A recession in 2001 due to the Dot.Com financial bubble caused a major decline in the State’s revenue with the reduction of capital gains taxes from stock sales. Almost overnight the State went from a budget surplus to a deficit. With no agreement in the Legislature on how to cover this shortfall, spending was slashed which in turned slowed the economy more. During this time many rail passenger and rail transit projects were delayed for years due to these cutbacks as well as other government services.
Adding to the State’s woes at this time between 2000-2001 were the many power outages on the State’s electrical grid. California was blamed at this time by pundits outside of California for not building enough power plants to meet demand. High energy costs resulted from importing electrical power needed with bidding for power on the electrical exchange run then by the now defunct Enron Corp. Enron promised the exchanges would lower the cost of electricity through competition. High priced electricity cost the State billions of dollars more than what it should have paid. It is now clear that power suppliers from outside of California using the electrical exchange with Enron’s involvement created artificial shortages which brought blackouts and raised electricity prices to obscene levels while screwing California.
These and other problems left the State heavily in debt with a sluggish economy. It was a favorite whipping boy of pundits from other States which were doing better at the time. The financial meltdown starting in 2007 affected California like all the States with people with mortgage problems and lost jobs. Since 2008 things have been improving in California. The State now has a budget surplus and cash reserves for the next “rainy day”. This was done the old fashion way, the same way then California Governor Reagan balanced the State Budget: cutting costs and raising taxes. One of the problems for the State in an economic downturn is State revenues drop while the need for government services increases. Reductions in government spending also makes the local economy slow down even more. With cash reserves when the next recession hits (many have claimed we are overdue for one) California will be in much better shape to weather a downturn than it was in 2001.
Another thing that has helped California is local governments around the State being able to pass measures to raise taxes to improve transportation. This despite the high bar of a 2/3’s majority needed for these measures to pass. This process began in the 1980’s and continues to grow with several tax increase measures just passed in November 2016. This investment and spending goes a long way to stimulate the economy and create economic growth. The success of local tax passages is reflected in the recent passage of Measure M in Los Angeles. Granted the last attempt by Los Angeles County in 2012 failed by about 1 percent to reaching the 2/3’s majority. But with the recent extensions of the Gold and Expo Lines, other areas of Los Angeles County are eager to have rail service in their communities. This measure won by almost 70% of the vote. With improved rail service we are seeing new development around the stations and new housing which is needed in Los Angeles and all urban areas of California. It should be noted that many local governments around the country have followed California’s lead with local tax measures for transportation and construction of new rail services.
There is broad support in California for cleaner air and greater energy efficiency. Critics love to complain that California has some of the highest electric power costs in the Nation. But what these critics don’t talk about is most Californians pay less for electricity than most Americans because we use less because we are more efficient. Increasingly California is becoming even more energy efficient and less dependent on fossil fuels and the pollution that come with them. California has long been a leader in renewable energy which continues to cost less and less while the cost to produce conventional fuels continues to grow. California represents the future which will be cleaner, more efficient with cheaper energy for a growing economy. Central to this future is modern transportation. We will still need roads and we like most places in this country have a backlog of repair work needed for our roads. But our roads will have to be more efficient with vehicles which carry more than one person. Roads already in urban areas are attracting more bicycle riders who require much less road space per person than cars and cause much less damage to the roads. For most short trips riding a bicycle takes less time than driving, when you include the time parking and walking.
California since 2010 has seen major economic growth in part because of its transportation and energy policies. In terms of gross domestic product California’s GDP ranked in 2016 6th among nations in the world. This was up from 10th in 2012. California’s economy is larger than that of Russia, Brazil or France. The future will see many changes in just the next 10 years. California is now positioned to lead the country with the transitions to come with more rail service, new development centered around rail service and cleaner, cheaper and more efficient energy. These changes will be opposed by those with vested interests in the status quo. This opposition will delay the transition and make it more expensive in some cases. But the end result will be the same. In the future the number of gas stations in this country will be about the same as video rental stores today.