California, There It Went
More than 40 years later, I still remember the bright sun and the palm trees when we got off the plane. California in 1968 was a magical place, a magnet for those seeking new opportunities or to lose an old identity. The Golden State was allowing the rich to get richer and the middle class to live out the American dream in its pristine state. The public schools and expanding state-university system (two separate systems, in fact) were the envy of the nation. The corruption and Mob influence that had paralyzed many eastern and midwestern states and cities were largely absent.
When my parents announced they were uprooting the Glazer family from a cozy suburb of Philadelphia, as 5 million people did from eastern and midwestern towns between 1950 and 1980, the news was met with a mixture of awe (“California…” they would breathlessly whisper) and bewilderment (“But what is there?”). The very act of migrating by plane was itself somewhat grand. In the years before airline deregulation, one dressed up to fly, as if sailing on an ocean liner, and at prices not all that much lower than an ocean voyage’s. And yet those we were leaving behind acted as though we were traveling by caravan, leaving civilization and going into the wilderness.
In a real sense, even in 1968, California was the wilderness. If the cost of air travel was prohibitive for a family of modest means, they usually drove, and from the flatness of the Midwest they found themselves left speechless by the vision of the Rocky Mountains, rugged coastlines, wide beaches, and empty space they knew only from the movies. Like emigrants leaving the old country in the 19th century, they often arrived friendless and unaccustomed to the habits of their new environment. Public transportation was in scarce supply; instead there were gleaming freeways with five lanes on each side. Tie and jacket? More and more restaurants didn’t care. Informality pervaded dress and speech at a time when, back east, adults still commonly addressed acquaintances as Mister and Missus.
In Southern California, the aerospace industry was booming, and middle-class professionals from all over the country flocked to work in and around it. The movie studios had fallen into distress and decay due to the growing popularity of TV (before the blockbuster era of the 1970s drew audiences back out of their living rooms), but if you went to the Norton Simon Museum in Pasadena, you might spot the billionaire in a corduroy jacket whose name was above the door escorting Cary Grant around his collection. Every now and then you’d have a Fred Astaire or a James Stewart sighting.
In Northern California, Haight-Ashbury was still awash in the haze of the Summer of Love from the year before, the hippies and the gay community were moving in on the old Republican establishments of San Francisco and Berkeley, and San Jose was a sleepy town where a family of modest means could own a four-bedroom house near terrific schools for $27,000. Silicon Valley was farmland.
Forty-two years after I arrived in California, the very notion of an affordable, happy-go-lucky, optimistic, and “golden” state seems otherworldly. Its financial condition resembles Greece’s. Self-dealing and political scandals involving public-sector unions have become commonplace not only in Sacramento but also in cities from Mexico to Oregon. Thirteen percent of the state’s workforce is unemployed. Taxes (sometimes disguised as “fees” or “special assessments”) are among the highest in the country, school days are being cut, and state universities have cut off financial aid as they squeeze out in-state residents in favor of higher-paying out-of-staters.
After a decade of energy brown-outs that shut down air conditioners in the sweltering summer, spending cuts that have increased the decrepitude of roads and public facilities, and mushrooming retirement obligations to state workers that have crowded out basic public services, California is only now teetering on the crest of a fiscal sinkhole from which it will be impossible to emerge.
But when we and a horde of other young families arrived, Los Angeles was frantically expanding to fit us. As was the case during the boom after World War II that produced the Levittowns of the East Coast, builders were racing to meet the needs of newcomers. Suburbs grew and multiplied with construction sites where new tracts of a hundred or more homes were being thrown together, three or four models repeated for blocks whose newly poured concrete sidewalks gleamed in the sun.
“Hidden Glenn—Worth discovering!” and other similar signage adored the entrances of the tracts. You could walk into any house, ignore the furnishings, and know the layout as soon as you assessed which model you were in. Before remodeling and landscaping differentiated the homes, there was an institutional sameness. “Neighborhood” seemed a quaint term, as if from a novel about a time long past. Just for fun, we’d drive (no other way to get around, of course) to nearby tracts, walk through partially completed homes, and guess which room would be which (look for the telltale signs—plumbing, size, proximity to kitchen).
There was a thriving apartment-rental business for families waiting for their homes to be completed. The builder promised October? Savvy mothers like mine knew that meant January and kept the Chanukah menorah in the boxes marked “apartment.”
Part of the lure was the sheer newness of it all—new homes, new schools, new roads. The accumulated decay and grime of midwestern and eastern cities was nowhere to be seen. The claustrophobia of indoor schools and boxy malls was replaced by year-round temperate sunshine that allowed for outdoor strip shopping and schools with no indoor corridors. Parallel parking was an unnecessary skill—there were parking lots everywhere, free at malls and five or 10 dollars all day downtown. The Los Angeles Dodgers were rained out only once before 1976. “Snow days” disappeared from our vocabulary.
The residents were new as well. Most everyone was from somewhere else. Freed from the bonds of family and friends, you could remake your life anew. If you were raised a Catholic but wanted to be a Buddhist, no one cared. If your business flopped in Detroit and you wanted a clean break, no one would be the wiser.
It was not all paradise. The Manson murders and the Berkeley riots reminded the newcomers that California was not immune to the rest of the country’s maladies. But in the age before cable news and the Internet, young children in the sparkling suburbs of Los Angeles breezed through it all, feeling blessedly far from the fires and destruction convulsing eastern cities in the wake of Martin Luther King’s assassination.
Only in retrospect is it clear that there was a larger political and indeed cultural crisis in the making even then.
In their new book, California Crack-up: How Reform Broke the Golden State and How We Can Fix It, Joe Matthews and Mark Paul detail a history of dysfunctional government and fiscal disarray that seems to have been written into the state’s DNA. Through the past century, layer upon layer of well-intentioned reforms have led to the promulgation and emendation of a gargantuan, unreadable state constitution now running into the tens of thousand of words. The result of these good-government repairs, as Matthews and Paul write, was that “it would become harder and harder for voters to know whom to hold responsible for problems.”
The reform era that began after the turn of the last century, a reaction to the railroad-baron-dominated government of the 19th century, contributed a heavy dose of direct democracy—a system of referenda, initiatives, and recalls that allowed the public to bypass the state legislature but also to accelerate the influence of special-interest groups that learned to draft and promote measures ranging from budget protection for teachers’ unions to bans on horse meat. The result was an unworkable governmental maze in which lobbyists and public-employee unions came to wield huge power.
Liberals finger the tax revolt of the 1970s and the successful passage of the Proposition 13 referendum in 1978 as the culprits for the state’s fiscal woes. They are correct in part, but for reasons they would prefer to ignore and the reform’s authors never imagined would result from it. In the 1970s, the influx of new residents and the frenzy for home-buying coincided with a nasty bout of inflation. Real-estate prices rose to astronomical levels. Middle-class families and the elderly faced crushing property-tax bills and the potential loss of their homes. California’s boom was imperiled. When the legislature proved unresponsive, the citizenry organized and launched the anti-tax crusade that is a direct precursor to the Tea Party movement of today.
As promised, Prop 13 drastically reduced property taxes and permitted residential homes to be re-assessed only at the time of sale, fixes that relieved homeowners of the heavy tax burden that had fueled the revolt. But Prop 13 had other effects as well. Local governments lost nearly a quarter of their revenue, and the state, which was then flush with cash, stepped in to take over school and social-welfare funding. This centralized spending in Sacramento and made the state capital an unparalleled target of opportunity for special-interest groups, which became expert in navigating the unwieldy bureaucracy and convoluted budgeting apparatus.
Over time, even well-intentioned legislators found their hands tied by the exigencies of fiscal law and the legislature’s political dynamics. Since the 1930s, a two-thirds majority of both state houses has been required to pass spending and budget bills. Prop 13 added a two-thirds vote requirement to pass tax hikes. While this reform was intended to compel fiscal discipline, it actually empowered small numbers of legislators to hold out for pork-barrel spending in their districts—effectively blackmailing the governor and more-responsible leaders, who felt compelled to pass timely budgets. An annual face-off would occur as the state edged closer to the budget deadline. California took to issuing IOUs while awaiting the passage of budgets. Crafty maneuverers, as Matthews and Paul explain, learned to reach budget compromises “through questionable borrowing and accounting gimmicks.” Thus, “in many ways, Prop 13 represented a liberal dream come true.”
California went on an unprecedented spending spree. Between 1990 and 2009, according to a 2009 Reason Foundation report, “state spending—including the General Fund, special funds, and bond funds—has increased 180.9 percent, or an average of 5.91 percent a year. . . . Since FY 1990-91, General Fund spending alone has increased 156.8 percent, or 5.37 percent a year.” The number of state employees soared by almost 40 percent. Per capita spending increased 95.9 percent in the same time period.
Despite the common argument that Proposition 13 had starved the state of revenue, cash flowed steadily into Sacramento’s coffers. “Since FY 1990-91,” the Reason Foundation report revealed, “revenues have increased 166.9 percent, or 5.61 percent a year. . . . Based on these revenues, if California had simply limited its spending increases to the 4.38 percent average increase in the state’s consumer price index and population growth each year since FY 1990-91, instead of a $42 billion deficit, the state would be sitting on a $15 billion surplus this year.”
The Wall Street Journal editorial page explained that in 1999, then-Governor Gray Davis, in cahoots with the California State Employees Association, passed “the largest issuance of non-voter-approved debt in the state’s history. The bill…granted billions of dollars in retroactive pension boosts to state employees, allowing retirements as young as age 50 with lifetime pensions of up to 90% of final year salaries.” The California Public Employees’ Retirement System (known as CalPERS) promised that no additional state contributions were needed and that the plans would be “fully funded.” It was the ultimate something-for-nothing scheme: “They also claimed that enhanced pensions would not cost taxpayers ‘a dime’ because investment bets would cover the expense.”
But CalPERS and Davis didn’t tell the voters that the state would have to pick up the tab if the ludicrous investment predictions (for example, that the Dow would hit 25,000 by 2009) failed to pan out. The shortfall turned out to be hundreds of billions of dollars. Nor did voters learn that “CalPERS’s own employees would benefit from the pension increases [or that]…members of CalPERs’s board had received contributions from the public employee unions who would benefit from the legislation.”
A sense of unreality still pervades. In August 2010, on the site of the Ambassador Hotel in Pasadena, a new high school named for Robert F. Kennedy (who was killed there on the night of the 1968 state primary) opened at a cost of $578 million, almost nine times that of an average new school in the state and the most ever spent on a high school. According to the Associated Press, it features “fine art murals and a marble memorial depicting the complex’s namesake, a manicured public park, a state-of-the-art swimming pool and preservation of pieces of the original hotel.” Meanwhile, “nearly 3,000 teachers have been laid off over the past two years [and] the academic year and programs have been slashed. The district also faces a $640 million shortfall and some schools persistently rank among the nation’s lowest performing.” A school-building advocate dryly observed, “Architects and builders love this stuff, but there’s a little bit of a lack of discipline here.”
That would aptly describe the state as a whole. This year, an official budget shortfall of $19 billion and record unemployment have Californians reeling. But even that understates the problem. The real extent of the state’s debt, including unfunded liabilities, now runs into the hundreds of billions. New scandals break daily—bloated pensions, lavish state salaries, and threatened draconian cuts in services. If you make more than $60,000 a year, a relatively modest wage considering the cost of living, your top marginal state income tax rate is now over 9 percent—and given the severity of the cuts in basic services, you have little to show for the money taken from you.
The notion that growth would be endless, that debt could be piled on future generations, and that government could provide an ever-growing array of services with no impact on the state’s ability to retain and attract wealth has reached its inevitable conclusion: full-fledged financial chaos. And while there are many responsible parties (Democratic-dominated legislatures, weak Republican governors, labor unions), at bottom Californians created their own morass. Much of the debt was piled on by popular referenda. Lawmakers were elected and re-elected. The people acted, and the people are now suffering the consequences.
Even so, some of those consequences were entirely unintended. Property-tax reform led to the centralization of power, which allowed interest groups to become politically pre-eminent. Term limits were supposed to end the reign of professional politicians, but the policy simply shuffled politicians from one post to another and strengthened the grip of outside interests and more-experienced bureaucrats.
Gerrymandered districts— and the population division of the state between liberal, urban areas and rural, conservative ones—have protected state legislators of both parties from any real competition. The latest reform, a jungle primary system (candidates of all parties appear on a ballot, with the top two vote-getters facing off in the general election) meant to make races more competitive and drive politicians toward the center of the political spectrum, will face constitutional challenge and, if history is any guide, produce results not remotely anticipated by its draftsmen.
California today bears little resemblance to the land of opportunity whose promise of a better life in a perfect climate once lured so many. Schools, even in expensive residential areas, are substandard and getting worse. Public parks are unseemly and unsightly. Libraries are understaffed and understocked. Commutes have extended from 30 to 60 to 90 minutes or longer.
Because the 21st-century economy is global and portable, residents and businesses have other options. Employers and educated people can uproot themselves, and they have been, fleeing the congestion, the traffic, the crumbling infrastructure, and the deficient schools. Between 1990 and 2000, 2 million more left the state than arrived from other states.
The U.S. Census Bureau report noted that a number of states have benefited from California’s woes: “199,000 of the 466,000 people who moved to Nevada during this time came from California…. Between 1995 and 2000, 644,000 people moved to Colorado from other states, led by 111,000 migrants from California.”
California’s unemployment rate at present hovers a few points above the national average, in part due to a state judiciary hostile to business and the proliferation of pro-plaintiff litigation rules that have made the state a toxic environment for employers. In recent years, Northrop Grumman, Fluor Corporation, Hilton Hotels, Computer Sciences Corporation, and defense contractor SAIC all moved their headquarters out of the state.
The optimism of the 1960s has been replaced by cynicism and resignation: Did you hear that gubernatorial candidate Jerry Brown gets multiple pensions totaling $78,000 a year? Did you read about the little city of Bell’s council members who pay themselves nearly 100 grand a year and paid the city administrator $1.5 mil a year? Gallows humor, appropriate for a dying state, is de rigueur among the state’s political class.
My own family has come full circle. My husband (whose family moved from Indiana to Northern California a year before mine moved from South Jersey) and I joined the out-migration in 2005, moving East with our two sons. It was our turn to amaze West Coast friends and family by leaving home. But unlike the trek four decades earlier, there was little confusion about the reasons for our departure. Instead, people seemed wistful, curious about whether they would learn from us that there might be a better life elsewhere, with workable schools, functioning state and local governments, and more modest taxes.
And in the years since our exodus, we have become acquainted, once again, as we had been in our youth, with normal public schools, pleasant neighborhood parks, well-stocked libraries, and state and local governments that live within their means, more or less.
Flying over Los Angeles on an annual summer visit, I peer through smog so thick that the coastline is hard to see. It is only three in the afternoon, but the cars are backed up for miles on the freeways, which remain largely in the same state of disrepair that greeted me last year. The state is literally deteriorating before my eyes. In an age when discount airfares are plentiful and one can wear shorts on American Airlines,California for me has become a nice place to visit. But who would want to live there?