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California Uber Alles

Wednesday, November 4th, 2009 | Economics | Permalink | 2 Comments |

Ride Fast - The California Way - Stealing from the wage earners:

As of yesterday, California is stealing an additional 10% of wage earners pay, by pre-deducting today your future taxes of tomorrow. They say it’s all wonderful and rainbow, unicorn farts, cause you’ll get the money back.

Ah, no, you won’t. They won’t be paying interest. And since they didn’t ask, it’s stealing. I say they’re breaking the law by not passing a tax increase. Borrowing isn’t a tax increase, they say. Raising fees on everything isn’t a tax increase, they say. I call bullshit on that.

In California the notion of government by the people, of the people, and for the people is dead. It’s now the people working to pay for the government.

How bad is it in California? It’s so bad the L.A. Times finally admits California taxes are too high:

These folks pulling up stakes and driving U-Haul trucks across state lines understand a reality the defenders of the high-benefit/high-tax model must confront: All things being equal, everyone would rather pay low taxes than high ones. The high-benefit/high-tax model can work only if things are demonstrably not equal — if the public goods purchased by the high taxes far surpass the quality, quantity and impact of those available to people who live in states with low taxes.

Today’s public benefits fail that test, as urban scholar Joel Kotkin of NewGeography.com and Chapman University told the Los Angeles Times in March: “Twenty years ago, you could go to Texas, where they had very low taxes, and you would see the difference between there and California. Today, you go to Texas, the roads are no worse, the public schools are not great but are better than or equal to ours, and their universities are good. The bargain between California’s government and the middle class is constantly being renegotiated to the disadvantage of the middle class.”

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CalPERS actuary says pension costs “unsustainable”

Tuesday, August 18th, 2009 | Economics | Permalink | No Comments |

Mish - CalPERS Admits California “Pension Costs Unsustainable” - So What To Do About It?

The CalPERS chief actuary says pension costs are “unsustainable,” and the giant public employee pension system plans to meet with stakeholders to discuss the issue.

“I don’t want to sugarcoat anything,” Ron Seeling, the CalPERS chief actuary said as he neared the end of his comments. “We are facing decades without significant turnarounds in assets, decades of — what I, my personal words, nobody else’s — unsustainable pension costs of between 25 percent of pay for a miscellaneous plan and 40 to 50 percent of pay for a safety plan (police and firefighters) … unsustainable pension costs. We’ve got to find some other solutions.”

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California pensions loses 23% of assets, managers get millions in bonuses

Thursday, August 13th, 2009 | Economics | Permalink | No Comments |

Sacramento Bee - CalPERS, CalSTRS award big bonuses despite losses:

California’s two biggest public employee pension funds handed out millions of dollars in bonuses last year to their top executives and investment managers, despite losing billions of dollars. The biggest bonus check, $322,953, went to Christopher Ailman, chief investment officer of the California State Teachers’ Retirement System. It nearly doubled his base pay of $330,000 for fiscal 2007-08.

Ailman’s counterpart at the California Public Employees’ Retirement System, Russell Read, received a $208,677 bonus to his $555,360 base pay in August, more than a month after he had resigned from the fund’s top investment job.

Much has been said about private investment firms rewarding failure. Judging from above it isn’t just private companies that pay big bonuses even when they lose money. Government outfits do it, too. That doesn’t make it right, of course. It does suggest that there’s something to the notion of a perverse bonus culture inside the financial community that’s disconnected from reality.

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California’s farce continues towards its final act

Tuesday, August 11th, 2009 | Economics | Permalink | 28 Comments |

Courthouse News - California won’t accept its own IOUs for payment:

SAN FRANCISCO (CN) - Small businesses that received $682 million in IOUs from the state say California expects them to pay taxes on the worthless scraps of paper, but refuses to accept its own IOUs to pay debts or taxes. The vendors’ federal class action claims the state is trying to balance its budget on their backs.

Lead plaintiff Nancy Baird filled her contract with California to provide embroidered polo shirts to a youth camp run by the National Guard, but never was paid the $27,000 she was owed. She says California “paid” her with an IOU that two banks refused to accept - yet she had to pay California sales tax on the so-called “sale” of the uniforms.

I was telling someone the other day to imagine working for a company that was in as bad a shape as California.

It’s obvious that any company that had problems like California’s couldn’t stay in business. Anyone who thinks a government can be run that way is delusional.

Things are going to end badly in California. What happens in California is going to provide a glimpse of the problems the United States is going to have due to excessive spending, debt, and poorly-funded retirement programs.

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Judge orders California to release 40,000 prisoners

Saturday, August 8th, 2009 | Economics | Permalink | No Comments |

Wall Street Journal - California Scrambles to Prepare for Inmate Release:

California state and local officials, already reeling from budget cuts and public-safety layoffs, are struggling with a federal order to release about 40,000 inmates to reduce prison overcrowding and bracing for the impact on their communities.

State officials have said they will appeal the decision, but as a contingency are cobbling together proposals to comply with the order. At the same time, cash-strapped local governments in places such as Los Angeles and Fresno are grappling with how to monitor and support thousands of released inmates at a time of scaled-down police forces and underfunded social-services programs.

Isn’t it about time we legalized pot? The state would get desperately-needed tax revenue that many people would be thrilled to pay. They’d also stop wasting money prosecuting and imprisoning people for doing something that our last three presidents, at least one one vice president, and at least one presidential candidate and one vice-presidential candidate have all admitted to doing.

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Study: refinancing, not buying at top, caused most SoCal defaults

Wednesday, July 29th, 2009 | Economics | Permalink | No Comments |

Via Calculated Risk:

Michael LaCour-Little, a finance professor at California State University at Fullerton, looked at 4,000 foreclosures in Southern California from 2006-08. He found that, at least in Southern California, borrowers who defaulted on their mortgages didn’t purchase their homes at the top of the market. Instead, the average acquisition was made in 2002 and many homes lost to foreclosure were bought in the 1990s. More than half of all borrowers who lost their homes had already refinanced at least once, and four out of five had a second mortgage.

Right after I bought my house I visited my Uncle John in Georgia. When he found out I had a house he said, simply, “Good. Now don’t ever get a second mortgage.”

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CALPERS plans riskier bets to recoup losses on previous risky bets

Saturday, July 25th, 2009 | Economics | Permalink | No Comments |

New York Times - California Pension Fund Hopes Riskier Bets Will Restore Its Health:

Mr. Dear wants to embrace some potentially high-risk investments in hopes of higher returns. He aims to pour billions more into beaten-down private equity and hedge funds. Junk bonds and California real estate also ride high on his list. And then there are timber, commodities and infrastructure.

That’s right, he wants to load up on many of the very assets that have been responsible for the fund’s recent plunge. Calpers’s real estate portfolio has tumbled 35 percent, and its private equity holdings are down 31 percent. What is more, under Mr. Dear’s predecessor, Calpers had to sell stocks in a falling market last year to fulfill calls for cash from its private equity and real estate partnerships. That led to bigger losses in its stock portfolio.

And there’s this:

Mr. Dear remains a believer. Private investments, he asserts, will over the long haul outperform stocks by three percentage points a year, and that is necessary to keep Calpers on track to returning its goal of 7.75 percent annual returns.

See Calling BS on high rates of expected return for why a 7.75% annual return - year in and year out - is unrealistic. These municipal pension fund managers and their political bosses have to pretend those returns are possible. Ootherwise they’d have to admit the pensions are woefully underfunded. California is broke and is planning cuts in basic services. They’d have to cut even more if they fully funded their massive pension funds.

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California pension funds lose $100 billion in a year

Friday, July 24th, 2009 | Economics | Permalink | 1 Comment |

LA Times - California’s biggest government pension funds lose almost $100 billion:

CalPERS’ preliminary losses were $56.2 billion in the fiscal year that ended last month, while the California State Teachers’ Retirement System lost $43.4 billion.

On Tuesday, the country’s two biggest public pension funds reported losing almost $100 billion in the fiscal year that ended June 30. And the governor is expected to highlight the new numbers as he renews a campaign to trim the cost of providing lifetime, fixed benefits to hundreds of thousands of government retirees.

Previously:

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SEC: Cali. IOUs should be treated as securities

Friday, July 10th, 2009 | Misc | Permalink | 1 Comment |

Sacramento Business Journal - SEC rules that IOUs should be treated as securities:

The U.S. Securities and Exchange Commission on Thursday issued its opinion that California’s IOUs should be treated as securities under federal securities law.

Under that opinion, holders of the notes, which carry a 3.75 percent interest rate, are protected by securities laws that prevent fraud. And it means that people who attempt to make a market in buying and selling the notes may have to be registered as “brokers, dealers or municipal securities dealers, or as alternative trading systems or national securities exchanges.”

The SEC did not make any determination on whether California has the authority to issue or repay the registered warrants.

Any lawyers in the hizzouse?

Previously - Cash4IOUs

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California: “Dude, where’s 58% of my budget?”

Thursday, July 9th, 2009 | E-commerce, Economics | Permalink | No Comments |

California has the worst budget shortfall of the 50 states, both in dollars and percent of budget:

  • California: $53.7 billion shortfall or 58 percent of its budget
  • Arizona: $4 billion shortfall or 41 percent of its budget
  • Nevada: $1.2 billion or 38 percent of its budget
  • Illinois: $9.2 billion or 33 percent of its budget
  • New York: $17.9 billion or 32 percent of its budget
  • Alaska: $1.35 billion shortfall or 30 percent of its budget
  • New Jersey: $8.8 billion or 30 percent of its budget
  • Oregon: $4.2 billion or 29 percent of its budget
  • Vermont: $278 million or 25 percent of its budget
  • Washington: $3.6 billion or 23 percent of its budget
  • Connecticut: $4.1 billion or 23 percent of its budget

So in other words California’s budget is (very roughly) $100 billion, but their projected revenue is only $42 billion. If your expenses were $100,000 per year and you only made $42,000 per year you’d realize you were deeply screwed, right?

This is going to be ugly.

Previously - Californians are getting the best government IOUs can buy

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California’s referendum system

Wednesday, May 20th, 2009 | Economics | Permalink | No Comments |

Californians just rejected a slew of propositions (California-speak for ballot referendums). Here’s why their system may not such a grand idea:

The problem is multifaceted, but I think that the ultimate root is that it takes a simple majority vote by the populace to mandate spending, allocate bonds, or cut taxes, but a 2/3rds vote to raise anything but a general, unrestricted tax. That formula just can’t work over the long term. After decades where the populace voted “yes” on virtually all new spending, and “no” on all new revenue, this crisis was all but inevitable.

That sounds right. Californians hate taxes, but love stupid projects paid for by tax dollars.

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Obama sides with the unions in California

Thursday, May 14th, 2009 | Politics | Permalink | No Comments |

Washington Post - Tincture of Lawlessness:

In February, California’s Democratic-controlled Legislature, faced with a $42 billion budget deficit, trimmed $74 million (1.4 percent) from one of the state’s fastest-growing programs, which provides care for low-income and incapacitated elderly people and which cost the state $5.42 billion last year. The Los Angeles Times reports that “loose oversight and bureaucratic inertia have allowed fraud to fester.”

But the Service Employees International Union collects nearly $5 million a month from 223,000 caregivers who are members. And the Obama administration has told California that unless the $74 million in cuts are rescinded, it will deny the state $6.8 billion in stimulus money.

The Obama administration’s agenda of maximizing dependency involves political favoritism cloaked in the raiment of “economic planning” and “social justice” that somehow produce results superior to what markets produce when freedom allows merit to manifest itself, and incompetence to fail. The administration’s central activity — the political allocation of wealth and opportunity — is not merely susceptible to corruption, it is corruption.

Previously

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Moody’s may downgrade local govt bonds

Monday, April 13th, 2009 | Economics | Permalink | No Comments |

New York Times - Muni Bonds May Face Downgrade:

Moody’s Investors Service assigned a negative outlook to the creditworthiness of all local governments in the United States, the agency said Tuesday, the first time it had ever issued such a blanket report on municipalities. The report signaled how severely the economic downturn was affecting towns, counties and school districts across the nation.

While Moody’s regularly reports on the financial strength of various sectors of private industry, its analysts have in the past considered America’s tens of thousands of towns and local authorities too diverse for generalizations.

The report suggests that the ratings of many governments could be downgraded in the coming months, something that would make it more expensive for them to borrow money to finance their operations. In the most extreme cases, municipalities might default on some of their obligations, as Jefferson County, Ala., has been threatening to do for a number of months.

LATER: I originally posted this without comment. My comment would be “holy crap!” Moody’s just pointed a finger at every municipal entity in the U.S. and suggested they’re not as sound as people previously thought.

Why not? Well, they tend to depend on property taxes and property values are down and heading down further. They depend on sales taxes and nothing is selling as well as it used to (just ask Circuit City, GM, and Chrysler).  Any local or state government with a pension plan is probably in trouble, too.

When Wall Street started tanking some people were quick to talk about the end of capitalism. The alternative to capitalism is to have the government in charge of the economy. We’re about to see how clean the government’s books are. I suspect the government accounting is at least as crooked as some of the corporate accounting.

Previously

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Bill Quick on California

Wednesday, March 4th, 2009 | Politics, Quotes | Permalink | No Comments |

“California spends far more than it takes in, despite having some of the highest taxes in the United States. It is hostile to business, and the middle class is fleeing in droves. It runs huge deficits every year, yet the Dem dominated legislature refuses to do anything effective to cut spending. Now one in ten Californians is unemployed. Does any of this sound familiar? It should. It’s what Obama and the Democrats have in mind as a ’solution’ for the rest of the country.”
– Bill Quick

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“it is only a matter of time before civil servants become civil masters”

Saturday, January 24th, 2009 | Economics, Political Survival Kit, Politics | Permalink | 6 Comments |

Chicago Boyz - California’s Tipping Point:

California has ~2.3 million unionized government workers and ~18.6 million civilians. With so many people organized with a laser-like focus on increasing taxes and spending, the private working citizens of California find it nearly impossible to prevent government workers from voting their own paychecks.

In effect, government workers have hijacked democracy. Instead of state employees working for the people, the people now work for the state employees. As far as the state government is concerned, people in the private sector work merely so that they can be taxed for the benefit of the tax consumers. They’ve entered a condition not unlike like that of pre-industrial serfs.

Of course no one is being whipped, but in effect an ordinary citizen of California cannot get their desires for reduced state spending implemented due to the disproportionate power of the State’s employees and allied interest. It appears now that the government unions will not accept any solution to California’s budget crisis except increased taxes in a declining economy. Ordinary citizens have no choice but to either emigrate or just lie there and take it.

By long custom and law, the U.S. military has remained ruthlessly apolitical. Serving members do not endorse candidates, organize politically in any fashion or make independent public statements about campaign issues. That standard evolved due to the obvious danger of having a military with a positive feedback loop into the political system that controls its budget. The same danger exists for all other state employees, albeit in a slower and less dramatic fashion.

No one should be able to vote their own paycheck. Government-employee unions should be legally restricted from engaging in any kind of political activity. If not, it is only a matter of time before civil servants become civil masters.

From a previous post of mine on Vallejo, California’s bankruptcy: “The insanity here is that public service unions are allowed to donate to candidates. The system allows taxpayer money skimmed from public employee salaries to fund political campaigns to elect more politicians to give more money to government employees … and the system just reinforces itself.”

And now the U.S. has more people working in government than in manufacturing.

Hat tip to Instapundit.

Previously

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“If you did not know it before, you do now. California is bankrupt.”

Monday, January 19th, 2009 | Economics | Permalink | 2 Comments |

Mish - Sharing The Pain In California (quoting the San Jose Mercury News):

If Gov. Arnold Schwarzenegger were to fire every employee in state government tomorrow, it would easily patch California’s enormous deficit, right? Not even close.

But surely shutting down all state prisons would do the trick? That, too, would only get him about a quarter of the way there.

Now what if he were to close every prison and cut off funding for health care and other services for the poor? Now we’re in the ballpark.

I’d like to see how the state’s public pensions stack up to that $40 billion projected deficit. Mish has lots more.

If you did not know it before, you do now. California is bankrupt. So is Ohio. So are numerous cities like San Diego. All told, 44 States Face Huge Budget Shortfalls. My big fear in this mess is that Obama will attempt to bail out the states before much needed reforms are made. Such actions will only postpone the problems.

Previously

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CA pension loses 25% of assets since July 1 due to real estate investments

Sunday, December 21st, 2008 | Economics | Permalink | 1 Comment |

Wall Street Journal - Risky, Ill-Timed Land Deals Hit Calpers:

At the height of the property bubble, California’s giant pension fund, Calpers, made a fateful decision: It aggressively poured money into real estate. As a result, today it’s one of the biggest owners of undeveloped residential land in America.

Partly because of these investments, California Public Employees’ Retirement System is struggling to avoid one of its worst annual declines since its 1932 inception. Calpers has lost almost a quarter of its assets since July 1, the start of the current fiscal year.

The problems come at a time of uncertainty for the nation’s largest public pension fund, which has been without its top two executives for nearly half a year. Calpers is poised to appoint a new chief executive as early as this week, people familiar with the matter said.

Calpers is now warning California’s cities, towns and schools that they may have to cough up more money to cover the retirement and other benefits the fund provides for 1.6 million state workers. Some towns are already cutting municipal services, and at least one is partly blaming the Calpers fees.

Via Mish.  W.C. Verone called it in July, citing the implausibly rosy numbers CALPERS reported for its real estate investments (emphasis mine):

While things that have easily observable market prices (i.e. stocks) went down, everything that is valued subjectively went up! Private equity? It does great during a credit crunch when stocks are crashing! Just ask noted private equity players Blackstone Group or Babcock & Brown. And real estate? Well, whose real estate portfolio is not up at least 8% this year?

Mark my words: CalPERS is lying about its performance, and there will be serious consequences for California retirees and taxpayers.

Previously:

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How irrational were California real estate prices?

Monday, November 17th, 2008 | Economics | Permalink | 5 Comments |

How irrational were California real estate prices? This irrational - the Pasadena shack in the picture sold for $522,000 in August, 2006. The local government was happy to play along with the fantasy since it meant more property tax money for them:

That’s one of Doctor Housing Bubble’s Real Homes of Genius. If you want to know how much trouble California is in read his article, 10 Reasons Why California is Years Away from a Housing Bottom.

We are going to find out how pervasive and extensive this fraud network is. To paraphrase Warren Buffet, the tide is going out and we are going to see who is swimming naked. Most of these loans fall under the Alt-A category and many lenders are deluded thinking these are much better than subprime loans. They are not. How many of these loans are out in California?

Total Alt-A loans as of June 2008: 688,975
Average Balance as of June 2008: $419,790 [* See note - LLJ]
Number with a prepayment penalty: 302,909
Number with a second lien at origination: 206,216 (these are most likely worth zero)
Number with interest only payment: 252,329
Number with negative amortization: 198,385
Percent with at least one late payment in last 12 months: 27%
Percent ARM loans: 70%
*Source: New York Fed

Think about those numbers for a second. This one point is enough to quell any bottom talk. Take a look at WaMu’s Option ARM portfolio, half of which is in California and you’ll realize that we haven’t even seen the start of this mess:

The world is in for a rough ride. The country is in for a rough ride. California is in for something even worse. Go read the Doctor.

* That $419,790 average is slightly higher than Fannie Mae’s 2008 limit of $417,000 for conforming single-family first mortgages.

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Even more bad real estate news: 1 in 5 mortgages upside down, increasing foreclosures

Thursday, November 6th, 2008 | Economics | Permalink | No Comments |

Graph via Dr. Housing Bubble.

Reuters - One in five homeowners with mortgages under water:

NEW YORK (Reuters) - Nearly one in five U.S. mortgage borrowers owe more to lenders than their homes are worth, and the rate may soon approach one in four as housing prices fall and the economy weakens, a report on Friday shows.

About 7.63 million properties, or 18 percent, had negative equity in September, and another 2.1 million will follow if home prices fall another 5 percent, according to a report by First American CoreLogic.

The data, covering 43 states and Washington, D.C., includes borrowers nationwide, even those who took out mortgages before housing prices began to soar early this decade.

Seven hard-hit states — Arizona, California, Florida, Georgia, Michigan, Nevada and Ohio — had 64 percent of all “underwater” borrowers, but just 41 percent of U.S. mortgages.

Foreclosure filings rose 71 percent in the third quarter to a record 765,558, according to RealtyTrac.

Last week, Wachovia Corp said borrowers with its “Pick-a-Pay” ARMs and living in or near Stockton and Merced, California, owed at least 55 percent more on their mortgages, on average, than their homes were worth. Wells Fargo & Co is buying Wachovia.

Owing more than their house than is worth is going to create economic despair for millions. No wonder consumer confidence is so low. Some homeowners will stick it out until the market recovers, but others will walk away from the moneyhole. ARM resets will only accelerate the trend. It’s going to get ugly.

Previously:
- More bad real estate news

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Those wacky ballot initiatives

Wednesday, November 5th, 2008 | Misc | Permalink | 1 Comment |

Massachusetts voters passed a measure to decriminalize possession of less than one ounce of marijuana.

The ballot to name a San Francisco sewage treatment plant after George Bush failed 70-30.

Citizens of my hometown politely declined to pay a higher sales tax.

California had a whole slew of initiatives. The one that caught my eye is the Safe, Reliable High-Speed Passenger Train Bond Act. That’s the wildly optimistic bullet train I blogged about a few weeks ago. From the ballot description (emphasis mine):

  • State costs of about $19.4 billion, assuming 30 years to pay off both principal ($9.95 billion) and interest ($9.5 billion) costs of the bonds. Payments of about $647 million per year.
  • When constructed, additional unknown costs, probably in excess of $1 billion a year, to operate and maintain a high-speed train system. The costs would be at least partially, and potentially fully, offset by passenger fare revenues, depending on ridership.

And how likely is that last point to actually come true? Take it away, P.J.:

The Heritage Foundation says, “There isn’t a single light rail transit system in America in which fares paid by the passengers cover the cost of their own rides.” Heritage cites the Minneapolis “Hiawatha” light rail line, soon to be completed with $107 million from the transportation bill. Heritage estimates that the total expense for each ride on the Hiawatha will be $19. Commuting to work will cost $8,550 a year. If the commuter is earning minimum wage, this leaves about $1,000 a year for food, shelter and clothing. Or, if the city picks up the tab, it could have leased a BMW X-5 SUV for the commuter at about the same price.

Patterico’s showing the proposition winning 52% to 48% with 92% of precincts reporting. I’m amazed the California voters went for this boondoggle. California can’t balance its budget. People are fleeing the state to escape high taxes. The real estate market there is crashing worse than almost anywhere in the country. And now they’re committing to $1.5 billion per year for passenger rail between San Francisco and Los Angeles. Crazy.

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More bad real estate news

Monday, October 27th, 2008 | Economics | Permalink | 1 Comment |

Option ARMs are just now starting to reset on a large scale. The housing market will get worse before it gets better. Link.

September’s growth in home sales was apparently mostly foreclosures and short sales. The sales that aren’t foreclosures are mostly homes being sold at lower prices than before. Link.

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California attempts to build world’s most *optimistic* commuter rail

Monday, October 20th, 2008 | Economics | Permalink | 4 Comments |

or,

THIS IS YOUR TRAIN ON DRUGS

Reason - California is Headed for a Real Fiscal Train Wreck:

Another rosy assessment comes in estimates of annual ridership. The Rail Authority says the trains will carry 65 million riders each year. But the Reason Foundation’s study gives a much lower estimate—23 million riders annually—after looking at Japan and France, which have the world’s strongest markets for rail. Neither country has achieved the kind of ridership California is predicting and both countries have far higher population densities in the cities served by their bullet trains than Los Angeles and San Francisco.

To attract riders, California’s rail will have to out-compete cars and airplanes by keeping a lid on commute times and fares. To keep commutes short, the state legislature has put statutory limits on travel times. The Los Angeles-San Francisco commute, for instance, is legally required to come under two hours and 42 minutes. This is probably impossible because it would mean that the train will have to post average (not potential) speeds of 200 miles per hour, something that has not been achieved anywhere in the world, even in places whose flat topography allows for far straighter routes.

And as for fares, the Rail Authority is promising a $70 ticket between Los Angeles and San Francisco. This is about half of Japan’s Tokyo-Osaka ($135) and France’s Paris-Marseille ($140) train and far less than the $172 Amtrak charges riders traveling between New York and Washington—all of which are shorter and, with the exception of Japan, heavily subsidized.

It seems that California is promising to build a train that is faster, cheaper, more efficient, and serves more riders than any high-speed train in the world. And all it has to do to pull off this miracle is defy the laws of economics and physics.

Modern commuter rail projects seem to be triumphs of hope over experience, and this is a crowning example.

Previously:
- Local Rail Revisited in Light of High Gas Prices?
- Everything You Need to Know About Mass Transit

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Exodus from Large Cities, CA, IL, MA, NY

Wednesday, April 26th, 2006 | Population | Permalink | No Comments |

A new census report shows population losses in most large urban areas, and overall losses for California and most Northeastern states. The people fleeing those areas are of all ethnic makeups, leading some people to say this isn’t white flight but middle class flight.

The states gaining population are mostly in the South in the non-coastal Western states. The large cities that gained were Riverside, CA, Phoenix, AZ, Tampa-St. Petersburg, FL, Atlanta and Dallas-Fort Worth.

Those same emigrants are also moving to states with fewer gun control laws, as Uncle notes, but as his commentors suggest I think that’s a coincidence. The states that are more economically free also happen to have more second amendment freedom.

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Leaving California

Monday, March 6th, 2006 | Population | Permalink | 8 Comments |

Meathead Economics, from the Wall Street Journal.

It takes hard work to drive anyone away from California’s sunshine and scenic vistas, but politicians in Sacramento have been up to the task.

The latest Census Bureau data indicate that, in 2005, 239,416 more native-born Americans left the state than moved in. California is also on pace to lose domestic population (not counting immigrants) this year. The outmigration is such that the cost to rent a U-Haul trailer to move from Los Angeles to Boise, Idaho, is $2,090–or some eight times more than the cost of moving in the opposite direction.

…

This isn’t [Rob Renier's] first foray into confiscatory tax politics. Last year he sponsored a ballot initiative narrowly approved by voters that imposed a percentage-point income-tax surcharge (to the current 10.3%) to pay for government mental-health subsidies. And in the late 1990s he helped to pass an initiative to raise the state’s tobacco tax by 50 cents a pack to pay for children’s health care.

All of this has contributed to the trend of wealthy taxpayers disappearing from the state. State finance office data indicate that the number of Californians reporting million-dollar incomes fell to 25,000 in 2003 from 44,000 in 2000. That decline has cost the state $9 billion a year in uncollected tax revenues.

California’s generous social programs depend on a strong population, a rich population, and a strong property tax base. A relatively small downturn in population and housing demand could cause a large correction in real estate prices.

When things were good, California was tempted into creating big social programs. Now that the economy is cooling down, they could wind up in the same boat as GM and Delphi - past their earnings peak and paying obilgations made during the good years.

LATER: Tam warns other states to be on the lookout for the type of California refuge who flees the state and then tries to Californize their new home: “Some folks may be leaving California looking for freedom, but [some] guys are just leaving to find more comfortable chains that don’t make them look fat.”

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State Population Changes

Tuesday, January 10th, 2006 | Population | Permalink | 5 Comments |

Michael Barone looks at state population changes and what they mean for upcoming elections. Average growth was 5.3 percent. In general, the only Northeast states that registered above-average gains were the economically liberal states of Delaware and New Hampshire. All of the Western states registered above-average growth except for Montana and Wyoming. Louisiana registered the least growth (1.2%) even before Hurricane Katrina. On the political picture:

These numbers are mostly good news for Republicans. The average population growth in the 31 states carried by George W. Bush was 5.6 percent. The average population growth in the 19 states and the District of Columbia carried by John Kerry was 3.9 percent.

And there’s this:

For internal migration, the two big losers were New York (1,001,100) and, perhaps surprisingly to many readers but in line with the 1990s trend, California (664,460). New York’s internal population loss was almost precisely the same as Florida’s internal migration gain (1,057,619), while California’s internal migration loss was almost precisely the same as the internal migration gain of Arizona and Nevada (679,105). That’s not to say that all these internal migrants went to Florida, Arizona, and Nevada, but you get the idea.

There’s an official census in 2010 that will almost certaintly re-apportion Congressional representation and electoral votes in favor of red states. If the Democrats have a plan to counteract these ingrained population trends they need to get cracking on it before they go the way of the Shakers (and that Wikipedia link puts the best possible spin on a religious movement that went extinct because of a belief in celibacy, a lack of personal property rights, and the dissolution of the family unit).

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