CRUEL SUMMER

Budget bust: Gov. Newsom announced his revised budget yesterday to address the state’s projected $54 billion coronavirus-induced shortfall. Among his cost-cutting measures are a 10 percent salary reduction for state employees and 10 percent reduction in public school funding. Newsom’s budget moves California’s fiscal response in the right direction, but it doesn’t attempt to reform the state’s biggest cost-driver: pensions. Further, these cuts would automatically be canceled if the federal government passes a state and local bailout in its next stimulus legislation. House Democrats in Washington are poised to vote in favor of a $3 trillion “Phase 4” relief package, which would provide California with $51 billion in federal aid.
 
Public-sector compensation cuts should be a prerequisite of, not obviated by, a federal bailout: As I told The Center Square: “Before California goes hat in hand to Washington D.C., it must address the underlying fiscal problems that put it in this precarious position in the first place. That means reforming bloated public sector pension commitments that are driving many localities to bankruptcy. Federal taxpayers shouldn't have to reward California for its decades of fiscal profligacy."
 
Ten hardest-hit cities: A new CPC analysis of local budgets identifies the ten Golden State cities that are in the worst financial shape heading into this crisis. The report explains, “The crisis won’t end when the state reopens. Many local governments will be forced to cut services; in most of those, public officials will also propose a disastrous regime of business-stifling taxes and debt. The new California Policy Center survey of some 300 California communities reveals that some cities, counties and other agencies are in such dire shape that their best option may be federal bankruptcy.”
 
You were warned: For years, a handful of concerned citizens have been sounding the alarm about the threat posed by California’s unrealistic pension commitments. Chief among these is CPC co-founder and contributor Edward Ring. In his latest contribution, he writes, “California’s state and local governments face unprecedented financial hardship. Only a light breeze was necessary to disrupt their finances, and what’s happening today is a hurricane. And even after the economic weather stabilizes, the state government’s financial house of cards will remain scattered.”
 
Cruel summer: This week, L.A. County Public Health Director Barbara Ferrer revealed that county stay-at-home orders will “with all certainty” stay in place for the next three months. Elsewhere in the Tarnished State, 17 less-populated counties are reopening faster than their denser counterparts.
 
First on the chopping block at state universities? Diversity bureaucrats: Writes Edward Ring in another contribution this week, “These departments of ‘equity, diversity and inclusion,’ now operating in every major college and university in America, and at stupefying taxpayer expense, are indoctrinating students to equate their academic failures to systemic discrimination, a preposterous lie that only serves to weaken the character of anyone who believes it, at the same time as it lines the pockets of the diversity bureaucrats who spew such filth.”
 
There’s also low-hanging savings in public schools: CPC contributor Larry Sand discusses how California public education can respond to the pandemic-induced economic contraction in his latest contribution: “The unions have had their way in education far too long, and now their traditional way of doing business is in jeopardy due to the economic ramifications of Covid-19. Automatic quality-blind teacher raises, detrimental seniority rules and chronic over-hiring have done great damage to education. Business as usual needs to end.”
 
Elon Musk = Hank Rearden? In words that could have come straight from the pages of Atlas Shrugged, Elon Musk tweeted this week: “Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else. If anyone is arrested, I ask that it only be me.” In a note to employees, he wrote, “An honest day's work spent building products or providing services of use to others is extremely honorable. I have vastly more respect for someone who takes pride in doing a good job, whatever the profession, than some rich or famous person who does nothing useful.”
 
A microcosm of what’s wrong with the state: CPC President Will Swaim and CPC Board Member David Bahnsen discuss how Musk’s battle with regulators reveal everything about the late, great state of California and address the 150 economists begging Governor Gavin Newsom to let his people go on this week’s episode of National Review’s Radio Free California.
 
F**k Elon Musk? Assemblywoman Lorena Gonzalez didn’t take kindly to Musk’s threat to leave California, tweeting, “F**k Elon Musk.” The California Business and Industrial Alliance, a business trade group working to reform state labor law, responded with a full-page ad in the San Diego Union-Tribune, contrasting Gonzalez’s record of killing thousands of jobs with Musk’s record of creating them. The ad asks: “Who’s really f**king California?”
 
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Jordan Bruneau
Communications Director
[email protected]
 
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