California’s Masterclass in Failed Governance

The story

From the gold rush era to the post-WWII population boom, California represented the final frontier of expansion and opportunity — a beautiful, sun-soaked land that promised the American dream to millions.

But the dream has been hindered by a series of compounding issues, devastating the state’s upward mobility, population, and national reputation. California’s recent $47 billion budget deficit highlights chronic social and political ills that Golden State Democrats are unable and unwilling to fix. Problems range from an increasing homeless population to high cost of living, a housing crisis, failing schools, an ongoing immigration crisis, and poorly managed government.

The politics

California Republicans criticized Gov. Gavin Newsom (D) and legislature Democrats for excluding them from recent budget negotiations. They derided the budget for its typical progressive flaws — unsustainable government spending, funding of “unneeded social experiments and pet projects,” and ignoring constituents represented by Republicans.

Gov. Ron DeSantis (R-FL) is among GOP governors who are outspoken critics of Gavin Newsom. A Fox News debate showcased their rivalry as they argued why their respective governance styles are preferable to Americans.

DeSantis launched a verbal attack at Newsom, “You have the freedom to defecate in public in California … to pitch a tent on Sunset Blvd.” DeSantis excoriated the California model, saying that if the state’s policies were national, consequences would be “disastrous for working people.”

Recently, Gov. Newsom deflected attacks in his State of the State address and defended California’s progressive values. He defended pro-choice laws, gun control efforts, environmental protection measures, and the state’s many economic opportunities. Republicans criticized Newsom’s comparison of California’s tax brackets to red states, saying no one buys the idea “that taxes are reasonable in this state.”

The issues

Cost of living

California’s high cost of living, especially for homes, is the primary impetus behind its diminishing population. In 2000, California estimated its 2020 population at 45 million, but it stagnated at 39.5 million. Numbers started growing again only recently, for the first time since 2020.

One estimate finds that 40 percent of California’s housing costs are directly related to government regulations. California also has some of the highest utility rates and state taxes in the country. The average family pays $9,000 more in utilities annually than the national average.

Couples enter the 9.3 percent state tax bracket when earning $136,700. That figure might seem high-income but, in one of the most expensive states, the additional tax places a huge burden on families.

Government waste & incompetence

Cost of living is not the only line item rendered more expensive by California’s massive regulatory bureaucracy. A famous example is the $1.7 million price tag on a small public bathroom in San Francisco. Public outcry drove the cost down to $200,000 — still exorbitant.

A key factor in the state’s bloated $300 billion budget is California’s unwillingness to move to a more conventional pension system. Unlike many states, California and its municipalities assume higher financial risk by defining retirement benefits instead of basing benefits on employee contributions. Unions exert pressure on the state to maintain the existing pension system and the hefty six-figure salaries for top-earning public employees, making it difficult for California to meet those financial obligations.

Despite the state’s budgetary issues, some are proposing a modern Freedmen’s Bureau and funding an initial $12 million reparations program in an attempt to heal racial inequalities. San Francisco alone considered $5 million restitution per recipient. Not only is the program extremely divisive, but it does not address the cause of racial inequality — a disproportionate lack of human capital: abilities, education, and skills among the African-American population.

Homelessness

More government waste is the $24 billion California dumped into its severe homelessness problem since 2019. Despite the massive investment, homelessness increased by 20 percent to a staggering 181,000 people between 2019-2023, representing 28 percent of the country’s entire homeless population. The state’s dysfunction is so severe that California has no method of tracking the cost or effectiveness of its anti-homelessness programs.

Federal regulations and dogma surrounding “housing first” have California building “affordable” housing units as the answer to homelessness, at a massive $700,000 per-unit. While construction prices skyrocketed nationwide, California is guilty of imposing the country’s most excessive soft costs, like consultant fees and regulatory red tape.

Not only is housing extremely expensive and time consuming to build (in San Francisco, building a single housing unit requires 87 permits), but it is almost certainly not an ideal solution to the crisis. Placing homeless people in housing without preconditions and with services present — known as supportive housing — works well enough on an individual level, but it is ineffective at reducing the general homeless population.

Failing schools

California’s schools are the crown jewel of the state’s failures. L.A. teachers’ union president Cecily Myart-Cruz outright denied the existence of learning loss resulting from school closures during the pandemic, despite plummeting reading and math comprehension scores and a mass exodus of students from the system; the L.A. student population nearly halved during the last 20 years.

Further, negative consequences result from California teachers’ unions resisting a competitive school system. Student report cards reflect passing grades for huge majorities, but when standardized tests are administered, students demonstrate massive learning deficits.

Only 19 percent of 11th graders achieve grade-level math skills, and only 40 percent of 6th graders read and write at grade level. After graduation, a staggering 23.1 percent of Californians (age 15 and above) are considered under-literate.

The California Teachers Association’s stance against school choice seems confounding, given its progressive mores. Charter schools achieve a longstanding progressive goal by greatly improving educational outcomes for minority students. But the teachers’ union opposes charter schools because its focus is on its own interests, rather than on student needs.

Immigration

California’s education issues are compounded by an ongoing immigration crisis. Orange County schools alone have doubled the number of English as a Second Language teachers and still experience shortfalls. California’s new status as the epicenter of the national migration crisis is driving its school crisis.

Schools are not alone in being severely strained by the influx of new people. California is the hub for illegal migration after Texas intensified security — arresting illegal migrants at the border. So, migrants choose a more lenient state. California border cities are overwhelmed, with San Diego delivering 1,000 migrants daily to public transit centers in February.

This issue imposes a national security concern because migrants are abandoning identification documents before entering the U.S. Local officials fear that some are concealing their identities due to criminal histories they do not want discovered.

Why it matters

In many respects, California’s dream is America’s dream. California began as a place where a great diversity of people came together to purse wealth and opportunity under the banner of freedom. Now, a lack of ideological diversity threatens the dream as the state’s progressives overwhelmingly control its power levers.

Progressives throwing money at California’s problems is clearly failing, as is their inclination to over-regulate, stifle competition, expand bureaucracy, and race-pander. With too few conservatives to prevent progressivism’s worst ideas unfolding upon society, those tendencies, unchecked, threaten the preconditions that made California great.