Friday, March 21, 2014

California and Texas; A Blue v. Red State Comparison

What does a US state look like without a Republican legislature since 1997?  Look no further than the State of California.  Conversely, Texas has been solidly Republican since LBJ. 

I grew up with an "understanding" that the future of America is best divined by looking at trends in California.  As California goes, so goes the entire US.  I hope it's not true as the future will be a story of decline and disappointment.   I hope that Texas is the new model for America's future. Texas is prosperous, growing and financially sound.  California is not.  

California hasn't had a balanced budget in decades.  So-called "progressives" in California have made that state one of the ultimate tax and spend states.  Even with significantly higher taxation, spending has risen faster.  Therefore California has chronic budget deficits.  Texas has had nothing but budget surpluses.  California is losing people as businesses flee.  Texas has an employment boom.  Although California has huge oil and gas reserves, oil and gas production continues it's decline whereas Texas oil production is soaring.

California businesses are fleeing the state due to 1) hyper-regulation especially environmental regulation, 2) threats of more regulation including threats of more disastrous carbon regulation, 3) higher taxes, and 4) high real estate prices due to over-regulated property markets.  Many of these businesses are relocating to Texas.  

See the following comparisons of the two states with the help from KQED News:
  • Even with high taxes, California still has chronic Budget deficits.  The Tax Foundation says that Californians paid an average of $4,935 in state and local taxes in 2010, while Texans paid $3,205.  Even with higher taxes California's 2012 budget is still $15.7 billion in the red. Why? Spending is out of control in California.  Texas has budget surpluses.
  • Taxes are much higher in California compared to Texas.  The Tax Foundation found that California had the fourth highest “tax burden” in the country, at 11.2 percent while Texas came in 45th with 7.9 percent.
  • Unemployment is high in California at 9.8 percent, compared to 6.1 percent in Texas, according to the Bureau of Labor Statistics.
  • Even educational results are better now in Texas.  In California, according to the National Center for Education Statistics, 23 percent of eighth graders scored at or above proficient in math on the National Assessment of Education Progress, compared to 36 percent of Texas eighth graders. For reading, 21 percent of California eighth-graders were at or above proficient compared to 28 percent of Texas eighth graders.
  • Due to over-regulated property markets, property prices are sky-high in California.  The median sales price of a home in California is $452,000, compared to only $144,900 in Texas according to Trulia.com.
Traditionally, California had a thriving oil and gas industry with many major oil/gas companies headquartered there.  California, for decades was one of the nation's biggest oil and gas producers and has large shale gas and oil potential.   Even though California has large potential oil and gas reserves it has eschewed the shale revolution.  Energy production there continues it's steady descent.  In contrast, oil and gas production in Texas has dramatically improved in Texas. 



Nearly all of the major oil companies have fled the state over the years -- mostly to Texas.  From Newgeography
In all but forcing out fossil-fuel firms, California is shedding one of its historic core industries. Not long ago, California was home to a host of top 10 energy firms – ARCO, Getty Oil, Union Oil, Oxy and Chevron; in 1970, oil firms constituted the five largest industrial companies in the state. Now, only Chevron, which has been reducing its headcount in Northern California and is clearly shifting its emphasis to Texas, will remain.

These are losses that California can not easily absorb. Despite all the hype about the ill-defined “green jobs” sector, the real growth engine remains fossil fuels, which have added a half-million jobs in the past five years. If you don't believe it, just take a trip to Houston, where Occidental is moving. Houston now has more new office construction, some 9 million square feet, than any region in the country outside New York; Los Angeles barely has 1 million.

 Texas Versus California In Charts






Let's hope the Republicans, with the help of young responsible folks like Paul Ryan and Rand Paul, can regain their credentials at the national level for being responsible fiscal administrators and leaders in promoting growth and employment.  The success story in Texas is being replicated in many, if not most, Republican led States. Some 60% of the States have Republican governors -- many also have Republican legislatures.  Success stories abound in these states.

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